What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-03 compared with 2024-02-27 · 233 added, 242 removed, 676 unchanged (41% of the section changed)

13 unchanged sentences

changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL;

cyber-security concerns;

cybersecurity concerns;

rapid technological developments and changes;

3 unchanged sentences

a change in spreads on interest-earning assets and interest-bearing liabilities;

any remaining uncertainties with the transition from LIBOR as a reference rate;

regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements;

13 unchanged sentences

an interruption or cessation of an important service by a third-party provider;

our ability to attract and retain talented executives and employees;

our ability to attract and retain talented executives and other employees;

general economic or business conditions, including the strength of regional economic conditions in our market area;

18 unchanged sentences

Certain policies are based, to a greater extent, on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally reported.

Our most significant accounting policies are presented in Note 1 Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report.

Our most significant accounting policies are presented in Note 1.

Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report.

These policies, along with the disclosures presented in the Notes to Consolidated Financial Statements, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined.

We view critical accounting policies to be those which are highly dependent on subjective or complex estimates, assumptions and judgments and where changes in those estimates and assumptions could have a significant impact on the consolidated financial statements.

Further, we view critical accounting estimates as those estimates made in accordance with

GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

We currently view the determination of the ACL and goodwill and other intangible assets to be critical accounting policies.

Further, we view critical accounting estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

We currently view the determination of the ACL and goodwill to be critical accounting policies.

We did not significantly change the manner in which we applied our critical accounting policies or developed related assumptions or estimates during 2024.

15 unchanged sentences

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

Goodwill and Other Intangible Assets

As a result of acquisitions, we have recorded goodwill and identifiable intangible assets in our Consolidated Balance Sheets.

As a result of acquisitions, we have recorded goodwill in our Consolidated Balance Sheets.

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

18 unchanged sentences

Recent Accounting Pronouncements and Developments

Note 1 Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements, which is included in Part II, Item 8 Financial Statements and Supplementary Data of this Report, discusses new accounting pronouncements that we have adopted and the expected impact of accounting pronouncements recently issued or proposed, but not yet required to be adopted.

Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements, which is included in Part II, Item 8 Financial Statements and Supplementary Data of this Report, discusses new accounting pronouncements that we have adopted and the expected impact of accounting pronouncements recently issued or proposed, but not yet required to be adopted.

Explanation of Use of Non-GAAP Financial Measures

8 unchanged sentences

(dollars in thousands) 2024 2023 2022

Interest and dividend income per Consolidated Statements of Net Income $ 477,901 $ 340,751 $ 289,262

Total Interest and Dividend Income

$ 515,872 $ 477,901 $ 340,751

taxable equivalent adjustment 2,706 2,550 2,052

Interest Income on an FTE Basis (Non-GAAP) $ 480,451 $ 342,803 $ 291,578

Interest and dividend income per Consolidated Statements of Net Income $ 477,901 $ 340,751 $ 289,262

Interest and Dividend Income on an FTE Basis (Non-GAAP)

$ 518,578 $ 480,451 $ 342,803

Total Interest and Dividend Income

$ 515,872 $ 477,901 $ 340,751

Interest expense (181,066) (128,491) (24,968)

Net Interest Income per Consolidated Statements of Net Income 349,410 315,783 276,112

Net Interest Income

334,806 349,410 315,783

taxable equivalent adjustment 2,706 2,550 2,052

11 unchanged sentences

Efficiency Ratio (Non-GAAP)

Noninterest expense per Consolidated Statements of Net Income $210,334 $196,746 $188,925

Net interest income per Consolidated Statements of Net Income

Noninterest expense $218,938 $210,334 $196,746

Net interest income

$334,806 $349,410 $315,783

3 unchanged sentences

337,512 351,960 317,835

Noninterest income per Consolidated Statements of Net Income

Noninterest income

49,083 57,620 58,259

net gains on sale of securities

net losses (gains) on sale of securities

7,938 — (198)

gain on Visa class B-1 exchange (3,492) — —

Net interest income (FTE) (non-GAAP) plus noninterest income

3 unchanged sentences

Return on average tangible shareholders' equity (non-GAAP) is a key profitability metric used by management to measure financial performance.

The following table provides a reconciliation of return on average tangible shareholders' equity (non-GAAP) by reconciling net income (GAAP) per the Consolidated Statements of Net Income to net income before amortization and intangibles and average shareholder's equity to average tangible shareholders' equity for the periods presented:

The following table provides a reconciliation of return on average tangible shareholders' equity (non-GAAP) by reconciling net income (GAAP) per the Consolidated Statements of Net Income to net income before amortization of intangibles and average shareholder's equity to average tangible shareholders' equity for the periods presented:

Years ended December 31,

17 unchanged sentences

We cultivate relationships rooted in trust, strengthened by going above and beyond and renewed with every interaction.

Our strategic priorities for 2024 and beyond will be focused on our deposit franchise, core profitability, asset quality and talent and engagement.

During the first quarter of 2023, the banking industry experienced significant volatility with several high-profile bank failures and industry wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding consumer confidence in the banking system.

Despite these negative industry developments, our liquidity position and balance sheet remain well-positioned.

We have a well-diversified deposit base with a balance mix of 56.4 percent personal, 34.1 percent business, 4.5 percent public funds and 5.0 percent brokered deposits at December 31, 2023.

We have total uninsured deposits of $2.3 billion, or 30 percent of our total deposit base.

At December 31, 2023, we had remaining borrowing availability of $4.1 billion, which includes $2.7 billion with the FHLB of Pittsburgh, $769.7 million from the Federal Reserve Borrower-in-Custody Program and $637.0 million from the Federal Reserve Bank Term Funding Program, or BTFP.

Furthermore, our capital remains strong with a Common Equity Tier 1 Ratio of 13.37 percent and a total capital ratio of 15.27 percent at December 31, 2023.

Our strategic priorities for 2025 and beyond will be focused on growing our deposit franchise, core profitability, asset quality and talent and engagement.

S&T BANCORP, INC.

1 unchanged sentence

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Year Ended December 31, 2023

Earnings Summary

9 unchanged sentences

(1) Reconciled to GAAP in the "Explanation of Use of Non-GAAP Financial Measures" section of this MD&A.

We earned record net income of $144.8 million for the second consecutive year, representing an increase of $9.3 million or 6.83 percent, compared to net income of $135.5 million in 2022.

