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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-28 · 594 added, 588 removed, 1645 unchanged (42% of the section changed)

9 unchanged sentences

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

CONSOLIDATED BALANCE SHEETS

S&T BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

( in thousands, except share and per share data) 2022 2021

19 unchanged sentences

Total Deposits 7,219,970 7,996,524

Securities sold under repurchase agreements 84,491 65,163

Short-term borrowings 370,000 84,491

11 unchanged sentences

Retained earnings 863,948 773,659

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

Accumulated other comprehensive loss ( 112,125 ) ( 7,090 )

Treasury stock — 2,449,711 shares at December 31, 2022 and 2,098,250 shares at December 31, 2021, at cost

3 unchanged sentences

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF NET INCOME

S&T BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME

Years ended December 31,

9 unchanged sentences

Deposits 19,907 10,757 35,986

Borrowings and junior subordinated debt securities 2,393 5,090 10,667

Borrowings, junior subordinated debt securities and other 5,061 2,393 5,090

Total Interest Expense 24,968 13,150 41,076

1 unchanged sentence

Provision for credit losses 8,366 16,215 131,424

16,215 131,424 14,873

Net Interest Income After Provision for Credit Losses 307,417 259,897 147,964

NONINTEREST INCOME

Net gain (loss) on sale of securities 29 142 ( 26 )

Net gain on sale of securities 198 29 142

Debit and credit card 19,008 17,952 15,093

2 unchanged sentences

Mortgage banking 2,215 9,734 10,923

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

Other 7,292 9,052 10,034

5 unchanged sentences

Furniture, equipment and software 11,606 10,684 11,050

Other taxes 6,644 6,622 3,364

Professional services and legal 8,318 6,368 6,394

Other taxes 6,620 6,644 6,622

Marketing 5,600 4,553 5,996

4 unchanged sentences

Income Before Taxes 168,930 135,668 21,039

Income taxes (benefit) expense 25,325 ( 1 ) 19,126

Income tax expense (benefit) 33,410 25,325 ( 1 )

Net Income $ 135,520 $ 110,343 $ 21,040

2 unchanged sentences

Dividends declared per common share $ 1.20 $ 1.13 $ 1.12

(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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

S&T BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31,

1 unchanged sentence

Net Income $ 135,520 $ 110,343 $ 21,040

Other Comprehensive Income (Loss), Before Tax:

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)

Available-for-Sale Debt Securities

Net change in unrealized gains (losses) on available-for-sale debt securities ( 111,539 ) ( 23,972 ) 22,683

Tax effect 23,805 5,115 ( 4,827 )

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

Tax effect 42 — —

Net effect on other comprehensive income $ ( 87,890 ) $ ( 18,857 ) $ 17,856

Interest Rate Swaps

Net change in fair value of interest rate swaps ( 21,459 ) — —

Tax effect 4,581 — —

Net interest rate swap losses reclassified into earnings (2)

Tax effect ( 19 ) — —

Net effect on other comprehensive income $ ( 16,806 ) $ — $ —

Employee Benefit Plans

Adjustment to funded status of employee benefit plans ( 2,526 ) 363 792

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

Tax effect 608 ( 78 ) ( 171 )

Net employee benefit plan (gains) losses reclassified into earnings (3)

2,080 3,198 2,757

Tax effect ( 501 ) ( 687 ) ( 593 )

Net effect on other comprehensive income $ ( 339 ) $ 2,796 $ 2,785

Other Comprehensive Income (Loss) $ ( 105,035 ) $ ( 16,061 ) $ 20,641

Comprehensive Income $ 30,485 $ 94,282 $ 41,681

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

The realized gains or losses have been reclassified out of accumulated other comprehensive income/(loss) and have affected certain lines in the Consolidated Statements of Net Income as follows:

the pre-tax amount is included in securities gains/losses-net, the tax expense amount is included in the provision for income taxes and the net of tax amount is included in net income.

The realized gains or losses have been recorded in net gain on sale of securities in the Consolidated Statements of Net Income.

(2) Reclassification adjustments have been recorded in interest income in the Consolidated Statements of Net Income.

(3) Reclassification adjustments are comprised of realized actuarial gains or losses and settlement charges.

These gains or losses and settlement charges have been recorded in salaries and employee benefits in the Consolidated Statements of Net Income.

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

S&T BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(dollars in thousands, except share and per share data) Common

2 unchanged sentences

Earnings Accumulated

Comprehensive (Loss)/Income Treasury

Comprehensive Income/(Loss) Treasury

Balance at December 31, 2019 $ 103,623 $ 399,944 $ 761,083 $ ( 11,670 ) $ ( 60,982 ) $ 1,191,998

1 unchanged sentence

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

Impact of new lease standard — — 167 — — 167

Cash dividends declared ($ 1.09 per share)

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

Cash dividends declared ($ 1.12 )

— — ( 43,949 ) — — ( 43,949 )

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

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

Treasury stock issued for restricted stock awards ( 230,703 shares)

— — ( 7,361 ) — 7,361 —

Treasury stock repurchased ( 470,708 shares)

Forfeitures of restricted stock awards ( 81,570 shares)

— — 1,838 — ( 2,432 ) ( 594 )

Treasury stock issued ( 28,174 shares, net)

Repurchase of S&T Stock ( 411,430 shares)

— — — — ( 12,559 ) ( 12,559 )

2 unchanged sentences

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

Other comprehensive income, 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)

Treasury stock issued for restricted stock awards ( 130,670 shares)

— — ( 4,163 ) — 4,163 —

Treasury stock issued ( 149,133 shares, net)

Forfeitures of restricted stock awards ( 77,483 shares)

— — 1,754 — ( 2,384 ) ( 630 )

5 unchanged sentences

— — ( 47,023 ) — — ( 47,023 )

Treasury stock repurchased ( no shares)

Treasury stock issued ( 53,187 shares, net)

Treasury stock issued for restricted stock awards ( 4,250 shares)

— — ( 135 ) — 135 —

Forfeitures of restricted stock awards ( 87,208 shares)

— — 1,927 — ( 2,735 ) ( 808 )

Repurchase of S&T Stock ( 268,503 shares)

— — — — ( 7,637 ) ( 7,637 )

Recognition of restricted stock compensation expense — 3,188 — — — 3,188

1 unchanged sentence

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS

S&T BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31,

4 unchanged sentences

Provision for credit losses 8,366 16,215 131,424

Provision for unfunded loan commitments — — 436

Depreciation and amortization 9,027 11,480 12,066

4 unchanged sentences

Loss (gain) on sale of fixed assets 61 30 ( 23 )

Gain on sale and fair value adjustments of other real estate owned, net ( 3,119 ) 420 108

Gain on the sale of loans, net ( 1,229 ) ( 8,856 ) ( 8,998 )

3 unchanged sentences

Proceeds from sale of mortgage loans 38,583 311,479 357,613

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 (increase) decrease in interest receivable ( 10,033 ) 3,561 ( 2,560 )

Net increase (decrease) in interest payable 2,901 ( 2,087 ) ( 3,178 )

Net (increase) decrease in other assets ( 24,628 ) 83,830 ( 144,898 )

Net increase (decrease) in other liabilities 114,713 ( 35,569 ) 50,392

Net Cash Provided by Operating Activities 240,434 214,852 51,552

INVESTING ACTIVITIES

Purchases of securities available-for-sale ( 313,617 ) ( 178,389 ) ( 129,973 )

Proceeds from maturities, prepayments and calls of securities available-for-sale 144,905 205,606 92,412

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

Purchases of securities ( 401,054 ) ( 313,617 ) ( 178,389 )

Proceeds from maturities, prepayments and calls of securities 160,830 144,905 205,606

Proceeds from sales of securities 30,490 1,917 1,349

Purchases of Federal Home Loan Bank stock ( 48,272 ) ( 22,515 ) ( 33,755 )

Proceeds from redemption of Federal Home Loan Bank stock 34,757 26,026 43,702

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

Net (increase) decrease in loans ( 192,403 ) 173,401 ( 194,768 )

Proceeds from the sale of portfolio loans 8,024 5,107 547

Purchases of premises and equipment ( 3,863 ) ( 3,611 ) ( 5,416 )

Proceeds from the sale of premises and equipment 161 14 23

Net cash acquired from bank acquisitions — — 63,759

Proceeds from sale of other real estate owned 12,529 1,259 1,899

Proceeds from settlement of bank owned life insurance 214 353 —

1 unchanged sentence

FINANCING ACTIVITIES

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

Net (decrease) increase in core deposits ( 623,076 ) 875,378 591,932

Net (decrease) in certificates of deposit ( 153,400 ) ( 299,292 ) ( 207,106 )

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 )

Proceeds from long-term borrowings — — 10,000

Net (decrease) increase in securities sold under repurchase agreements ( 84,491 ) 19,328 45,275

Net increase (decrease) in short-term borrowings 370,000 ( 75,000 ) ( 206,319 )

Repayments of long-term borrowings ( 7,689 ) ( 11,001 ) ( 27,187 )

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

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

Costs to issue equity securities — — ( 176 )

Repurchase of shares for taxes on restricted stock ( 808 ) ( 630 ) ( 594 )

Repurchase of S&T stock ( 7,637 ) — ( 12,559 )

Cash dividends paid to common shareholders ( 46,952 ) ( 44,325 ) ( 43,949 )

Net Cash Provided by Financing Activities ( 554,053 ) 464,458 139,493

Net increase in cash and cash equivalents 692,549 31,843 42,334

Net (decrease) increase in cash and cash equivalents ( 712,206 ) 692,549 31,843

Cash and cash equivalents at beginning of year 922,215 229,666 197,823

Cash and Cash Equivalents at End of Year $ 210,009 $ 922,215 $ 229,666

STATEMENTS OF CASH FLOWS

S&T BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31,

1 unchanged sentence

Supplemental Disclosures

Interest paid $ 15,236 $ 44,353 $ 75,278

Income taxes paid, net of refunds $ 24,213 $ 6,231 $ 14,663

Cash paid for interest $ 22,068 $ 15,236 $ 44,353

Cash paid for income taxes, net of refunds $ 31,175 $ 24,213 $ 6,231

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

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

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

Transfers to other real estate owned and other repossessed assets $ 23 $ 12,392 $ 631

See Notes to Consolidated Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

S&T Bancorp, Inc., or S&T, was incorporated on March 17, 1983 under the laws of the Commonwealth of Pennsylvania as a bank holding company and has five active direct wholly owned subsidiaries, S&T Bank, 9th Street Holdings, Inc., STBA Capital Trust I, DNB Capital Trust I and DNB Capital Trust II.

DNB Capital Trust I and DNB Capital Trust II were acquired with the DNB merger on November 30, 2019.

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 six entities:

3 unchanged sentences

Stewart Capital Advisors, LLC;

DN Acquisition, Inc.

9th Street Holdings, Inc.

DN Acquisition Company, Inc.

Our investment holding companies are 9th Street Holdings, Inc.

and S&T Bancholdings, Inc.

are investment holding companies.

CTCLIC, which is a joint venture with another financial institution, acts as a reinsurer of credit life, accident and health insurance policies sold by S&T Bank and the other institution.

2 unchanged sentences

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.

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

Accounting Policies

Our financial statements have been prepared in accordance with GAAP.

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the dates of the balance sheets and revenues and expenses for the periods then ended.

Our consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles, or GAAP.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosures of contingent assets and liabilities as of the dates of the balance sheets and revenues and expenses for the periods then ended.

Actual results could differ from those estimates.

20 unchanged sentences

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

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

After initial recognition, the accounting for a PCD 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.

1 unchanged sentence

Subsequent to the acquisition date, the methods utilized to estimate the required ACL for these loans is similar to the method used for originated loans.

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

Measurement of Credit Losses on Financial Instruments, the methods utilized to estimate the required allowance for loan losses, or ALL for acquired loans was similar to the method used for originated loans;

however, we recorded a provision for credit losses only when the required allowance exceeded the remaining fair value adjustment.

Acquired loans were considered impaired if there was evidence of credit deterioration since origination and if it was probable at time of acquisition that all contractually required payments would not be collected.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

We use fair value measurements when recording and disclosing certain financial assets and liabilities.

Debt securities, equity securities and derivative financial instruments are recorded at fair value on a recurring basis.

Additionally, from time to time, we may be required to record other assets at fair value on a nonrecurring basis, such as loans held for sale, individually assessed loans, other real estate owned, or OREO, and other repossessed assets, mortgage servicing rights, or MSRs, and certain other assets.

Available-for-sale debt securities, equity securities, trading securities held in a deferred compensation plan and derivative financial instruments are recorded at fair value on a recurring basis.

Additionally, from time to time, we may be required to record other assets at fair value on a nonrecurring basis, such as loans held for sale, individually assessed loans, OREO and other repossessed assets, mortgage servicing rights, or MSRs, and certain other assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date.

15 unchanged sentences

Recurring Basis

Debt Securities Available-for-Sale

Available-for-Sale Debt Securities

We obtain fair values for debt securities from a third-party pricing service which utilizes several sources for valuing fixed-income securities.

5 unchanged sentences

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 and extensive quality control programs.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Equity Securities

Marketable equity securities with quoted prices in active markets for identical assets are classified as Level 1.

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 in markets that are not active are classified as Level 2.

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 other noninterest income in our Consolidated Statements of Net Income.

Securities Held in a Deferred Compensation Plan 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.

1 unchanged sentence

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

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative Financial Instruments

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 use derivative instruments, including interest rate swaps that qualify as cash flow hedges, 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.

1 unchanged sentence

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.

We consider the impact of master netting agreements and collateral postings with our counterparties to determine the credit valuation adjustment.

Interest rate swaps 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.

2 unchanged sentences

Loans held for sale consist of 1-4 family residential loans originated for sale in the secondary market and, from time to time, certain loans transferred from the loan portfolio to loans held for sale, all of which are carried at the lower of cost or fair value.

The fair value of 1-4 family residential loans is based on the principal or most advantageous market currently offered for similar loans using observable market data.

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 marked to fair value are classified as Level 3.

The fair value of 1-4 family residential loans, when marked to fair value, is based on the principal or most advantageous market currently offered for similar loans using observable market data.

Loans held for sale marked to fair value are classified as Level 2 if the fair value is determined using a sales or market approach and Level 3 if the fair value is determined using an income approach.

Loans Individually Evaluated

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;

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.

Fair value is determined using either the loan’s observable market price or 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.

1 unchanged sentence

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.

If the fair value of loans individually evaluated is determined based on an independent market based appraisal less estimated costs to sell, it is classified as Level 2.

If the fair value of loans individually evaluated is determined using an internal valuation, it is classified as Level 3.

OREO and Other Repossessed Assets

4 unchanged sentences

Appraisals on OREO may be discounted based on our historical knowledge, changes in market conditions from the time of appraisal or other information available to us.

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

If the fair value for OREO is determined based on an independent market-based appraisal less estimated costs to sell or an executed sales agreement, it is classified as Level 2.

If the fair value for OREO is determined using an internal valuation, it is classified as Level 3.

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.

MSRs are reported using the amortization method and 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.

2 unchanged sentences

The valuation model includes significant unobservable inputs;

therefore, MSRs are classified as Level 3.

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.

therefore, MSRs are classified as Level 3 when marked to fair value.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments

In addition to financial instruments recorded at fair value in our financial statements, fair value accounting guidance requires disclosure of the fair value of all of an entity’s assets and liabilities that are considered financial instruments.

Fair value accounting guidance requires disclosure of the fair value of all of an entity’s assets and liabilities that are considered financial instruments.

The majority of our assets and liabilities are considered financial instruments.

9 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.

The valuation models include significant unobservable inputs;

therefore, loans are classified as Level 3.

The carrying amount of interest receivable approximates fair value.

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

5 unchanged sentences

The fair values disclosed for deposits without defined maturities (e.g., noninterest and interest-bearing demand, money market and savings accounts) are by definition equal to the amounts payable on demand.

Deposits without defined maturities are classified as Level 1.

The carrying amounts for variable rate, fixed-term time deposits approximate their fair values.

Estimated fair values for fixed rate and other time deposits are based on discounted cash flow analysis using interest rates currently offered for time deposits with similar terms.

Fixed rate and other time deposits are classified as Level 2.

The carrying amount of accrued interest approximates fair value.

1 unchanged sentence

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

Fair values are based on observable inputs in a secondary market;

therefore, these are classified as Level 2.

Long-Term Borrowings

1 unchanged sentence

The carrying amounts of variable rate long-term borrowings approximate their fair values.

Fair values are based on observable inputs in a secondary market;

therefore, these are classified as Level 2.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Junior Subordinated Debt Securities

1 unchanged sentence

therefore, the carrying values approximate their fair values.

Fair values are based on observable inputs in a secondary market;

therefore, these are classified as Level 2.

Collateral Payable

Collateral payable is cash that is received from counterparties as collateral for our interest rate swaps.

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

Cash and Cash Equivalents

3 unchanged sentences

A determination will be made on whether a decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors.

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

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

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.

2 unchanged sentences

Realized gains and losses on the sale of these securities are determined using the specific-identification method and are recorded within noninterest income in the Consolidated Statements of Net Income.

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

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

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.

6 unchanged sentences

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.

Loans are reported at the principal amount outstanding net of unearned income.

Unearned income consists of net deferred loan fees and costs and a discount or premium related to purchase accounting fair value adjustments.

We defer certain nonrefundable loan origination and commitment fees.

Accretion of discounts and amortization of premiums on loans are included in interest income in the Consolidated Statements of Net Income.

Loan origination fees and direct loan origination costs are deferred and amortized as an adjustment of loan yield over the respective lives of the loans without consideration of anticipated prepayments.

Loan origination fees and direct loan origination costs are deferred and amortized as an adjustment of loan yield over the lives of the loans without consideration of anticipated prepayments.

If a loan is paid off, the remaining unaccreted or unamortized net origination fees and costs are immediately recognized into income or expense.

Interest is accrued and interest income is recognized on loans as earned.

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

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

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.

Other multi-payment obligations with payments scheduled other than monthly are reported past due when one scheduled payment is due and unpaid for 30 days or more.

Other multi-payment obligations with payments scheduled other than monthly are reported past due when one scheduled payment is due and unpaid for 30 days

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Generally, consumer loans are charged off against the ACL upon the loan reaching 90 days past due.

Commercial loans are charged off as management becomes aware of facts and circumstances that raise doubt as to the collectability of all or a portion of the principal and when we believe a confirmed loss exists.

Nonaccrual or Nonperforming Loans

Nonaccrual Loans

We stop accruing interest on a loan when the borrower’s payment is 90 days past due.

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Troubled Debt Restructurings

Troubled debt restructurings, or TDRs, are loans where we, for economic or legal reasons related to a borrower’s financial difficulties, grant a concession to the borrower.

Troubled debt restructurings, or TDRs, are loans where we, for economic or legal reasons related to a borrower’s financial difficulties, grant a concession to the borrower that we would not otherwise consider.

We strive to identify borrowers with financial difficulty early and work with them to come to a mutual resolution to modify the terms of their loan before the loan reaches nonaccrual status.

These modified terms generally include extensions of maturity dates at a stated interest rate lower than the current market rate for a new loan with similar risk characteristics, reductions in contractual interest rates or principal deferment.

These modified terms generally include extensions of maturity dates at a stated interest rate lower than the current market rate for new debt with similar risk characteristics, reductions in contractual interest rates or principal deferment.

While unusual, there may be instances of principal forgiveness.

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Allowance for Credit Losses

The ACL is a valuation reserve established and maintained by charges against operating income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

The allowance for credit losses, ACL, is a valuation reserve established and maintained by charges against operating income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible.

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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.

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

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.

1) Commercial 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.

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After consideration of the historic loss calculation, 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.

Our reasonable and supportable forecast adjustment is based on the unemployment forecast and management judgment.

Our reasonable and supportable forecast is for a period of two years and is based on the unemployment forecast and management judgment.

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,

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.

A similar process is employed to calculate a reserve assigned to off-balance sheet commitments, specifically unfunded loan commitments and letters of credit, and any needed reserve is recorded in other liabilities.

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, other external factors and segment specific risks.

These modified

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

The ACL for individual loans begins with the use of normal credit review procedures to identify whether a loan no longer shares similar risk characteristics with other pooled loans and therefore, should be individually assessed.

We evaluate all commercial loans greater than $ 1.0 million that meet the following criteria:

1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) any commercial TDR, or any loan reasonably expected to become a TDR whether on accrual or nonaccrual status and 4) when it is determined by management that a loan does not share similar risk characteristics with other loans.

1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonaccrual loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) any commercial TDR, or any loan reasonably expected to become a TDR whether on accrual or nonaccrual status and 4) when it is determined by management that a loan does not share similar risk characteristics with other loans.

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

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

Allowance for Loan Losses

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

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

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 recognize leases on our Consolidated Balance Sheets as right-of-use, or ROU, assets and related lease liabilities.

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

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

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 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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of Net Income.

Lease and amortization expenses are included in occupancy expense and interest on finance lease liabilities is included in borrowings interest expense in our Consolidated Statements of Net Income.

Restricted Investment in Bank Stock

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

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

We do not currently use their membership products and services.

We acquired ACBB stock through various mergers of banks that were ACBB members.

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

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.

We have one reporting unit, Community Banking.

Existing goodwill relates to value inherent in the Community Banking reporting unit and that value is dependent upon our ability to provide quality, cost-effective services in the face of competition from other market participants.

This ability relies upon continuing investments in processing systems, the development of value-added service features and the ease of use of our services.

As such, goodwill value is supported ultimately by profitability that is driven by the volume of business transacted.

A decline in earnings as a result of a lack of growth or the inability to deliver cost-effective services over sustained periods can lead to impairment of goodwill, which could adversely impact our earnings in the period in which impairment occurs.

We have one reporting unit.