Earnings per diluted share increased 8.1 percent to a record $3.74 in 2023 compared to $3.46 in 2022.

The increase in net income was primarily due to higher net interest income related to higher interest rates.

Return on average assets increased 8 basis points to 1.56 percent for 2023 compared to 1.48 percent for 2022.

Return on average shareholders' equity increased 33 basis points to 11.80 percent for 2023 compared to 11.47 percent for 2022.

Net interest income increased $33.6 million, or 10.65 percent, to $349.4 million compared to $315.8 million in 2022.

Interest and dividend income increased $137.2 million and interest expense increased $103.5 million compared to 2022.

The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 37 basis points to 4.13 percent compared to 3.76 percent in 2022.

The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2023 and an asset sensitive balance sheet.

We earned net income of $131.3 million for 2024 compared to net income of $144.8 million in 2023.

Diluted earnings per share, or EPS, was $3.41 in 2024 compared to $3.74 in 2023.

The decrease in both net income and EPS in 2024 can be attributed to declining interest rates, as compared to 2023 when we had record net income and EPS due to the impact of rising interest rates on our net income.

Net interest income decreased $14.6 million, or 4.18 percent, to $334.8 million in 2024 compared to $349.4 million in 2023.

Net interest income on an FTE basis (non-GAAP) decreased $14.4 million, or 4.11 percent, compared to 2023.

The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points to 3.82 percent in 2024 compared to 4.13 percent in 2023.

The decreases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to the impact of higher interest rates on total interest-bearing liabilities.

While higher interest rates positively impacted interest income and rates on interest-earning assets, it was more than offset by higher interest expense and rates on interest-bearing liabilities.

NIM is reconciled to net interest margin adjusted to an FTE basis (non-GAAP) above in the "Explanation of Use of Non-GAAP Financial Measures" section of this Management’s Discussion and Analysis, or MD&A.

The provision for credit losses increased $9.5 million to $17.9 million for 2023 compared to $8.4 million for 2022.

The increase in the provision for credit losses was mainly due to an increase in net charge-offs in 2023 and our qualitative reserve.

The provision for credit losses decreased $17.8 million to $0.1 million for 2024 compared to $17.9 million for 2023.

The significant decline in the provision for credit losses was mainly due to a lower level of ACL related to decreases in our criticized and classified loans and a decrease in net loan charge-offs.

Net loan charge-offs were $8.3 million, or 0.11 percent of average loans, in 2024 compared to $13.2 million, or 0.18 percent of average loans, in 2023.

Noninterest income was relatively consistent at $57.6 million compared to $58.3 million in 2022.

Mortgage banking income decreased $1.1 million due to a decline in loan sale activity caused by rising interest rates and a shift to holding originated mortgage loans on the balance sheet.

Various other customer fees were down compared to the prior year due to lower activity.

Offsetting these decreases was an increase of $2.5 million in other noninterest income primarily related to valuation adjustments and a $0.8 million increase in net gain on the sale of OREO partially offset by a $0.8 million decrease in fees on commercial loan swaps.

Noninterest expense increased $13.6 million to $210.3 million compared to $196.7 million in 2022.

Salaries and employee benefits increased $8.2 million primarily due to higher salaries related to inflationary wage pressure, the acquisition of new talent and a change in the valuation adjustment on a nonqualified benefit plan.

Loan-related expense increased $2.1 million primarily due to an increase in loan collection and legal expenses for the workout of criticized and classified loans.

Furniture, equipment and software expense increased $1.3 million due to new software implemented in 2023.

FDIC insurance increased $1.3 million due to a two basis point increase in the assessment rate.

The efficiency ratio (non-GAAP) for 2023 improved to 51.35 percent compared to 52.34 percent for 2022 due to higher revenue in 2023.

Noninterest income decreased $8.5 million to $49.1 million in 2024 compared to $57.6 million in 2023.

was mainly related to $7.9 million of realized losses in 2024 from the repositioning of securities into longer duration, higher-yielding securities.

Other noninterest income decreased $0.8 million in 2024 compared to 2023 primarily due to a $3.9 million gain on the sale of other real estate owned, or OREO, in 2023 compared to a gain of $3.5 million from the exchange offer for Visa Class B-1 common stock in 2024.

Noninterest expense increased $8.6 million to $218.9 million in 2024 compared to $210.3 million in 2023.

Salaries and employee benefits increased $10.5 million primarily due to higher salaries related to annual merit increases, the acquisition of new talent and higher incentives and medical costs.

Professional services and legal decreased $2.4 million primarily due to higher consulting expenses in 2023 compared to 2024.

Other noninterest expense decreased $3.2 million primarily due to the adoption of PAM and a $2.1 million decrease in loan collection and appraisal expense compared to 2023.

As a result of adopting PAM, amortization expense related to tax credit equity investments of $4.3 million is included in income tax expense for 2024 compared to $2.1 million included in other noninterest expense in 2023.

The efficiency ratio (non-GAAP) for 2024 was 55.99 percent compared to 51.35 percent for 2023.

A reconciliation of the efficiency ratio (non-GAAP) is provided above in the "Explanation of Use of Non-GAAP Financial Measures" section of this MD&A.

The provision for income taxes increased $0.6 million to $34.0 million in 2023 compared to $33.4 million in 2022.

The increase in our income tax provision was primarily due to a $9.9 million increase in pretax income in 2023 compared to 2022.

The effective tax rate decreased 0.8 percent to 19.0 percent in 2023 compared to 19.8 percent in 2022.

The decrease in the effective tax rate was primarily due to an increase in Low Income Housing Tax Credits, or LIHTCs, in 2023 compared to 2022.

Net Interest Income

Our principal source of revenue is net interest income.

Net interest income represents the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities.

Net interest income is affected by changes in the average balance of interest-earning assets and interest-bearing liabilities and changes in interest rates and

The provision for income taxes decreased $0.4 million to $33.6 million in 2024 compared to $34.0 million in 2023.

The decrease in our income tax provision was primarily due to a $14.0 million decrease in income before taxes in 2024 compared to 2023 partially offset by the adoption of PAM as explained above.

The effective tax rate increased to 20.4 percent in 2024 compared to 19.0 percent in 2023.