The carrying value of goodwill is tested annually for impairment each October 1st or more frequently if events and circumstances indicate that it may be impaired.

We test for impairment by comparing the fair value of our Community Banking reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

A qualitative assessment is performed to determine whether it is more likely than not that the reporting unit's fair value is less than it's carrying value.

We perform a quantitative impairment test only if we conclude that it is more likely than not that a reporting unit's fair value is less than the carrying amount.

Determining the fair value of a reporting unit is judgmental and involves the use of significant estimates and assumptions.

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No such events or changes in circumstances occurred during the years ended December 31, 2022 and 2021.

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.

Joint Ventures

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Qualified Affordable Housing

We have made investments directly in Low Income Housing Tax Credit, or LIHTC, partnerships formed with third parties.

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We use the cost method to account for these partnerships.

These investments are recorded in other assets on our balance sheet.

These investments are recorded in other assets in our Consolidated Balance Sheets.

Amortization expense is included in other noninterest expense in the Consolidated Statements of Net Income.

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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 noninterest income or expenses in the Consolidated Statements of Net Income.

Gains or losses realized upon disposition of these assets are recorded in other noninterest income or expense in the Consolidated Statements of Net Income depending on whether the net position is a gain or loss.

Mortgage Servicing 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

Interest Rate Swaps

In accordance with applicable accounting guidance for derivatives and hedging, all derivatives are recognized as either assets or liabilities on the balance sheet at fair value.

Derivatives are recognized as either assets or liabilities on the balance sheet at fair value.

All derivatives are evaluated at inception to determine whether it is a hedging or non-hedging activity.

The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Pursuant to our agreements with various financial institutions, we may receive collateral or may be required to post collateral based upon mark-to-market positions.

Beyond unsecured threshold levels, collateral in the form of cash or securities may be made available to counterparties of interest rate swap transactions.

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.

All derivative contracts with financial institutions may be executed only with counterparties approved by our Asset and Liability Committee, or ALCO, and derivatives with customers may only be executed with customers within credit exposure limits approved in accordance with our credit policy.

We have entered into agreements with counterparty financial institutions, which include master netting agreements that provide for the net settlement of all contracts with a single counterparty in the event of default.

We elect, however, to account for all derivatives with counterparty institutions on a gross basis.

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Interest Rate Swaps Designated as Hedging Instruments

As part of our interest rate risk management strategy, we use interest rate swaps to add stability to interest income and to manage exposure to interest rate movements.

Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for making variable rate payments over the life of the agreements without exchange of the underlying notional amount.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Hedge accounting generally provides for the earnings effect of the hedged forecasted transactions in a cash flow hedge.

As long as the cash flow hedge continues to qualify for hedge accounting, the entire change in the fair value of the hedging instrument is recognized in OCI, net of applicable taxes, and reclassified into interest income as interest payments are received.

Interest Rate Contracts with Customers

Interest rate swaps are contracts in which a series of interest rate flows (fixed and variable) are exchanged over a prescribed period.

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At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount.

The transaction allows our customer to effectively convert a variable rate loan to a fixed rate loan with us receiving a variable rate.

The transaction allows our customer to effectively convert a variable rate loan to a fixed rate loan, while we continue to receive a variable amount of interest on the loan.

These agreements could have floors or caps on the contracted interest rates.

Pursuant to our agreements with various financial institutions, we may receive collateral or may be required to post collateral based upon mark-to-market positions.

Beyond unsecured threshold levels, collateral in the form of cash or securities may be made available to counterparties of interest rate swap transactions.

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.

Interest rate swaps are considered derivatives but are not accounted for using hedge accounting.

Interest rate swaps with customers and the corresponding offsetting interest rate swap with a financial institution are considered derivatives but are not accounted for using hedge accounting.

As such, changes in the estimated fair value of the derivatives are recorded in current earnings and included in other noninterest income in the Consolidated Statements of Net Income.

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As such, changes in the estimated fair value of the derivatives during the commitment period are recorded in current earnings and included in mortgage banking in the Consolidated Statements of Net Income.

Allowance for Unfunded Commitments

In the normal course of business, we offer off-balance sheet credit arrangements to enable our customers to meet their financing objectives.

These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements.

Our exposure to credit loss, in the event the customer does not satisfy the terms of the agreement, equals the contractual amount of the obligation less the value of any collateral.

We apply the same credit policies in making commitments and standby letters of credit that are used for the underwriting of loans to customers.

Commitments generally have fixed expiration dates, annual renewals or other termination clauses and may require payment of a fee.

Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The allowance for unfunded commitments is determined using a similar methodology as our ACL methodology except that we apply a probability to fund assumption.

The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.

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 Statements of Net Income.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Treasury Stock

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These costs are primarily salaries and employee benefits recognized as expense in the period incurred.

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Service charges on deposit accounts - We recognize monthly service charges for both commercial and personal banking customers based on account fee schedules.

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The fees are based on a fixed amount or a scale based on the level of services provided or amount of assets under management.

Other fee revenue - Other fee revenue includes a variety of other traditional banking services such as, electronic banking fees, letters of credit origination fees, wire transfer fees, money orders, treasury checks, checksale fees and transfer fees.

Our performance obligations are generally satisfied at a point in time and fee revenue is recognized when the services are provided or the transaction is settled.

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Stock-Based Compensation

Stock-based compensation includes restricted stock which is measured using the fair value method of accounting.

Stock-based compensation includes restricted stock awards and restricted stock units, which are measured using the fair value at the time of issuance.

The grant date fair value is recognized over the period during which the recipient is required to provide service in exchange for the award.

Compensation expense for time-based restricted stock is recognized ratably over the period of service, generally the entire vesting period, based on fair value on the grant date.

Compensation expense for performance-based restricted stock is recognized ratably over the remaining vesting period once the likelihood of meeting the performance measure is probable, based on the fair value on the grant date.

Compensation expense for time-based restricted stock is recognized ratably over the period of service based on fair value on the grant date.

Compensation expense for performance-based restricted stock is recognized ratably over the remaining vesting period if the likelihood of meeting the performance measure is probable, based on the fair value on the grant date.

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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We recognize in the Consolidated Balance Sheets an asset for the plan’s overfunded status or a liability for the plan’s underfunded status.

Gains or losses related to changes in benefit obligations or plan assets resulting from experience different from that assumed are recognized as other comprehensive income (loss) in the period in which they occur.

Gains or losses related to changes in benefit obligations or plan assets resulting from experience different from that assumed are recognized as OCI in the period in which they occur.

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.

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The plan was previously closed to new participants effective December 31, 2007.

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Marketing Costs

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Potentially dilutive common shares are related to restricted stock.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- continued

Recently Adopted Accounting Standards Updates, or ASU or Update

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

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

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Recently Adopted Accounting Standards Updates, or ASU or Updated

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

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The amendments provide optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks.

Modified contracts that meet certain scope guidance are eligible for relief from the modification accounting requirements in US GAAP.

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.

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

On November 30, 2019, we completed our acquisition of DNB Financial Corporation, or DNB, and DNB First National Association, its wholly-owned bank subsidiary, located in Downingtown, Pennsylvania.

The acquisition of DNB expanded our Eastern Pennsylvania market by adding 14 banking locations, in an all-stock transaction structured as a merger of DNB with and into S&T, with S&T being the surviving entity.

The related systems conversion of DNB into S&T Bank occurred on February 7, 2020.

DNB shareholders received, without interest, 1.22 shares of S&T common stock for each share of DNB common stock.

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 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.

Goodwill of $ 86.0 million at December 31, 2020 was calculated as the excess of the consideration exchanged over the fair value of the identifiable net assets acquired.

All of the goodwill was assigned to our Community Banking segment.

The goodwill recognized is not deductible for tax purposes.

Measurement period adjustments were $ 1.8 million as of November 30, 2020 which reflect facts and circumstances in existence as of the closing date of the acquisition.

These measurement period adjustments primarily related to a $ 2.4 million reduction in the fair value of loans, a $ 0.3 million reduction in the fair value of borrowings, a $ 0.1 million reduction of other liabilities, a $ 0.1 million reduction in other assets and a $ 0.3 million increase in deferred income tax assets.

The accounting for the acquisition was finalized on November 30, 2020.

BUSINESS COMBINATIONS - continued

The following table presents the fair value adjustments and the measurement period adjustments as of the dates presented:

November 30, 2019 November 30, 2020

As Recorded by DNB Fair Value Adjustments As Recorded by S&T Measurement Period Adjustments As Recorded by S&T

Fair Value of Assets Acquired

Cash and cash equivalents $ 64,119 $ — $ 64,119 $ — $ 64,119

Securities and other investments 108,715 183 108,898 — 108,898

Loans 917,127 ( 8,143 ) 908,984 ( 2,377 ) 906,607

Allowance for credit losses ( 6,487 ) 6,487 — — —

Goodwill 15,525 ( 15,525 ) — — —

Premises and equipment 6,782 8,090 14,872 — 14,872

Accrued interest receivable 4,138 — 4,138 — 4,138

Deferred income taxes 2,017 ( 3,298 ) ( 1,281 ) 311 ( 970 )

Core deposits and other intangible assets 269 ( 269 ) — — —

Other assets 24,883 ( 4,278 ) 20,605 ( 116 ) 20,489

Total Assets Acquired 1,137,088 ( 16,753 ) 1,120,335 ( 2,182 ) 1,118,153

Fair Value of Liabilities Assumed

Deposits 966,263 1,002 967,265 — 967,265

Borrowings 37,617 ( 276 ) 37,341 ( 257 ) 37,084

Accrued interest payable and other liabilities 11,157 ( 3,184 ) 7,973 ( 122 ) 7,851

Total Liabilities Assumed 1,015,037 ( 2,458 ) 1,012,579 ( 379 ) 1,012,200

Total Net Assets Acquired $ 122,051 $ ( 14,295 ) $ 107,756 $ ( 1,803 ) $ 105,953

Core Deposit Intangible Asset $ 7,288 $ — $ 7,288

Wealth Management Intangible Asset 1,772 — 1,772

Total Fair Value of Net Assets Acquired and Identified $ 116,816 $ ( 1,803 ) $ 115,013

Consideration Paid

Cash $ 360 $ — $ 360

Common stock 200,631 — 200,631

Fair Value of Total Consideration $ 200,991 $ — $ 200,991

Goodwill $ 84,175 $ 1,803 $ 85,978

Loans acquired in the Merger were recorded at fair value with no carryover of the related ACL from DNB.

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

The fair value of the loans acquired was estimated at $ 909.0 million, net of a $ 10.5 million discount.

The discount is accreted to interest income over the remaining contractual life of the loans.

During the measurement period ended November 30, 2020, the fair value of acquired loans was reduced by $ 2.4 million as we finalized our evaluation of the loan portfolio to reflect facts and circumstances in existence as of the acquisition date.

As of December 31, 2020, direct costs related to the DNB merger of $ 13.7 million were recognized and expensed as incurred.

During the year ended December 31, 2020, we recognized $ 2.3 million of merger related expenses including $ 0.2 million in legal and professional fees, $ 1.4 million in severance payments and stay-bonuses, $ 0.4 million for data processing and $ 0.3 million in other expenses.

As of December 31, 2019, we recognized $ 11.4 million of merger related expenses, including $ 4.7 million for data processing contract termination and system conversion costs, $ 2.8 million in legal and professional expenses, $ 3.4 million in severance payments and $ 0.5 million in other expenses.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Addendum (Topic 848) which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

The guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU No 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.

The amendments in this ASU defer the sunset date for applying the reference rate reform relief by two years to December 31, 2024.

We adopted ASU 2020-04 and ASU 2021-01 on January 1, 2022 and ASU 2022-06 upon issuance.

We are utilizing the LIBOR transition relief as contract modifications are made during the course of the reference rate reform transition period.

ASU 2020-04, ASU 2021-01 and ASU 2022-06 did not have a material impact on our consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

Financial Instruments Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the FASB issued ASU 2022-02, Financial Instruments Credit Losses (Topic 326):

Troubled Debt Restructuring and Vintage Disclosures.

The guidance eliminates the “once a TDR, always a TDR” requirement for loan disclosures and requires disclosures about the performance of modified loans to borrowers experiencing financial difficulty in the 12 months following the modification.

ASU 2022-02 eliminates the recognition and measurement guidance related to TDRs for creditors that have adopted ASC 326 Financial Instruments - Credit Losses.

We adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, on January 1, 2020.

The required accounting and disclosures for a loan modified in a TDR no longer provide decision-useful information.

ASC 326 requires the recognition of lifetime expected credit losses when a loan is originated or acquired, so the effect of credit losses that occur in loans modified in TDRs is already included in the ACL.

ASU 2022-02 requires a creditor to apply the loan refinancing and restructuring guidance in ASC 310-205 (consistent with the accounting for other loan modifications) to determine whether a modification results in a new loan or a continuation of an existing loan.

It also requires enhanced disclosures for modifications in the form of interest rate reductions, principal forgiveness, other-than-insignificant payment delays or term extensions (or combinations thereof) of loans made to borrowers experiencing financial difficulty.

Disclosures are required regardless of whether a modification of a loan to a borrower experiencing financial difficulty results in a new loan.

The objective of the disclosures is to provide information about the type and magnitude of modifications and the degree of their success in mitigating potential credit losses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods therein.

Early adoption is permitted, however, we have not elected to do so.

We have developed new reporting and processes in order to adhere to the new disclosure requirements.

We adopted this ASU, as of January 1, 2023, using a modified retrospective transition approach, which resulted in a cumulative effect adjustment being recorded to retained earnings related to the elimination of TDRs.

It did not have a material impact on our consolidated financial statements.

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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:

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 2022, 2021 and 2020 and therefore was used to determine earnings per share.

The following table reconciles the numerators and denominators of basic and diluted earnings per share calculations for the periods presented:

Years ended December 31,

(dollars in thousands, except share and per share data) 2022 2021 2020

Numerators for Earnings per Common Share—Basic and Diluted:

Numerator for Earnings per Share—Basic and Diluted:

Net income $ 135,520 $ 110,343 $ 21,040

Income allocated to participating shares 381 492 68

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

Denominators:

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

Net Income Allocated to Shareholders $ 135,139 $ 109,851 $ 20,972

Denominator for Earnings per Share—Basic and Diluted:

Weighted Average Shares Outstanding—Basic 38,988,174 39,050,241 39,070,439

Average participating shares outstanding 42,760 2,720 2,780

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

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

Denominator for Two-Class Method—Diluted:

39,030,934 39,052,961 39,073,219

Earnings per share—basic $ 3.47 $ 2.81 $ 0.54

Earnings per share—diluted $ 3.46 $ 2.81 $ 0.53

Restricted stock considered anti-dilutive excluded from potentially dilutive shares 12,654 793 1,242

FAIR VALUE MEASUREMENTS

The following tables present our assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level at December 31, 2022 and 2021.

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.

December 31, 2022

(dollars in thousands) Level 1 Level 2 Level 3 Total

Debt securities available-for-sale:

Available-for-sale debt securities:

Treasury securities $ 131,695 $ — $ — $ 131,695

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Obligations of states and political subdivisions — 30,471 — 30,471

Total Debt Securities Available-for-Sale 95,327 814,324 — 909,651

Total Available-for-Sale Debt Securities 131,695 870,089 — 1,001,784

Marketable equity securities 952 42 — 994

1,061 81 — 1,142

Total Securities 132,647 870,131 — 1,002,778

Securities held in a deferred compensation plan 10,230 — — 10,230

Trading securities held in a deferred compensation plan 8,087 — — 8,087

Derivative financial assets:

Interest rate swaps — 33,528 — 33,528

Interest rate swaps - commercial loans — 83,449 — 83,449

Interest rate lock commitments — — 5 5

Forward sale contracts — — 4 4

Forward sale contracts - mortgage loans — — 2 2

Total Assets $ 140,734 $ 953,580 $ 7 $ 1,094,321

Derivative financial liabilities:

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

Interest rate swaps - commercial loans $ — $ 83,449 $ — $ 83,449

Interest rate swaps - cash flow hedge — 21,368 — 21,368

Total Liabilities $ — $ 104,817 $ — $ 104,817

FAIR VALUE MEASUREMENTS -- continued

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

(dollars in thousands) Level 1 Level 2 Level 3 Total

Debt securities available-for-sale:

Available-for-sale debt securities:

Treasury securities $ 95,327 $ — $ — $ 95,327

9 unchanged sentences

Obligations of states and political subdivisions — 75,089 — 75,089

Total Debt Securities Available-for-Sale 10,282 760,111 — 770,393

Total Available-for-Sale Debt Securities 95,327 814,324 — 909,651

Marketable equity securities 1,061 81 — 1,142

Total Securities 96,388 814,405 — 910,793

Securities held in a deferred compensation plan 6,794 — — 6,794

Trading securities held in a deferred compensation plan 10,230 — — 10,230

Derivative financial assets:

Interest rate swaps — 78,319 — 78,319

Interest rate swaps - commercial loans — 33,528 — 33,528

Interest rate lock commitments — — 401 401

Forward sale contracts - mortgage loans — — 4 4

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

Derivative financial liabilities:

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

Forward sale contracts — 385 — 385

Interest rate swaps - commercial loans $ — $ 33,631 $ — $ 33,631

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

6 unchanged sentences

(dollars in thousands)

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

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

(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

Other real estate owned $ 3,060 Collateral method Discount rate 13.00 % 13.00 %

December 31, 2021 Valuation Technique Significant

Unobservable Inputs Range Weighted Average

(dollars in thousands)

Loans individually evaluated $ 64,286 Collateral method Appraisal adjustment 0 % - 12 % 7.70 %

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

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

(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.

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

Other real estate owned $ 1,011 Collateral method Appraisal adjustment - cost to sell 2.53 % 2.53 %

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying values and fair values of our financial instruments at December 31, 2022 and 2021 are presented in the following tables:

9 unchanged sentences

Mortgage servicing rights 7,147 9,994 — — 9,994

Interest rate swaps 33,528 33,528 — 33,528 —

Interest rate swaps - commercial loans 83,449 83,449 — 83,449 —

Interest rate lock commitments 5 5 — — 5

1 unchanged sentence

Deposits $ 7,219,970 $ 7,194,225 $ 6,285,377 $ 908,848 —

Securities sold under repurchase agreements 84,491 84,491 84,491 — —

Collateral payable 65,065 65,065 65,065 — —

Short-term borrowings 370,000 370,000 — 370,000 —

1 unchanged sentence

Junior subordinated debt securities 54,453 54,453 — 54,453 —

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

Interest rate swaps - commercial loans 83,449 83,449 — 83,449 —

Interest rate swaps - cash flow hedge 21,368 21,368 — 21,368 —

(1) As reported in the Consolidated Balance Sheets

FAIR VALUE MEASUREMENTS -- continued

Fair Value Measurements at December 31, 2021

5 unchanged sentences

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

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

Securities held in a deferred compensation plan 10,230 10,230 10,230 — —

Mortgage servicing rights 7,677 7,677 — — 7,677

Interest rate swaps 4,976 4,976 — — 4,976

Interest rate swaps - commercial loans 33,528 33,528 — 33,528 —

Interest rate lock commitments 401 401 — — 401

Forward sale contracts 2,900 2,900 — — 2,900

Forward sale contracts - mortgage loans 4 4 — — 4

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

Securities sold under repurchase agreements 84,491 84,491 84,491 — —

Short-term borrowings 75,000 75,000 75,000 — —

Long-term borrowings 22,430 22,678 — 22,678 —

Junior subordinated debt securities 54,393 54,393 — 54,393 —

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

Forward sale contracts 385 385 — 385 —

Interest rate swaps - commercial loans 33,631 33,631 — 33,631 —

(1) As reported in the Consolidated Balance Sheets

2 unchanged sentences

These reserves are maintained in the form of vault cash or as an interest-bearing balance with the Federal Reserve.

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 2020 to 2021 was due to the Federal Reserve reducing the reserve requirement ratio to zero percent effective March 26, 2020.

There were no required reserves for 2022 and 2021.

The Federal Reserve reduced the reserve requirement ratio to zero percent effective March 26, 2020.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DIVIDEND AND LOAN RESTRICTIONS

4 unchanged sentences

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 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.

Federal law prohibits us from borrowing from S&T Bank unless such loans are collateralized by specific obligations.

2 unchanged sentences

(dollars in thousands) 2022 2021

Debt securities available-for-sale $ 909,651 $ 770,393

Available-for-sale debt securities $ 1,001,784 $ 909,651

Marketable equity securities 994 1,142

Total Securities $ 1,002,778 $ 910,793

Debt Securities Available-for-Sale

The following tables present the amortized cost and fair value of debt securities available-for-sale as of December 31, 2021 and December 31, 2020:

Available-for-Sale Debt Securities

The following tables present the amortized cost and fair value of available-for-sale debt securities as of December 31, 2022 and December 31, 2021:

December 31, 2022 December 31, 2021

13 unchanged sentences

Obligations of states and political subdivisions 30,788 55 ( 372 ) 30,471 70,539 4,550 — 75,089

Total Debt Securities Available-for-Sale $ 900,235 $ 15,183 $ ( 5,767 ) $ 909,651 $ 737,005 $ 33,478 $ ( 90 ) $ 770,393

SECURITIES AVAILABLE-FOR-SALE -- continued

Total Available-for-Sale Debt Securities (1)

$ 1,104,105 $ 261 $ ( 102,582 ) $ 1,001,784 $ 900,235 $ 15,183 $ ( 5,767 ) $ 909,651

(1) Excludes interest receivable of $ 3.7 million at December 31, 2022 and $ 3.3 million at December 31, 2021.