The increase in the effective tax rate was primarily due to the adoption of PAM.

S&T BANCORP, INC.

1 unchanged sentence

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Twelve Months Ended December 31, 2024 Compared to

Twelve Months Ended December 31, 2023

Net Interest Income

Our principal source of revenue is net interest income.

Net interest income represents the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities.

Net interest income is affected by changes in the average balance of interest-earning assets and interest-bearing liabilities and changes in interest rates and spreads.

The level and mix of interest-earning assets and interest-bearing liabilities is managed by our Asset and Liability Committee, or ALCO, in order to mitigate interest rate and liquidity risks of the balance sheet.

2 unchanged sentences

During 2022, we entered into interest rate swaps with a total notional amount of $500.0 million with original maturities ranging from three to five years.

There were no new interest rates swaps entered into in 2023.

There were no new interest rates swaps entered into in 2024 or 2023.

Our strategy is to reduce our exposure to variability in expected future cash flows related to interest payments on commercial loans that are currently indexed to the 1-month SOFR rate.

Interest rates have increased substantially in 2022 and 2023 resulting in an unrealized loss on the cash flow hedges of $11.6 million, which is reported in Other Comprehensive Income (Loss), or OCI, net of applicable taxes.

Interest rates increased substantially in 2022 and 2023 followed by decreases in 2024 resulting in an unrealized loss on the cash flow hedges of $7.5 million at December 31, 2024, which is reported in Other Comprehensive Income (Loss), or OCI, net of applicable taxes.

This is an improvement of $4.1 million compared to the $11.6 million unrealized loss at December 31, 2023.

Average Balance Sheet and Net Interest Income Analysis (FTE) (non-GAAP)

The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets and the average balances, interest and rates paid on interest-bearing liabilities for the periods presented:

The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets, and interest and rates paid on interest-bearing liabilities for the periods presented:

S&T BANCORP, INC.

29 unchanged sentences

Total Interest-bearing Deposits 5,467,452 159,411 2.92 % 4,844,964 92,836 1.92 % 4,942,970 19,907 0.40 %

Securities sold under repurchase agreements — — — % 35,836 36 0.10 % 69,964 79 0.11 %

Short-term borrowings 257,524 13,206 5.12 % 500,421 27,238 5.44 % 75,849 1,695 2.23 %

7 unchanged sentences

Total Liabilities and Shareholders' Equity $ 9,572,834 $ 9,276,256 $ 9,167,038

Net Interest Income (1)(2)

Net Interest Income (FTE) (non-GAAP) (1)(2)

$ 337,512 $ 351,960 $ 317,835

Net Interest Margin (1)(2)

Net Interest Margin (FTE) (non-GAAP) (1)(2)

3.82 % 4.13 % 3.76 %

2 unchanged sentences

(3) Nonaccruing loans are included in the daily average loan amounts outstanding.

Net interest income on an FTE basis (non-GAAP) increased $34.1 million, or 10.7 percent, compared to 2022.

The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 37 basis points to 4.13 percent compared to 3.76 percent in 2022.

The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2023.

Interest income on an FTE basis (non-GAAP) increased $137.6 million compared to 2022.

The increase in interest income on an FTE basis (non-GAAP) was primarily due to higher interest rates.

Average loan balances increased $326.3 million compared to 2022.

Net interest income on an FTE basis (non-GAAP) decreased $14.4 million, or 4.11 percent to $337.5 million in 2024 compared to $351.9 million in 2023.

The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points to 3.82 percent compared to 4.13 percent in 2023.

The decreases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to the impact of higher interest rates on total interest-bearing liabilities.

While higher interest rates positively impacted interest income and rates on interest-earning assets, it was more than offset by higher interest expense and rates on interest-bearing liabilities.

Strong customer deposit growth in 2024 has helped to improve our overall funding mix by reducing borrowings.

Interest income on an FTE basis (non-GAAP) increased $38.1 million to $518.6 million in 2024 compared to $480.5 million in 2023.

The increase in interest income on an FTE basis (non-GAAP) was primarily due to higher interest rates on interest earning assets.

The average yield on loan balances increased 20 basis points compared to 2023 due to higher interest rates.

Average interest-bearing deposits with banks decreased $236.4 million compared to 2022 due to declines in deposit balances and loan growth.

The average yield on interest-bearing deposits with banks increased 439 basis points compared to 2022 due to

Average loan balances increased $0.3 billion to $7.7 billion in 2024 compared to $7.4 billion in 2023.

Overall, the FTE rate (non-GAAP) on interest-earning assets increased 23 basis points compared to 2023.

S&T BANCORP, INC.

1 unchanged sentence

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

increased interest rates.

Overall, the FTE rate (non-GAAP) on interest-earning assets increased 158 basis points compared to 2022.

Interest expense increased $103.5 million compared to 2022.

The increase in interest expense was primarily due to higher interest rates and a shift in our funding mix to higher cost certificates of deposits and borrowings.

Average interest-bearing deposits decreased $98.0 million compared to 2022 due to the competitive market driven by rising interest rates.

The average rate paid on interest-bearing deposits increased 152 basis points due to higher interest rates.

Certificates of deposit increased $308.8 million compared to 2022.

The increase in certificates of deposits was primarily due to higher interest rates resulting in customers moving deposits to higher yield accounts.

Average borrowings increased $435.0 million compared to 2022 primarily due to decreased deposit balances and increased loans.

The average rate paid on borrowings increased 258 basis points compared to 2022 due to higher interest rates.

Overall, the cost of interest-bearing liabilities increased 185 basis points compared to 2022.

Interest expense increased $52.6 million to $181.1 million in 2024 compared to $128.5 million in 2023.

The increase in interest expense was primarily due to higher interest rates, a shift in our customer deposit mix to higher costing products and an increase in deposit balances.

Average interest-bearing deposits increased $0.7 billion to $5.5 billion in 2024, with $189.7 million of brokered deposits compared to $4.8 billion in 2023.

Average borrowings decreased $231.1 million to $353.2 million in 2024 compared to $584.3 in 2023 primarily due to an increase in deposits.

Overall, the cost of interest-bearing liabilities increased 75 basis points in 2024 compared to 2023.