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

The following table shows the composition of gross and net realized gains and losses for the periods presented:

3 unchanged sentences

Gross realized losses — — ( 77 )

Net Realized Gains/(Losses) $ 29 $ 142 $ ( 26 )

The following tables present the fair value and the age of gross unrealized losses on debt securities available-for-sale by investment category as of the dates presented:

Net Realized Gains $ 198 $ 29 $ 142

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the fair value and the age of gross unrealized losses on available-for-sale debt securities by investment category as of the dates presented:

December 31, 2022

10 unchanged sentences

Treasury securities 6 $ 57,057 $ ( 3,363 ) 8 $ 74,638 $ ( 10,358 ) 14 $ 131,695 $ ( 13,721 )

Obligations of U.S.

government corporations and agencies 6 41,811 ( 1,668 ) — — — 6 41,811 ( 1,668 )

Collateralized mortgage obligations of U.S.

5 unchanged sentences

Corporate Obligations — — — — — — — — —

Obligations of states and political subdivisions 2 20,127 ( 372 ) — — — 2 20,127 ( 372 )

Total 116 $ 663,656 $ ( 46,120 ) 31 $ 308,067 $ ( 56,462 ) 147 $ 971,723 $ ( 102,582 )

11 unchanged sentences

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

Obligations of U.S.

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

Collateralized mortgage obligations of U.S.

5 unchanged sentences

Corporate Obligations — — — — — — — — —

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

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

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

We do not believe any individual unrealized loss as of December 31, 2021 represents an impairment.

At December 31, 2021, there were 31 debt securities and at December 31, 2020 there were 3 debt securities in an unrealized loss position.

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

We do not believe any individual unrealized loss as of December 31, 2022 represents a credit impairment.

There were 147 debt securities in an unrealized loss position at December 31, 2022 and 31 debt securities in an unrealized loss position at December 31, 2021.

The unrealized losses on debt securities were primarily attributable to changes in interest rates and not related to the credit quality of the issuers.

All debt securities are determined to be investment grade and paying principal and interest according to the contractual terms of the security.

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.

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.

The following table presents net unrealized gains and losses, net of tax, on debt securities available-for-sale included in accumulated other comprehensive income/(loss), for the periods presented:

We do not intend to sell and it is more likely

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The following table presents net unrealized gains and losses, net of tax, on available-for-sale debt securities included in accumulated OCI, for the periods presented:

December 31, 2022 December 31, 2021

(dollars in thousands) Gross Unrealized Gains Gross Unrealized Losses Net Unrealized Gains (Losses) Gross Unrealized Gains Gross Unrealized Losses Net Unrealized Gains (Losses)

Total unrealized gains/(losses) on debt securities available-for-sale $ 15,183 $ ( 5,767 ) $ 9,416 $ 33,478 $ ( 90 ) $ 33,388

Total unrealized gains/(losses) on available-for-sale debt securities $ 261 $ ( 102,582 ) $ ( 102,321 ) $ 15,183 $ ( 5,767 ) $ 9,416

Income tax (expense) benefit ( 56 ) 21,915 21,859 ( 3,215 ) 1,221 ( 1,994 )

Net Unrealized Gains/(Losses), Net of Tax Included in Accumulated Other Comprehensive Income/(Loss) $ 205 $ ( 80,667 ) $ ( 80,462 ) $ 11,968 $ ( 4,546 ) $ 7,422

The amortized cost and fair value of debt securities available-for-sale at December 31, 2021 by contractual maturity are included in the table below.

The amortized cost and fair value of available-for-sale debt securities at December 31, 2022 by contractual maturity are included in the table below.

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.

9 unchanged sentences

Due after ten years 11,523 11,238

Debt Securities Available-for-Sale With Maturities 235,092 240,764

Available-for-Sale Debt Securities With Fixed Maturities 219,683 203,977

Collateralized mortgage obligations of U.S.

5 unchanged sentences

Corporate Obligations 500 500

Total Debt Securities Available-for-Sale $ 900,235 $ 909,651

At December 31, 2021 and 2020, debt securities with carrying values of $ 466.9 million and $ 308.3 million were pledged for various regulatory and legal requirements.

Marketable Equity Securities

The following table presents realized and unrealized net gains and losses for our marketable equity securities for the periods presented:

Years ended December 31,

(dollars in thousands) 2021 2020 2019

Marketable Equity Securities

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

Net gains recognized for equity securities sold 29 142 —

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

Total Available-for-Sale Debt Securities $ 1,104,105 $ 1,001,784

Debt securities are pledged in order to meet various regulatory and legal requirements.

Restricted pledged securities had a carrying value of $ 17.9 million at December 31, 2022 and $ 23.9 million at December 31, 2021.

Unrestricted pledged securities had a carrying value of $ 251.5 million at December 31, 2022 and $ 443.0 million at December 31, 2021.

Any changes to restricted pledged securities require approval of the pledge beneficiary.

Approval is not required for unrestricted pledged securities.

LOANS AND LOANS HELD FOR SALE

Loans are presented net of unearned income of $ 14.1 million and $ 16.0 million at December 31, 2021 and 2020 and net of a discount related to purchase accounting fair value adjustments of $ 6.7 million and $ 8.6 million at December 31, 2021 and December 31, 2020.

Loans are presented net of unearned income.

Unearned income consists of net deferred loan fees and costs of $ 7.5 million at December 31, 2022 and $ 14.1 million at December 31, 2021 and a discount related to purchase accounting fair value adjustments of $ 4.7 million at December 31, 2022 and $ 6.7 million at December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

Commercial construction 381,963 424,755

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

Business banking 1,205,944 1,135,693

Consumer real estate 1,421,953 1,127,585

Installment and other consumer 107,928 80,915

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

Other consumer 124,878 107,906

Total Portfolio loans $ 7,183,969 $ 6,999,990

4 unchanged sentences

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

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.

C&I, included $ 4.0 million of loans originated under the Paycheck Protection Program, or PPP, at December 31, 2022 compared to $ 88.3 million at December 31, 2021.

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

7 unchanged sentences

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.

When concentrations exist in certain segments, we mitigate this risk by reviewing the relevant economic indicators and internal risk rating trends and through stress testing of the loans in these segments.

Total commercial loans represented 77.2 percent of total portfolio loans at December 31, 2021 and 78.5 percent at December 31, 2020.

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.

LOANS AND LOANS HELD FOR SALE -- continued

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

The majority of our commercial and consumer loans are made to businesses and individuals in this geography, resulting in a concentration.

We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk.

The conditions of the local and regional economies are monitored closely through publicly available data and information supplied by our customers.

We also use subscription services for additional geographic and industry specific information.

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, 2021and December 31, 2020.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our TDRs as of the dates presented:

December 31, 2022 December 31, 2021

(dollars in thousands) Performing

TDRs Nonperforming

TDRs Performing

TDRs Nonperforming

(dollars in thousands) Accruing

TDRs Nonaccruing

TDRs Accruing

TDRs Nonaccruing

Commercial real estate $ — $ — $ — $ — $ 1,697 $ 1,697

5 unchanged sentences

Total $ 8,891 $ 2,894 $ 11,785 $ 9,921 $ 21,774 $ 31,695

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

There was one $ 0.2 million TDR returned to accruing status during 2022 compared to no TDRs returned to accruing status during 2021.

The following tables present the TDRs by portfolio segment and by type of concession for the years ended:

December 31, 2022

32 unchanged sentences

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

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.

The customer remains responsible for deferred payments along with any additional interest accrued during the deferral period.

For our consumer customers, interest does not accrue during the deferral period and the maturity date is extended by the length of the deferral period.

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

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

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

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

The customer remained responsible for deferred payments along with any additional interest accrued during the deferral period.

For our consumer customers, interest did not accrue during the deferral period and the maturity date was extended by the length of the deferral period.

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

The program ended January 1, 2022 and we had no loans modified at December 31, 2022, compared to eight loans that were modified totaling $ 28.8 million at December 31, 2021.

As of December 31, 2022, we had 16 commitments to lend an additional $ 0.4 million on TDRs compared to 12 commitments to lend an additional $ 2.6 million at December 31, 2021.

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 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.

There were no TDRs that defaulted during 2022 or 2021.

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

6 unchanged sentences

Total Nonperforming Assets $ 22,117 $ 79,604

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:

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 the dates presented:

(dollars in thousands) 2022 2021

Balance at beginning of year $ 6,157 $ 6,329

14 unchanged sentences

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

ALLOWANCE FOR CREDIT LOSSES - continued

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

9 unchanged sentences

Other Consumer —Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans.

This segment includes auto loans, unsecured loans and lines and credit cards.

This segment includes auto loans, unsecured loans and lines.

The primary source of repayment for these loans is the income and assets of the borrower.

1 unchanged sentence

The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

Management monitors various credit quality indicators for the commercial, business banking and consumer loan portfolios, including changes in risk ratings, nonperforming status and delinquency on a monthly basis.

Management monitors various credit quality indicators for the commercial, business banking and consumer loan portfolios, including changes in risk ratings, nonaccrual status and delinquency on a monthly basis.

We monitor the commercial loan portfolio through an internal risk rating system.

9 unchanged sentences

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

37 unchanged sentences

Total Other Consumer 20,054 10,819 5,427 3,270 1,034 724 82,125 1,425 124,878

Pass 1,271,177 1,177,280 581,879 677,616 406,053 1,313,942 1,348,200 23,596 6,799,743

Special Mention — 36,547 146 26,394 24,765 113,071 20,073 95 221,091

Substandard 587 280 4,519 21,507 18,941 101,043 13,244 2,982 163,103

Doubtful — — — — — 32 — — 32

Total Loan Balance $ 1,271,764 $ 1,214,107 $ 586,544 $ 725,517 $ 449,759 $ 1,528,088 $ 1,381,517 $ 26,673 $ 7,183,969

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

36 unchanged sentences

Total Other Consumer 20,059 9,448 7,261 3,093 1,021 6,444 57,903 2,677 107,906

Pass 1,379,856 768,961 879,574 576,166 370,013 1,361,826 1,209,363 24,964 6,570,723

Special Mention 150 151 42,832 10,312 41,574 88,094 9,047 111 192,271

Substandard 124 3,671 36,888 20,492 20,137 142,059 8,515 3,333 235,219

Doubtful — — 1,777 — — — — — 1,777

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Loans are considered nonperforming when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists.

The risk of loss is generally highest for nonperforming loans.

ALLOWANCE FOR CREDIT LOSSES - continued

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

Loans are considered nonaccrual when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists.

The risk of loss is generally highest for nonaccrual loans.