The following table sets forth for the periods presented a summary of the changes in interest earned and interest paid resulting from changes in volume and changes in rates:

30 unchanged sentences

Total Interest-bearing Deposits 21,886 44,690 66,576 173 72,756 72,929

Securities sold under repurchase agreements (36) — (36) (38) (5) (43)

Short-term borrowings (13,221) (811) (14,032) 19,058 6,484 25,542

14 unchanged sentences

The provision for credit losses includes a provision for losses on loans and on unfunded commitments.

The provision for credit losses fluctuates based on changes in loan balances, risk ratings, net loan charge-offs/recoveries, the macro environment and our Current Expected Credit Loss, or CECL, forecast.

The provision for credit losses increased $9.5 million to $17.9 million for 2023 compared to $8.4 million for 2022.

The provision for credit losses included a reduction of $1.4 million for the reserve for unfunded commitments for 2023 compared to an increase of $3.0 million for 2022.

The increase in the provision for credit losses for 2023 compared to 2022 was primarily due to increases in net loan charge-offs and our qualitative reserve.

The provision for credit losses fluctuates based on changes in loan balances, loan risk ratings, net loan charge-offs/recoveries, the macro environment and our Current Expected Credit Loss, or CECL, forecast.

The provision for credit losses decreased $17.8 million to $0.1 million for 2024 compared to $17.9 million for 2023.

The decrease in the provision for credit losses was primarily due to a lower level of ACL and a decrease in net loan charge-offs.

The lower level of ACL was mainly related to improved asset quality, including a decrease in criticized and classified loans of $96.2 million, or 31.1 percent, during 2024.

Additionally, the provision for credit losses for the reserve for unfunded commitments was a negative $1.7 million for 2024 compared to a negative $1.4 million for 2023.

The decrease in the reserve for unfunded commitments for 2024 was primarily due to lower loss rates and fewer unused commitments in the construction portfolio.

Net loan charge-offs for 2024 were $8.3 million, or 0.11 percent of average loans, compared to $13.2 million, or 0.18 percent of average loans, for 2023.

Offsetting loan charge-offs during 2023 were $11.5 million of loan recoveries which included a $9.3 million recovery related to a 2020 customer fraud compared to $9.0 million of loan recoveries during 2022.

The increase in qualitative reserve was primarily due to deterioration in the CRE Price Index and our qualitative reserve capturing additional expected losses in commercial loans that are not included in the model.

Offsetting the increase in provision for credit losses during 2023 was a $4.4 million decrease in the provision for unfunded loan commitments primarily due to a decrease in loss rates and unused commitments in the construction portfolio.

Offsetting loan charge-offs of $24.6 million during 2023 was a $9.3 million recovery related to a 2020 customer fraud.

Refer to the "Credit Quality" section of this MD&A for further details.

1 unchanged sentence

Years Ended December 31,

Twelve Months Ended December 31,

(dollars in thousands) 2024 2023 $ Change % Change

Net gain on sale of securities $ — $ 198 $ (198) (100.0) %

Net loss on sale of securities $ (7,938) $ — $ (7,938) — %

Debit and credit card 18,263 18,248 15 0.1 %

1 unchanged sentence

Wealth management 12,259 12,186 73 0.6 %

Mortgage banking 1,164 2,215 (1,051) (47.4) %

Other noninterest income 10,226 10,993 (767) (7.0) %

Total Noninterest Income $ 49,083 $ 57,620 $ (8,537) (14.8) %

NM - not meaningful

Noninterest income decreased $8.5 million to $49.1 million compared to $57.6 million in 2023.

Mortgage banking income decreased $1.1 million due to a decline in loan sale activity caused by rising interest rates and a shift to holding originated mortgage loans on the balance sheet.

Debit and credit card income decreased by $0.8 million due to decreased customer activity.

Service charges on deposit accounts decreased by $0.6 million due to decreases in returned check and the elimination of non-sufficient funds, or NSF, fees.

Other noninterest income increased $2.5 million primarily related to a $3.3 million increase in the fair value of assets in a nonqualified benefit plan, which has a corresponding offset in salaries and benefits resulting in no impact to net income, and an increase in net gain on the sale of OREO of $0.8 million, partially offset by a $0.7 million decrease in the valuation of our commercial loan swaps and a $0.8 million decrease in fees on our commercial loan swaps.

The decrease was mainly related to $7.9 million of realized losses from the repositioning of securities into longer duration, higher-yielding securities.

Other noninterest income decreased $0.8 million primarily related to a gain of $3.9 million on the sale of OREO in 2023 compared to a $3.5 million gain from the exchange offer for Visa Class B-1 common stock in 2024.

Noninterest Expense

5 unchanged sentences

Furniture, equipment and software 13,559 12,912 647 5.0 %

Professional services and legal 7,823 8,318 (495) (6.0) %

Other taxes 6,813 6,620 193 2.9 %

Marketing 6,351 6,488 (137) (2.1) %

Other taxes 7,452 6,813 639 9.4 %

Professional services and legal 5,468 7,823 (2,355) (30.1) %

FDIC insurance 4,201 4,122 79 1.9 %

Loan-related expense 5,391 3,337 2,054 61.6 %

Other 25,305 28,463 (3,158) (11.1) %

1 unchanged sentence

Noninterest expense increased $8.6 million to $218.9 million compared to $210.3 million in 2023.

Salaries and employee benefits increased $8.2 million during 2023 primarily due to inflationary wage pressure, the acquisition of new talent, higher

Salaries and employee benefits increased $10.5 million during 2024 primarily due to annual merit increases, the acquisition of new talent and higher incentives and medical costs.

Data processing and information technology increased $2.1 million due to higher outsourced processing costs related to additional products and higher transaction volume.

Professional services and legal decreased $2.4 million due to higher consulting expense in 2023 compared to 2024.

Other noninterest expense decreased $3.2 million primarily due to the adoption of PAM and a $2.1 million decrease in loan collection and appraisal expense compared to 2023.

As a result of adopting PAM, amortization expense of $4.3 million related to tax credit equity investments is included in income tax expense for 2024 compared to $2.1 million included in noninterest expense in 2023.

S&T BANCORP, INC.

1 unchanged sentence

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

medical costs and an increase in the fair value of assets in a nonqualified benefit plan, partially offset by a decrease in incentives.

Loan-related expense increased $2.1 million primarily due to an increase in loan collection and legal expenses for the workout of criticized and classified loans.