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

December 31, 2022

1 unchanged sentence

Commercial Real Estate

Performing $ 385,347 $ 317,359 $ 461,613 $ 332,482 $ 259,723 $ 865,567 $ 36,948 $ — $ 2,659,039

Nonperforming — 7,107 2,261 6,296 15,824 — — 31,488

Accrual $ 292,732 $ 360,423 $ 269,049 $ 449,493 $ 261,941 $ 876,435 $ 21,666 $ — $ 2,531,739

Nonaccrual — — — — — 7,100 — — 7,100

Total Commercial Real Estate 292,732 360,423 269,049 449,493 261,941 883,535 21,666 — 2,538,839

Commercial and Industrial

Performing 437,529 126,371 123,944 86,852 38,540 136,427 548,622 — 1,498,285

Nonperforming — — 10,473 60 2,882 43 1,780 — 15,239

Accrual 253,696 289,448 88,544 73,998 65,858 147,273 591,292 — 1,510,109

Nonaccrual — — — — 53 — 230 — 283

Total Commercial and Industrial 253,696 289,448 88,544 73,998 65,911 147,273 591,522 — 1,510,392

Commercial Construction

Performing 142,321 110,562 111,445 16,838 989 10,093 30,036 — 422,284

Nonperforming — — 2,087 — — 384 — — 2,471

Accrual 120,655 170,691 40,762 14,442 3,953 3,792 27,284 — 381,579

Nonaccrual — — — — — 384 — — 384

Total Commercial Construction 120,655 170,691 40,762 14,442 3,953 4,176 27,284 — 381,963

Business Banking

Performing 257,368 107,984 144,689 113,820 81,195 311,673 108,202 1,122 1,126,052

Nonperforming 41 64 287 1,408 694 7,062 28 57 9,641

Accrual 287,679 233,656 91,149 109,479 83,689 289,435 105,172 1,195 1,201,454

Nonaccrual — 67 — 252 1,200 2,776 99 96 4,490

Total Business Banking 287,679 233,723 91,149 109,731 84,889 292,211 105,271 1,291 1,205,944

Consumer Real Estate

Performing 137,465 100,253 91,689 49,853 39,657 234,297 443,238 23,839 1,120,291

Nonperforming — 742 476 303 727 4,165 168 713 7,294

Accrual 296,948 148,868 91,085 73,947 31,646 196,384 553,441 23,108 1,415,427

Nonaccrual — 135 528 636 385 3,785 208 849 6,526

Total Consumer Real Estate 296,948 149,003 91,613 74,583 32,031 200,169 553,649 23,957 1,421,953

Other Consumer

Performing 20,059 9,290 7,261 3,093 1,021 6,444 57,903 2,677 107,748

Nonperforming — 158 — — — — — — 158

Accrual 20,054 10,819 5,303 3,270 1,034 593 82,125 1,411 124,609

Nonaccrual — — 124 — — 131 — 14 269

Total Other Consumer 20,054 10,819 5,427 3,270 1,034 724 82,125 1,425 124,878

Performing 1,380,089 771,819 940,641 602,938 421,125 1,564,501 1,224,949 27,638 6,933,699

Nonperforming 41 964 20,430 4,032 10,599 27,478 1,976 770 66,291

Accrual 1,271,764 1,213,905 585,892 724,629 448,121 1,513,912 1,380,980 25,714 7,164,917

Nonaccrual — 202 652 888 1,638 14,176 537 959 19,052

Total Loan Balance $ 1,271,764 $ 1,214,107 $ 586,544 $ 725,517 $ 449,759 $ 1,528,088 $ 1,381,517 $ 26,673 $ 7,183,969

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

1 unchanged sentence

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

Accrual $ 385,347 $ 317,359 $ 461,613 $ 332,482 $ 259,723 $ 865,567 $ 36,948 $ — $ 2,659,039

Nonaccrual — 7,107 2,261 6,296 15,824 — — 31,488

Total Commercial Real Estate 385,347 317,359 468,720 334,743 266,019 881,391 36,948 — 2,690,528

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

Accrual 437,529 126,371 123,944 86,852 38,540 136,427 548,622 — 1,498,285

Nonaccrual — — 10,473 60 2,882 43 1,780 — 15,239

Total Commercial and Industrial 437,529 126,371 134,417 86,912 41,422 136,470 550,402 — 1,513,523

Commercial Construction

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

Nonperforming — — — — — 384 — — 384

Accrual 142,321 110,562 111,445 16,838 989 10,093 30,036 — 422,284

Nonaccrual — — 2,087 — — 384 — — 2,471

Total Commercial Construction 142,321 110,562 113,532 16,838 989 10,477 30,036 — 424,755

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

Accrual 257,368 107,984 144,689 113,820 81,195 311,673 108,202 1,122 1,126,052

Nonaccrual 41 64 287 1,408 694 7,062 28 57 9,641

Total Business Banking 257,409 108,048 144,976 115,228 81,889 318,735 108,230 1,179 1,135,693

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

Accrual 137,465 100,253 91,689 49,853 39,657 234,297 443,238 23,839 1,120,291

Nonaccrual — 742 476 303 727 4,165 168 713 7,294

Total Consumer Real Estate 137,465 100,995 92,165 50,156 40,384 238,462 443,406 24,552 1,127,585

Other Consumer

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

Nonperforming — — — — — 96 — — 96

Accrual 20,059 9,290 7,261 3,093 1,021 6,444 57,903 2,677 107,748

Nonaccrual — 158 — — — — — — 158

Total Other Consumer 20,059 9,448 7,261 3,093 1,021 6,444 57,903 2,677 107,906

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

Accrual 1,380,089 771,819 940,641 602,938 421,125 1,564,501 1,224,949 27,638 6,933,699

Nonaccrual 41 964 20,430 4,032 10,599 27,478 1,976 770 66,291

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

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 Non-

performing Total

Past Due Nonaccrual Total

Loans Total Loans

6 unchanged sentences

Total $ 7,144,576 $ 18,093 $ 2,248 $ 19,052 $ 39,393 $ 7,183,969

(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.

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

December 31, 2021 (1)

1 unchanged sentence

Past Due 60-89 Days

Past Due 90 Days + Past Due (1)

performing Total

Past Due Nonaccrual Total

Loans Total Loans

6 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 at December 31, 2020.

(1) We had eight loans that were modified totaling $ 28.8 million under the CARES act at December 31, 2021.

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:

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

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present loans on nonaccrual status by class of loan:

December 31, 2022

11 unchanged sentences

December 31, 2021 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)

(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

9 unchanged sentences

Type of Collateral

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

(dollars in thousands) Real Estate Blanket Lien Other

Commercial real estate $ 5,649 $ — $ —

6 unchanged sentences

Type of Collateral

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

(dollars in thousands) Real Estate Blanket Lien Other

Commercial real estate $ 28,046 $ — $ —

4 unchanged sentences

Total $ 34,456 $ 6,541 $ 10,473

ALLOWANCE FOR CREDIT LOSSES - continued

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

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present activity in the ACL for the periods presented:

Twelve Months Ended December 31, 2022

13 unchanged sentences

Balance at End of Period $ 41,428 $ 25,710 $ 6,264 $ 12,547 $ 12,105 $ 3,286 $ 101,340

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

Twelve Months Ended December 31, 2021

1 unchanged sentence

Real Estate Commercial and

Industrial (1)

Industrial Commercial

Construction Business Banking Consumer

3 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 (1)

4 unchanged sentences

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

(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.

(1) 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 $ 4.0 million of loans originated under the PPP at December 31, 2022 compared to $ 88.3 million at December 31, 2021.

The loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL to these loans at December 31, 2022.

ALLOWANCE FOR CREDIT LOSSES - continued

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

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

We have 47 lease contracts, including 45 operating leases and two finance leases at December 31, 2022.

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

Included in the lease expense for premises are leases with one S&T director, which totaled approximately $ 0.2 million for each of the three years 2022, 2021 and 2020.

No new lease agreements were entered into in 2022.

The following table presents our lease expense for finance and operating leases for the years ended December 31:

1 unchanged sentence

Operating lease expense $ 5,169 $ 5,135 $ 5,711

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

Amortization of ROU assets - finance leases 179 224 224

3 unchanged sentences

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

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

13 unchanged sentences

Finance leases 6.01 % 5.91 %

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, 2022:

10 unchanged sentences

Lease Liabilities $ 1,039 $ 49,697 $ 50,736

ALLOWANCE FOR CREDIT LOSSES - continued

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PREMISES AND EQUIPMENT

8 unchanged sentences

Total $ 49,285 $ 52,632

Certain banking facilities are leased under finance leases and are included in total premises and equipment.

We have one right-of-use asset for land in the amount of $ 0.1 million and two right-of use assets for buildings totaling $ 1.0 million.

Additional information relating to leased right-of-use assets is included in Note 10 Right-of-Use Assets and Lease Liabilities.

Depreciation expense related to premises and equipment was $ 6.4 million in 2022, $ 6.6 million in 2021 and $ 6.7 million in 2020.

ALLOWANCE FOR CREDIT LOSSES - continued

GOODWILL AND OTHER INTANGIBLE ASSETS

4 unchanged sentences

Balance at End of Year $ 373,424 $ 373,424

Goodwill represents the excess of the purchase price over the fair value of net assets acquired.

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.

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.

Based upon our qualitative assessment performed for our annual impairment analysis as of October 1, 2022, we concluded that goodwill was not impaired.

No events or circumstances since the October 1, 2022 annual impairment test were noted that would indicate goodwill was impaired at December 31, 2022.

The following table presents a summary of intangible assets as of the dates presented:

5 unchanged sentences

Intangible assets of $ 5.4 million at December 31, 2022 relate to core deposit and wealth management customer relationships resulting from acquisitions.

The $ 0.3 million addition during 2020 related to acquired wealth management customer relationships.

We determined the amount of identifiable intangible assets for our core deposits based upon an independent valuation.

2 unchanged sentences

Amortization expense on finite-lived intangible assets totaled $ 1.5 million, $ 1.8 million and $ 2.5 million for 2022, 2021 and 2020.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the expected amortization expense for finite-lived intangible assets, assuming no new additions, for each of the five years following December 31, 2022 and thereafter:

3 unchanged sentences

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following table indicates the amounts representing the value of derivative assets and derivative liabilities at December 31:

Derivatives (included in

Other Assets) Derivatives (included

in Other Liabilities)

(dollars in thousands) 2021 2020 2021 2020

The following table indicates the amounts representing the value of derivative assets and derivative liabilities for the dates presented:

Derivative Assets

(Included in Other Assets) Derivative Liabilities

(Included in Other Liabilities)

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

(dollars in thousands) Notional

Value Notional Amount Fair

Value Notional

Derivatives Designated as Hedging Instruments

Interest rate swap contracts - cash flow hedge $ — $ — $ — $ — $ 500,000 $ 21,368 $ — $ —

Total Derivatives Designated as Hedging Instruments $ — $ — $ — $ — $ 500,000 $ 21,368 $ — $ —

Derivatives Not Designated as Hedging Instruments

Interest rate swap contracts - commercial loans $ 976,707 $ 83,449 $ 1,017,178 $ 33,528 $ 976,707 $ 83,449 $ 1,017,178 $ 33,631

Fair value $ 33,528 $ 78,319 $ 33,631 $ 79,033

Notional amount 1,017,178 983,638 1,017,178 983,638

Collateral posted — — 37,360 77,930

Interest rate lock commitments - mortgage loans 126 5 12,148 401 — — — —

Fair value 401 2,900 — —

Notional amount 12,148 51,053 — —

Forward Sale Contracts—Mortgage Loans

Fair value 4 — — 385

Notional amount 8,436 — — 47,062

Presenting offsetting derivatives that are subject to legally enforceable netting arrangements with the same party is permitted.