Furniture, equipment and software expense increased $1.3 million mainly due to new software implemented in 2023.

FDIC insurance increased $1.3 million due to a two basis point increase in the assessment rate.

Provision for Income Taxes

The provision for income taxes increased $0.6 million to $34.0 million in 2023 compared to $33.4 million for 2022.

The increase in our income tax provision was primarily due to a $9.9 million increase in income before taxes in 2023 compared to 2022.

The effective tax rate, which is total tax expense as a percentage of income before taxes, decreased to 19.0 percent in 2023 compared to 19.8 percent in 2022.

The decrease in the effective tax rate was primarily due to an increase in LIHTCs in 2023 compared to 2022.

We have generated an annual effective tax rate that is less than the statutory rate of 21 percent due to benefits resulting from tax-exempt interest, excludable dividend income, tax-exempt income on Bank Owned Life Insurance, or BOLI, and tax benefits associated with LIHTCs.

The provision for income taxes decreased by $0.4 million to $33.6 million in 2024 compared to $34.0 million for 2023.

The decrease in our income tax provision was primarily due to a $14.0 million decrease in income before taxes in 2024 compared to 2023 partially offset by the adoption of PAM on January 1, 2024.

The effective tax rate, which is total tax expense as a percentage of income before taxes, increased to 20.4 percent in 2024 compared to 19.0 percent in 2023.

The increase in the effective tax rate in 2024 compared to 2023 was primarily due to the adoption of PAM.

Financial Condition as of December 31, 2024

Total assets increased $441.0 million to $9.6 billion at December 31, 2023 compared to $9.1 billion at December 31, 2022.

Total portfolio loans increased $469.4 million to $7.7 billion at December 31, 2023 compared to $7.2 billion at December 31, 2022.

The increase in loans is primarily related to consumer loan growth of $352.9 million with an increase in consumer real estate of $362.9 million compared to December 31, 2022.

The commercial loan portfolio increased $116.5 million at December 31, 2023 compared to December 31, 2022 due to an increase of $229.4 million in CRE loans offset by decreases of $76.9 million in C&I and $36.1 million in construction.

Securities remained relatively unchanged at $970.4 million at December 31, 2023 compared to $1.0 billion at December 31, 2022.

Total assets were $9.7 billion at December 31, 2024 compared to $9.6 billion at December 31, 2023.

Total portfolio loans increased $89.6 million, or 1.2 percent, to $7.7 billion at December 31, 2024 compared to December 31, 2023.

Loan growth was slow in 2024 due to higher interest rates and uncertainty in the macro environment and elevated loan-payoffs.

Loan growth improved in the fourth quarter of 2024, with expanding loan pipelines positioning us for better results in 2025.

Securities remained unchanged at $1.0 billion at December 31, 2024 and December 31, 2023.

The bond portfolio was in a net unrealized loss position of $71.7 million at December 31, 2024 compared to a net unrealized loss position of $82.0 million at December 31, 2023.

The decrease in the net unrealized loss portion of the bond portfolio of $20.3 million was due to a change in interest rates.

Our deposits increased $301.8 million to $7.5 billion at December 31, 2023 compared to $7.2 billion at December 31, 2022.

The increase related to the addition of $375.7 million of brokered deposits, including $200.7 million of brokered money market accounts and $175.0 million of brokered certificates of deposit.

Customer deposits decreased $73.9 million compared to the prior year with decreases in noninterest-bearing demand deposits of $366.8 million and savings of $168.0 million partially offset by an increase in certificates of deposit of $472.1 million.

Customer deposits decreased primarily due to lower commercial and consumer deposits due to the competitive pricing in this higher interest rate environment.

Additionally, noninterest-bearing demand decreased due to the shift into interest-bearing deposits as a result of the elevated interest rate environment.

Total borrowings increased $64.4 million to $503.6 million at December 31, 2023 compared to $439.2 million at December 31, 2022 primarily due to loan growth.

The improvement in the net unrealized loss position of $10.3 million was primarily due to realized losses of $7.9 million during 2024 as a result of repositioning $144.3 million of our securities portfolio into longer-duration, higher yielding securities.

Customer deposit growth continues to be strong, allowing for a reduction in higher costing borrowings and brokered deposits.

Total deposits increased $261.3 million with customer deposits increasing $411.7 million, or 5.8 percent, to $7.6 billion at December 31, 2024 compared to $7.1 billion at December 31, 2023.

Brokered deposits decreased $150.4 million, or 40.0 percent, to $225.3 million at December 31, 2024 compared to $375.7 million at December 31, 2023.

The increase in customer deposits is the result of our continued focus on our deposit franchise.

Total borrowings decreased $253.3 million, or 50.3 percent, to $250.3 million at December 31, 2024 compared to $503.6 million at December 31, 2023, primarily due to strong growth in customer deposits.

Total shareholders’ equity increased by $96.8 million to $1.4 billion at December 31, 2024 compared to $1.3 billion at December 31, 2023.

The increase was primarily due to net income of $144.8 million and other comprehensive income of $21.2 million, offset by dividends of $49.9 million and common stock repurchases of $20.0 million.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The increase was primarily due to net income of $131.3 million and other comprehensive income of $13.9 million offset by dividends of $51.1 million.

Securities Activity

The balances and average rates of our securities portfolio are presented below as of December 31:

2024 2023 2022

16 unchanged sentences

Securities are subject to market risks that could negatively affect the level of liquidity available to us.

Security purchases are subject to an investment policy approved annually by our Board of Directors and administered through ALCO and our treasury function.

Our securities portfolio represents 10.2 percent of total assets and is classified as available for sale.The portfolio primarily consists of structured agency backed fixed income securities with limited credit exposure.

Securities decreased $32.4 million to $970.4 million at December 31, 2023 compared to $1.0 billion at December 31, 2022.

Security purchases are subject to an

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

investment policy approved annually by our Board of Directors and administered through ALCO and our treasury function.

Our entire securities portfolio is classified as available for sale.

The portfolio primarily consists of structured agency-backed, fixed-income securities with limited credit exposure.

Total securities available for sale increased to $987.6 million at December 31, 2024 compared to $970.4 million at December 31, 2023.

At December 31, 2024, our bond portfolio was in a net unrealized loss position of $71.7 million compared to a net unrealized loss position of $82.0 million at December 31, 2023.

6 unchanged sentences

We did not recognize any impairment charges on our securities portfolio in 2024, 2023 or 2022.

The securities portfolio could generate impairments in future periods requiring realized losses to be reported.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We recognized $7.9 million of realized losses as a result of repositioning $144.3 million of our securities portfolio into longer duration, higher-yielding securities during 2024.

We sold shorter duration U.S.

Treasury securities and commercial mortgage-backed securities and purchased a mix of collateralized mortgage obligations, U.S.

Treasury securities and commercial mortgage-backed securities with a longer duration and higher yield.

The following table sets forth the maturities of securities at December 31, 2024 and the weighted average yields of such securities.

19 unchanged sentences

— — % 4,982 3.32 % 19,305 3.14 % — — % — — %

Corporate bonds — — % — — % — — % — — % — — %

Marketable equity securities — — % — — % — — % — — % 1,176 3.00 %

2 unchanged sentences

(1) Weighted-average yields are calculated on a taxable-equivalent basis using the federal statutory tax rate of 21 percent for 2024.

Lending Activity

The following table summarizes our loan portfolio as of December 31:

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Loan Composition

The following table summarizes our loan portfolio as of the dates presented:

2024 2023 2022 2021 2020

11 unchanged sentences

Other conditions, such as downturns in the borrower’s industry or the overall economic climate, can significantly impact the borrower’s ability to pay.

We maintain a General Lending Policy to control the quality of our loan portfolio.

We adhere to a General Lending Policy to maintain the quality of our loan portfolio.

The policy delegates the authority to extend loans under specific guidelines and underwriting standards.

4 unchanged sentences

Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised $3.7 billion, or 70.8 percent, of total commercial loans and 48.3 percent of total portfolio loans at December 31, 2024 compared to $3.7 billion, or 69.4 percent, of total commercial loans and 48.6 percent of total portfolio loans at December 31, 2023.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our multi-family and office segments are the most significant CRE and commercial construction concentrations for us.

The multi-family segment was $658.9 million, or 8.6 percent of total portfolio loans at December 31, 2023 compared to $568.3 million, or 7.9 percent at December 31, 2022.

Criticized and classified loans in the multi-family segment are minimal at only $7.4 million at December 31, 2023.

The office segment represents $516.5 million, or 6.7 percent of total portfolio loans at December 31, 2023 compared to $511.8 million, or 7.1 percent at December 31, 2022.

Criticized and classified loans in the office segment were only $11.6 million at December 31, 2023.

Approximately 85 percent of the office portfolio is located in non central business districts, or CBD, with the remaining 15 percent in CBD within our direct markets.

We completed a target review of the office portfolio in the third quarter of 2023 and did not identify any material credit risk.

Our multi-family and office segments are the most significant CRE and commercial construction concentrations within our portfolio.

Approximately 95 percent of multifamily and 91 percent of office CRE loans are located within our market area, which includes Pennsylvania and the contiguous states of Ohio, New York, West Virginia, New Jersey, Delaware and Maryland.

In the CRE segment, multi-family represented $640.1 million, or 8.3 percent of total portfolio loans, at December 31, 2024 compared to $569.4 million, or 7.4 percent, at December 31, 2023.

The average loan size of multifamily CRE is $1.1 million with an average loan to value of 58 percent at December 31, 2024 compared to an average loan size of $0.9 million with an average loan to value of 58 percent at December 31, 2023.

There were no special mention loans and $7.3 million of substandard loans in the multifamily CRE segment at December 31, 2024 compared to special mention loans of $3.8 million and substandard loans of $13.0 million at December 31, 2023.

There were no nonperforming multifamily loans at December 31, 2024 and December 31, 2023.

Office CRE was $453.3 million, or 5.9 percent of total portfolio loans, at December 31, 2024 compared to $480.5 million, or 6.3 percent, at December 31, 2023.

The average loan size of office CRE is $1.1 million with an average loan to value of 56 percent at December 31, 2024 compared to an average loan size of $1.1 million with an average loan to value of 55 percent at December 31, 2023.

Special mention loans in the office CRE segment were $18.4 million and substandard loans were $2.1 million at December 31, 2024 compared to special mention loans of $9.1 million and substandard loans of $2.5 million at December 31, 2023.

There were $0.6 million of nonperforming loans at December 31, 2024 and $0.5 million at December 31, 2023.

In addition, within the commercial construction segment, multifamily represented $72.8 million, or 0.9 percent of total portfolio loans, at December 31, 2024 compared to $119.0 million, or 1.6 percent, at December 31, 2023.

Commercial construction office was $17.2 million, or 0.2 percent of total portfolio loans, at December 31, 2024 compared to $36.0 million, or 0.5 percent, at December 31, 2023.

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

2 unchanged sentences

Our operating knowledge at the local and regional level is derived from our front-line connection to the customer and our understanding of their businesses.

We also have a portfolio management group that utilizes multiple data sources including customer information, publicly available data and subscription service data to assess risk on an on-going basis and strong overall risk management practices which help us understand and evaluate concentration risk.

Our CRE and commercial construction portfolios have exposure outside this geography of 3.9 percent of the combined portfolios and 1.9 percent of total portfolio loans at December 31, 2023.

This compares to 5.8 percent of the combined portfolios and 2.9 percent of total portfolio loans at December 31, 2022.

We also have a portfolio management group that utilizes multiple data sources including

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

customer information, publicly available data and subscription service data to assess risk on an on-going basis and strong overall risk management practices which help us understand and evaluate concentration risk.

Our CRE and commercial construction portfolios have exposure outside this geography of 3.9 percent of the combined portfolios and 1.9 percent of total portfolio loans at December 31, 2024 and 2023.

Total portfolio loans increased $89.6 million, or 1.2 percent, to $7.7 billion at December 31, 2024 compared to $7.7 billion at December 31, 2023.

As of December 31, 2023, 65.0 percent of our total loans were variable rate loans and 35.0 percent were fixed rate loans.

Commercial loans increased $116.5 million related to an increase of $229.4 million in CRE offset by decreases of $76.9 million in C&I and $36.1 million in commercial construction compared to December 31, 2022.

Our loan demand was influenced by the uncertain macroeconomic environment during 2023.

Consumer loans represent 29.9 percent of our total portfolio loans at December 31, 2023 and 27.0 percent at December 31, 2022.