For example, we may have a derivative asset and a derivative liability with the same counterparty to a swap transaction and are permitted to offset the asset position and the liability position resulting in a net presentation.

The following table indicates the gross amounts of commercial loan swap derivative assets and derivative liabilities, the amounts offset and the carrying values in the Consolidated Balance Sheets at December 31:

Forward sales contracts - mortgage loans 130 2 8,436 4 — — — —

Total Derivatives Not Designated as Hedging Instruments $ 976,963 $ 83,456 $ 1,037,762 $ 33,933 $ 976,707 $ 83,449 $ 1,017,178 $ 33,631

Total Derivatives $ 976,963 $ 83,456 $ 1,037,762 $ 33,933 $ 1,476,707 $ 104,817 $ 1,017,178 $ 33,631

The following table indicates the gross amounts of interest rate swap derivative assets and derivative liabilities, the amounts offset and the carrying values in the Consolidated Balance Sheets at the dates presented:

Derivatives (included

1 unchanged sentence

in Other Liabilities)

(dollars in thousands) 2021 2020 2021 2020

Derivatives not Designated as Hedging Instruments

(dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Gross amounts recognized $ 83,449 $ 33,528 $ 104,817 $ 33,631

1 unchanged sentence

Net amounts presented in the Consolidated Balance Sheets 83,449 33,528 104,817 33,631

Gross amounts not offset (1)

Netting adjustments (1)

( 15,196 ) — ( 15,196 ) —

Cash collateral (2)

( 65,065 ) — ( 6,307 ) ( 33,631 )

Net Amount $ 3,188 $ 33,528 $ 83,314 $ —

(1) Amounts represent collateral posted for the periods presented.

The following table indicates the gain or loss recognized in income on derivatives for the years ended December 31:

(1) Netting adjustments represents the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

The application of the cash collateral cannot reduce the net derivative position below zero.

Therefore, excess cash collateral, if any, is not reflected above.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the effect of the cash flow hedges on OCI and on the Consolidated Statements of Comprehensive Income for the twelve month periods presented:

Amount of Loss Recognized in Other Comprehensive Income (Loss) Amount of Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Interest Income

(dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Derivatives in Cash Flow Hedging Relationships:

Interest rate swap contracts - cash flow hedge $ ( 16,806 ) $ — $ ( 72 ) $ —

Total $ ( 16,806 ) $ — $ ( 72 ) $ —

Amounts reported in OCI related to derivatives that are designated as hedging instruments are reclassified to interest income as interest payments are received on variable rate assets.

During the next twelve months, we estimate that an additional $ 11.0 million will be reclassified as a decrease to interest income.

The following table indicates the gain or (loss) recognized in income on derivatives not designated as hedging instruments for the years ended December 31:

(dollars in thousands) 2022 2021 2020

3 unchanged sentences

Forward sale contracts—mortgage loans ( 2 ) 389 478

Total Derivative (Loss)/Gain $ ( 1,500 ) $ 1,447 $ ( 116 )

Total Derivatives (Loss) Gain $ ( 295 ) $ ( 1,500 ) $ 1,447

MORTGAGE SERVICING RIGHTS

8 unchanged sentences

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

6 unchanged sentences

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 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 $ 23.6 million at December 31, 2022 and $ 12.6 million at December 31, 2021.

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.

Amortization expense, included in other noninterest expense in the Consolidated Statements of Net Income was $ 1.4 million, $ 1.2 million and $ 3.2 million for the twelve months ended December 31, 2022, 2021 and 2020.

The amortization expense was offset by tax credits of $ 1.2 million, $ 2.0 million and $ 2.2 million for the twelve months ended

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022, 2021 and 2020 as a reduction to our federal tax provision.

In 2022, we entered into three new qualified affordable housing projects and committed to a total investment of $ 20.1 million for these new projects.

As of December 31, 2022, $ 4.4 million of funds were invested into these new projects.

No amortization expense or tax credits will be recognized for these new projects until complete.

17 unchanged sentences

SHORT-TERM BORROWINGS

Short-term borrowings are for terms under or equal to one year and are comprised of securities sold under REPOs and FHLB advances.

All REPOs are overnight short-term investments and are not insured by the Federal Deposit Insurance Corporation, or FDIC.

Securities pledged as collateral under these REPO financing arrangements cannot be sold or repledged by the secured party and, therefore, the REPOs are accounted for as secured borrowings.

Mortgage-backed securities with amortized cost of $ 86.3 million and carrying value of $ 88.4 million at December 31, 2021 and amortized cost of $ 65.1 million and carrying value of $ 68.4 million at December 31, 2020 were pledged as collateral for these secured transactions.

The pledged securities are held in safekeeping at the Federal Reserve.

Due to the overnight short-term nature of REPOs, potential risk due to a decline in the value of the pledged collateral is low.

Collateral pledging requirements with REPOs are monitored daily.

Short-term borrowings are for terms under or equal to one year and at December 31, 2022 are comprised of FHLB advances.

FHLB advances are for various terms and are secured by a blanket lien on residential mortgages and other real estate secured loans.

During 2022, we discontinued our REPO product.

All REPOs were overnight short-term investments not insured by the Federal Deposit Insurance Corporation, or FDIC.

During 2021, securities pledged as collateral under these REPO financing arrangements could not be sold or repledged by the secured party and, therefore, the REPOs were accounted for as secured borrowings.

Mortgage-backed securities with amortized cost of $ 86.3 million and carrying value of $ 88.4 million at December 31, 2021 were pledged as collateral for these secured transactions.

The pledged securities were held in safekeeping at the Federal Reserve.

Due to the overnight short-term nature of REPOs, potential risk due to a decline in the value of the pledged collateral was low.

Collateral pledging requirements with REPOs were monitored daily.

The following table presents the composition of short-term borrowings, the weighted average interest rate as of December 31 and interest expense for the years ended December 31:

9 unchanged sentences

Total Short-term Borrowings $ 370,000 4.49 % $ 1,685 $ 84,491 0.10 % $ 91 $ 140,163 0.22 % $ 1,603

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LONG-TERM BORROWINGS AND SUBORDINATED DEBT

43 unchanged sentences

Interest Rate at December 31, 2022 7.09 % 6.46 % 6.37 % 8.27 %

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have completed three private placements of trust preferred securities to financial institutions.

4 unchanged sentences

therefore, the Trusts qualify as variable interest entities, but are not consolidated into our financial statements.

The Trusts pays dividends on the securities at the same rate as the interest paid by us on the junior subordinated debt held by the Trusts.

The Trusts pay dividends on the securities at the same rate as the interest paid by us on the junior subordinated debt held by the Trusts.

DNB Capital Trust I and DNB Capital Trust II were acquired with the DNB merger.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, we offer off-balance sheet credit arrangements to enable our customers to meet their financing objectives.

These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements.

Our exposure to credit loss, in the event the customer does not satisfy the terms of the agreement, equals the contractual amount of the obligation less the value of any collateral.

We apply the same credit policies in making commitments and standby letters of credit that are used for the underwriting of loans to customers.

Commitments generally have fixed expiration dates, annual renewals or other termination clauses and may require payment of a fee.

Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

The following table sets forth our commitments and letters of credit as of the dates presented:

4 unchanged sentences

Allowance for Credit Losses on Unfunded Loan Commitments

We maintain an ACL on unfunded commercial and consumer lending commitments and letters of credit to provide for the risk of loss in these arrangements.

We maintain an allowance for credit losses on unfunded commercial and consumer lending commitments and letters of credit to provide for the risk of loss in these arrangements.

The activity in the unfunded loan commitments reserve is summarized as of the dates presented:

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

(dollars in thousands) 2022 2021

Balance at beginning of period $ 5,189 $ 4,467

Impact of adopting ASU 2016-13 at January 1, 2020 — 1,349

Balance after adoption of ASU 2016-13 4,467 4,461

Provision for credit losses 3,007 722

10 unchanged sentences

733,285 161,343 38,711 1,254 934,593

Securities sold under repurchase agreements (1)

84,491 — — — 84,491

Short-term borrowings (1)

370,000 — — — 370,000

Long-term borrowings (1)

2 unchanged sentences

— — — 54,453 54,453

Operating and capital leases 4,932 9,290 9,383 65,052 88,657

Operating and finance leases 5,053 9,984 9,587 60,837 85,461

Purchase obligations 32,555 62,656 53,190 — 148,401

1 unchanged sentence

(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.

Operating lease obligations represent lease arrangements as described in Note 10 Premises and Equipment, to the consolidated financial statements.

Purchase obligations primarily represent obligations under agreement with our third-party data processing servicer, low income housing obligations and communications charges.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

29 unchanged sentences

The state tax provision is due to taxable business activities conducted at our loan production office in New York.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a reconciliation of the statutory tax rate to the effective tax rate for the years ended December 31:

1 unchanged sentence

Statutory tax rate 21.0 % 21.0 % 21.0 %

Low income housing tax credits ( 1.5 ) % ( 11.1 ) % ( 3.3 ) %

Tax-exempt interest ( 1.0 ) % ( 1.3 ) % ( 11.9 ) %

Low income housing tax credits ( 0.7 ) % ( 1.5 ) % ( 11.1 ) %

Bank owned life insurance ( 0.2 ) % ( 0.3 ) % ( 1.8 ) %

Merger related expenses — % — % 0.3 %

Other 0.7 % 0.8 % 3.8 %

3 unchanged sentences

Deferred Tax Assets:

Allowance for credit losses $ 22,083 $ 26,051

Allowance for loan losses $ 23,383 $ 22,083

Net unrealized holding losses on securities available-for-sale 21,843 —

Lease liabilities 10,767 10,876

State net operating loss carryforwards 5,924 5,565

Net adjustment to funded status of pension 3,922 4,692

Net unrealized losses on interest rate swaps 4,562 —

Cumulative adjustment to funded status of pension 4,029 3,922

Low income housing partnerships 3,098 3,270

1 unchanged sentence

Other 3,842 3,973

Gross Deferred Tax Assets 53,122 57,444

Deferred Tax Assets 80,518 53,122

Valuation allowance ( 5,924 ) ( 5,565 )

2 unchanged sentences

Right-of-use lease assets ( 9,385 ) ( 9,603 )

Net unrealized gains on securities available-for-sale ( 2,004 ) ( 7,125 )

Deferred loan income ( 6,113 ) ( 6,697 )

2 unchanged sentences

Depreciation on premises and equipment ( 629 ) ( 1,107 )

Net unrealized holding gains on securities available-for-sale — ( 2,004 )

Other ( 922 ) ( 1,466 )

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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 2021 and in 2020 related to Pennsylvania income tax NOLs.

Gross deferred tax assets were reduced by a valuation allowance of $ 5.9 million in 2022 compared to $ 5.6 million in 2021 related to Pennsylvania income tax NOLs.

The Pennsylvania NOL carryforwards total $ 59.3 million and will expire in the years 2022-2042.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unrecognized Tax Benefits

10 unchanged sentences

however, tax audit examinations are possible.

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.