Consumer loans increased $352.9 million compared to December 31, 2022 primarily due to an increase of $343.2 million in the residential real estate portfolio and $19.7 million in consumer construction.

Portfolio consumer real estate loans increased in 2023 based on a shift from mortgage loans sold to loans held in the portfolio on our balance sheet due to increased jumbo loans and the pricing of loans in the secondary market compared to December 31, 2022 .

As of December 31, 2024, 62.0 percent of our total loans were variable rate loans and 38.0 percent were fixed rate loans compared to 65.0 percent variable rate loans and 35.0 percent fixed rate loans at December 31, 2023.

Commercial loans decreased $81.7 million to $5.3 billion at December 31, 2024, related to decreases of $101.7 million in C&I and $10.4 million in commercial construction offset by an increase of $30.4 million in CRE compared to $5.4 billion at December 31, 2023.

The decrease in commercial loans was primarily driven by lower loan demand due to higher interest rates and uncertainty in the macro environment and elevated loan pay-offs which in part were strategic exits related to our criticized and classified loans.

Loan activity improved in the fourth quarter of 2024, with expanding loan pipelines positioning us for better growth in 2025.

Consumer loans represented 31.8 percent of our total portfolio loans at December 31, 2024 and 29.9 percent at December 31, 2023.

Consumer loans increased $171.3 million to $2.5 billion at December 31, 2024 compared to $2.3 billion at December 31, 2023 primarily due to an increase of $181.4 million in consumer real estate offset by a decrease of $10.1 million in consumer installment loans.

Beginning in 2022, we shifted from selling mortgages in the secondary market to holding mortgages in our portfolio.

We originate traditional fixed rate mortgage loans and adjustable rate mortgages with a maximum amortization term of 30 years.

5 unchanged sentences

We sell these loans in order to mitigate interest-rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing of the loans.

During 2023, our strategy changed whereby we held more mortgages on our balance sheet versus selling these loans in the secondary market.

Beginning in 2023, our strategy changed whereby we held more mortgages on our balance sheet versus selling these loans in the secondary market.

This shift in strategy was mainly due to loan pricing in the secondary market and the desire to reduce our variable rate loan exposure in this interest rate environment.

We continue to monitor this strategy and could shift back to selling more residential mortgages into the secondary market in future periods.

We sold $0.2 million of 1-4 family mortgages in 2023 and $28.6 million in 2022 to Fannie Mae.

Our servicing portfolio of mortgage loans that we had originated and sold into the secondary market was $707.8 million at December 31, 2023 compared to $772.9 million at December 31, 2022.

We also offer a variety of unsecured and secured consumer loan products.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We continue to monitor our strategy and may shift back to selling more residential mortgages into the secondary market in future periods.

At December 31, 2024, our servicing portfolio of mortgage loans that we originated and sold into the secondary market was $648.9 million at December 31, 2024 compared to $707.8 million at December 31, 2023.

The following table presents the maturity of commercial and consumer loans outstanding as of December 31, 2024:

14 unchanged sentences

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.

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

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

3 unchanged sentences

Total $ 2,452,405 $ 2,628,043

See Note 16 Commitments and Contingencies in Part II, Item 8.

Financial Statements and Supplementary Data of this Report for details on allowance for credit losses on unfunded commitments.

Commitments and Contingencies in Part II, Item 8.

Financial Statements and Supplementary Data of this Report for details on the allowance for credit losses on unfunded commitments.

Credit Quality

On a quarterly basis, a criticized asset meeting is held to monitor all special mention and substandard loans greater than $1.5 million and all business banking special mention and substandard loans greater than $0.5 million to establish action plans for these loans.

On a quarterly basis, criticized asset meetings are held to monitor all special mention and substandard loans greater than $1.5 million and all business banking special mention and substandard loans greater than $0.5 million to establish action plans for these loans.

These loans typically represent the highest risk of loss to us.

We monitor these loans through regular contact with the borrower, review of current financial information and other documentation, review of all loan or potential loan restructures or modifications and the regular re-evaluation of assets held as collateral.

Additional credit risk management practices include periodic review, at least annually, and updates of our lending policies and procedures to support sound underwriting practices and portfolio management through portfolio stress testing.

We have a portfolio monitoring group that performs an annual review of all commercial relationships greater than $1.5 million and a quarterly review of our Watch rated portfolio.

We also have a quarterly criticized asset meeting for the retail portfolio to review delinquent and nonaccrual loans as well as individual portfolio reviews such as unsecured, private banking and first payment default loans.

Additional credit risk management practices include periodic loan reviews, at least annually, and updates of our lending policies and procedures to support sound underwriting practices and portfolio management through portfolio stress testing.

We have a portfolio monitoring group that performs an annual review of all commercial and business banking relationships greater than $1.5 million and a quarterly review of our watch rated portfolio.

Business banking relationships less than $1.5 million are monitored through portfolio management software that identifies credit risk indicators.

1 unchanged sentence

The credit risk review function has the primary responsibility for assessing commercial credit administration and credit decision functions of consumer and mortgage underwriting, as well as providing input to the loan risk rating process.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Nonperforming assets, or NPAs, consist of nonaccrual loans and OREO.

8 unchanged sentences

Total Nonaccrual Loans 27,937 22,947

OREO 75 3,065

Total Nonperforming Assets $ 27,945 $ 23,022

1 unchanged sentence

Nonperforming assets as a percent of total loans plus OREO 0.36 % 0.30 %

Our policy is to place loans in all categories in nonaccrual status when collection of interest or principal is doubtful, or generally when interest or principal payments are 90 days or more past due.

Nonperforming assets increased $0.9 million, or 4.1 percent, resulting in a nonperforming assets to total loans plus OREO ratio of 0.30% at December 31, 2023 compared to 0.31% at December 31, 2022.

Nonaccrual loans increased $3.9 million, or 20.4 percent, to $22.9 million at December 31, 2023 compared to $19.1 million at December 31, 2022.

The decrease in OREO related to the sale of a commercial property that resulted in a gain on sale of OREO of $3.9 million, which is included in other noninterest income.

Our policy is to place loans in all categories in nonaccrual status when collection of interest or principal is doubtful or generally when interest or principal payments are 90 days or more past the contractual due date.