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 Benefit (Expense) Net of Tax

Net change in unrealized gains on debt securities available-for sale $ ( 23,972 ) $ 5,115 $ ( 18,857 )

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

Adjustment to funded status of employee benefit plans 3,561 ( 765 ) 2,796

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 — — —

Adjustment to funded status of employee benefit plans 3,549 ( 764 ) 2,785

Other Comprehensive Income $ 26,232 $ ( 5,591 ) $ 20,641

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 Income $ 14,537 $ ( 3,100 ) $ 11,437

As of December 31, 2022, all income tax returns filed for the tax years 2019 - 2021 remain subject to examination by the Internal Revenue Service and the New York State Department of Taxation and Finance.

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in the components of Accumulated Other Comprehensive Income for the periods presented:

Available-for-Sale Debt Securities Interest Rate Swaps Employee Benefit Plans Total

Balance at December 31, 2019 $ 8,428 $ — $ ( 20,098 ) $ ( 11,670 )

Net Change 17,856 — 2,785 20,641

Balance at December 31, 2020 $ 26,284 $ — $ ( 17,313 ) $ 8,971

Net Change ( 18,857 ) — 2,796 ( 16,061 )

Balance at December 31, 2021 $ 7,427 $ — $ ( 14,517 ) $ ( 7,090 )

Net Change ( 87,890 ) ( 16,806 ) ( 339 ) ( 105,035 )

Balance at December 31, 2022 $ ( 80,463 ) $ ( 16,806 ) $ ( 14,856 ) $ ( 112,125 )

All amounts are net of tax.

EMPLOYEE BENEFITS

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Contributions are intended to provide for benefits attributed to employee service to date and for those benefits expected to be earned in the future.

Our qualified and nonqualified defined benefit plans were amended to freeze benefit accruals for all persons entitled to benefits under the plan in 2016.

We will continue recording pension expense related to these plans, primarily representing interest costs on the accumulated benefit obligation and amortization of actuarial losses accumulated in the plan, as well as income from expected investment returns on pension assets.

Our qualified and nonqualified defined benefit plans, or Plans, were amended to freeze benefit accruals for all persons entitled to benefits under the Plans in 2016.

We will continue recording pension expense related to these plans, primarily representing interest costs on the accumulated benefit obligation and amortization of actuarial losses accumulated in the Plans, as well as income from expected investment returns on pension assets.

Since the Plans have been frozen, no service costs are included in net periodic pension expense.

The expected long-term rate of return on plan assets is 2.42 percent.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity in the benefit obligation and Plan assets deriving the funded status:

3 unchanged sentences

Interest cost 3,160 2,950

Actuarial gain/(loss) ( 2,136 ) 10,525

Actuarial gain ( 23,020 ) ( 2,136 )

Benefits paid ( 10,871 ) ( 14,223 )

2 unchanged sentences

Fair value of plan assets at beginning of year $ 107,525 $ 122,344

Actual return on plan assets ( 596 ) 15,731

Employer contributions — 115

Actual loss on plan assets ( 23,568 ) ( 596 )

Benefits paid ( 10,871 ) ( 14,223 )

1 unchanged sentence

Funded Status $ ( 280 ) $ 3,428

The following table sets forth the amounts recognized in accumulated other comprehensive income at December 31:

The following table sets forth the amounts recognized in accumulated OCI at December 31:

(dollars in thousands) 2022 2021

2 unchanged sentences

$ 19,409 $ 18,029

INCOME TAXES -- continued

Below are the actuarial weighted average assumptions used in determining the benefit obligation:

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Rate of compensation increase (1)

(1) Rate of compensation increase is not applicable for 2021 and 2020 due to the amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016.

(1) Rate of compensation increase is not applicable due to the plan amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016.

The following table summarizes the components of net periodic pension cost and other changes in Plan assets and benefit obligations recognized in other comprehensive loss for the years ended December 31:

3 unchanged sentences

Expected return on plan assets ( 3,158 ) ( 2,677 ) ( 3,925 )

Amortization of prior service credit - DNB merger — — 7

Recognized net actuarial loss 1,229 1,051 1,419

5 unchanged sentences

Settlement loss recognized ( 1,097 ) $ ( 1,629 ) ( 833 )

Recognized prior service credit — — —

Total (Before Tax Effects) $ ( 1,543 ) $ ( 3,534 ) $ 766

Total Changes in Plan Assets and Benefit Obligation Before Tax Effects $ 1,380 $ ( 1,543 ) $ ( 3,534 )

Total Recognized in Net Benefit Cost and Other Comprehensive Income/(Loss) (Before Tax Effects) $ 3,708 $ 1,410 $ ( 1,751 )

4 unchanged sentences

Expected return on assets 3.29 % 2.42 % 3.45 %

(1) Rate of compensation increase is not applicable for 2021, 2020, and 2019 due to the amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016.

(1) Rate of compensation increase is not applicable due to the plan amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accumulated benefit obligation for the Plan was $ 73.4 million at December 31, 2022 and $ 104.1 million at December 31, 2021.

10 unchanged sentences

2028 - 2032 28,021

We also have nonqualified supplemental executive pension plans, or SERPs, for certain key employees.

The SERPs are unfunded.

The projected benefit obligations related to the SERPs were $ 2.3 million and $ 5.6 million at December 31, 2021 and 2020.

These amounts also represent the net amount recognized in the statement of financial position for the SERPs.

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, $ 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.

The actuarial assumptions used for the SERPs are the same as those used for the Plan.

We maintain a Thrift Plan, a qualified defined contribution plan, in which substantially all employees are eligible to participate.

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 2021 and 2020 and $ 2.0 million in 2019.

Expense related to these contributions amounted to $ 2.5 million in 2022 and $ 2.4 million in 2021 and 2020.

Fair Value Measurements

22 unchanged sentences

It may also include convertible bonds.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

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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.

During 2022 and 2021, we granted 181,392 and 30,959 restricted stock awards of common stock under the 2021 Stock Plan.

During 2022, we did no t grant any shares under the 2014 stock plan.

In 2021 and 2020, we granted, 99,711 and 230,703 restricted shares of common stock under the 2014 Stock Plan.

7 unchanged sentences

Directors One year — — 23,153

Senior Management Three years 78,769 123,881 71,825

Other Awards Three years — 99,711 207,550

2 unchanged sentences

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 2022, 2021 and 2020, we recognized compensation expense of $ 3.2 million, $ 2.4 million and $ 0.7 million and realized a tax benefit of $ 0.7 million, $ 0.5 million and $ 0.2 million related to restricted stock grants.

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides information about restricted stock granted under the Plans for the years ended December 31:

13 unchanged sentences

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

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARENT COMPANY CONDENSED FINANCIAL INFORMATION

30 unchanged sentences

Net Income $ 135,520 $ 110,343 $ 21,040

EMPLOYEE BENEFITS -- continued

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS

6 unchanged sentences

Net Cash Provided by Operating Activities 58,445 58,887 56,178

INVESTING ACTIVITIES

Net investments in subsidiaries — — 176

Acquisitions — — ( 10 )

Net Cash Provided by Investing Activities — — 166

FINANCING ACTIVITIES

3 unchanged sentences

Cash dividends paid to common shareholders ( 46,952 ) ( 44,324 ) ( 43,949 )

Payment to repurchase of warrant — — —

Net Cash Used in Financing Activities ( 55,397 ) ( 54,703 ) ( 57,102 )

Net decrease in cash 4,184 ( 924 ) ( 1,360 )

Net increase (decrease) in cash 3,048 4,184 ( 924 )

Cash at beginning of year 10,769 6,585 7,509

8 unchanged sentences

Common equity tier 1 capital includes common stock and related surplus plus retained earnings, less goodwill and intangible assets subject to a limitation and certain deferred tax assets subject to a limitation.

In addition, we made a one-time permanent election to exclude accumulated other comprehensive income from capital.

In addition, we made a one-time permanent election to exclude accumulated OCI from capital.

For regulatory purposes, trust preferred securities totaling $ 29.0 million, issued by an unconsolidated trust subsidiary of S&T underlying junior subordinated debt, are included in Tier 1 capital for S&T.

3 unchanged sentences

As of December 31, 2022 and 2021, we met all capital adequacy requirements to which we are subject.

INCENTIVE AND RESTRICTED STOCK PLAN AND DIVIDEND REINVESTMENT PLAN -- continued

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes risk-based capital amounts and ratios for S&T and S&T Bank:

31 unchanged sentences

S&T Bank 961,762 13.45 % 571,931 8.00 % 714,913 10.00 %

S&T BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SHARE REPURCHASE PLAN

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.

On January 25, 2023, our Board of Directors authorized an extension of its $ 50 million share repurchase plan, which was set to expire March 31, 2023.

This authorization extended the expiration date of the repurchase plan through March 31, 2024.

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 plan permits S&T to repurchase shares up to the previously authorized $ 50 million in aggregate value of S&T's common stock 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.

2 unchanged sentences

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

The following table presents repurchase activity for the periods presented:

Twelve Months Ended December 31,

(in thousands, except share and per share data) 2022 2021

Value of shares authorized to repurchase $ 50,000 $ 50,000

Remaining plan capacity at the beginning of the period $ 37,442 $ 37,442

Total shares repurchased 268,503 —

Average share price for the period $ 28.44 $ —

Total cost of repurchases $ 7,637 $ —

Remaining plan capacity at the end of the period $ 29,805 $ 37,442

S&T BANCORP, INC.

AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of S&T Bancorp, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of net income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of net income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

1 unchanged sentence

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, 2022, 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 24, 2023 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

13 unchanged sentences

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

S&T BANCORP, INC.

AND SUBSIDIARIES

Allowance for Credit Losses (ACL)

Description of the Matter At December 31, 2022, the Company’s gross portfolio of loans was $7.2 billion with an associated ACL of $101.3 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.

As discussed in Notes 1 and 8 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.

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 an individual assessment of loans that do not share risk characteristics with other loans to determine if a specific reserve or a charge-off is appropriate.

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.

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.

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.

Judgment was required by management to determine the segment specific risk and the reasonable and supportable forecast, which are both part of the qualitative allowance.

Auditing the ACL involves a high degree of subjectivity due to the segment specific risk and the reasonable and supportable forecast, which are both part of the qualitative allowance.

Management’s identification and measurement of the segment specific risk and the reasonable and supportable forecast are 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 and the reasonable and supportable forecast, which are both part of the qualitative allowance and the reliability of the data utilized to support management’s assessment.

To test the segment specific risk and reasonable and supportable forecast, which are both part 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 and the reasonable and supportable forecast, which are both part 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.

3 unchanged sentences

February 24, 2023

S&T BANCORP, INC.

AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Opinion on Internal Control Over Financial Reporting

We have audited S&T Bancorp, Inc.’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) (the COSO criteria).

We have audited S&T Bancorp, Inc.

and subsidiaries’ internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, S&T Bancorp, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of net income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 24, 2023 expressed an unqualified opinion thereon.

18 unchanged sentences

February 24, 2023

S&T BANCORP, INC.

AND SUBSIDIARIES

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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