Nonaccrual loans remain low at $27.9 million at December 31, 2024 compared to $22.9 million at December 31, 2023.

The increase in nonaccrual loans was due to the addition of a $10.7 million commercial and industrial, or C&I, relationship during the three months ended December 31, 2024.

A specific reserve of $4.2 million was added for this relationship based on the uncertainty of timing surrounding the execution of the resolution strategy.

Partially offsetting the increase in nonaccrual loans were payoffs in our commercial construction and CRE portfolios.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following represents delinquency as of December 31:

18 unchanged sentences

We monitor delinquency on a monthly basis, including early-stage delinquencies of 30 to 89 days past due for early identification of potential problem loans.

Loans past due 90 days or more increased $3.9 million compared to December 31, 2022 and represented 0.30 percent of total loans at December 31, 2023.

Loans past due by 30 to 89 days decreased $5.2 million and represented 0.20 percent of total loans at December 31, 2023.

Allowance for Credit Losses

We maintain an ACL at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of a loan that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date.

We develop and document a systematic ACL methodology based on

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

the following portfolio segments:

We develop and document a systematic ACL methodology based on the following portfolio segments:

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

9 unchanged sentences

Unsecured loans are fully charged off and secured loans are charged down to the estimated fair value of the collateral less the cost to sell.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table presents activity in the ACL for each of the three years presented below:

21 unchanged sentences

Net loan charge-offs for 2024 were $8.3 million, or 0.11 percent of average loans, compared to $13.2 million, or 0.18 percent of average loans for 2023.

The most significant charge-offs during 2023 were for three C&I relationships totaling $16.9 million.

Offsetting loan charge-offs during 2023 were $11.5 million of loan recoveries, which included a $9.3 million recovery related to a 2020 customer fraud compared to $9.0 million of loan recoveries during 2022.

Offsetting loan charge-offs during 2024 were $3.9 million in recoveries compared to $11.5 million in recoveries in 2023, which included a $9.3 million recovery related to a 2020 customer fraud.

The following table summarizes net charge-offs as a percentage of average loans for the years presented:

8 unchanged sentences

Allowance for credit losses to total nonaccrual loans 363 % 471 % 532 %

Provision for credit losses as a percentage of net loan charge-offs 146 % 207 % 45 %

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is the ACL balance by portfolio segment as of December 31:

8 unchanged sentences

Total $ 101,494 100.0 % $ 107,966 100.0 %

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Significant to our ACL is a higher concentration of commercial loans.

4 unchanged sentences

The ACL was $101.5 million, or 1.31 percent of total portfolio loans, at December 31, 2024 compared to $108.0 million, or 1.41 percent of total portfolio loans, at December 31, 2023.

The increase in the ACL of $6.7 million was primarily due to a $7.7 million increase in our qualitative reserve mainly related to deterioration in the Commercial Real Estate Price Index and a higher C&I segment specific reserve which captures additional expected losses that are not included in the quantitative model.

Our quantitative reserve decreased $1.0 million primarily due to a reduction in criticized and classified loans mainly in our CRE healthcare and CRE hotel portfolios partially offset by higher C&I substandard loans and loan growth during 2023.

The decrease in the ACL of $6.5 million is related to improvement in our overall asset quality resulting in a $7.7 million decrease in our quantitative reserve and a $2.9 million decrease in our qualitative reserve.

The decrease in the quantitative reserve was primarily due to a $96.2 million, or 31.1 percent, reduction in our criticized and classified loans and the decrease in the qualitative reserve was primarily related to improvement in our healthcare portfolio along with improvement in various other risk factors within our qualitative reserve.

These decreases were offset by the addition of a $4.2 specific reserve for loans individually evaluated related to a C&I relationship that was downgraded to nonaccrual during the three months ended December 31, 2024.

Federal Home Loan Bank and Other Restricted Stock

11 unchanged sentences

Accordingly, we believe sufficient evidence exists to conclude that no impairment existed at December 31, 2024.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Deposits are our primary source of funds.

We have a well-diversified deposit base with a balance mix of 56.4 percent personal, 34.1 percent business, 4.5 percent public funds and 5.0 percent brokered at December 31, 2023.

The following table presents the mix of deposits as of the dates presented:

December 31, 2024 December 31, 2023

5 unchanged sentences

Total Deposits $ 7,783,117 100.0 % $ 7,521,769 100.0 % $ 261,348 3.5 %

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table presents the composition of deposits at December 31:

12 unchanged sentences

Total Deposits $ 7,783,117 $ 7,521,769 $ 261,348

We have a strong core deposit base with noninterest-bearing demand deposits representing 28.1 percent of total deposits at December 31, 2024 compared to 29.5 percent of total deposits at December 31, 2023.

Total deposits increased $261.3 million, or 3.5 percent, at December 31, 2024 compared to December 31, 2023.

Total customer deposits decreased $73.9 million from December 31, 2022 primarily due to lower commercial and consumer deposits due to the competitive pricing in this higher interest rate environment.

Additionally, noninterest-bearing demand decreased due to the shift into interest-bearing deposits as a result of the elevated interest rate environment.

Total brokered deposits increased $375.7 million from December 31, 2022.

Total customer deposits increased $411.7 million, or 5.8 percent, from December 31, 2023, as a result of our focus on our deposit franchise.

Total brokered deposits decreased $150.4 million from December 31, 2023 due to strong growth in customer deposits.

Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.

2 unchanged sentences

We have total uninsured deposits of $2.6 billion, or 33.5 percent of our total deposit base, compared to $2.3 billion, or 30.0 percent, at December 31, 2023.

Included in uninsured deposits is $296.0 million, or 4.0 percent of our total deposit base, of municipal deposits which are fully collateralized.

Included in uninsured deposits is $297.5 million of fully collateralized, municipal deposits, or 3.8 percent of our total deposit base.

The daily average balance of deposits and rates paid on deposits are summarized in the following table for the years ended December 31:

10 unchanged sentences

These primarily represent deposit relationships with local customers in our market area.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Maturities of CDs of $250,000 or more outstanding at December 31, 2024 are summarized as follows:

5 unchanged sentences

Total $ 479,244

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Borrowings are an additional source of funding for us.

Short-term borrowings are for terms under or equal to one year at December 31, 2024 and are comprised of FHLB Advances.

Long-term borrowings are for original terms greater than one year and are comprised of FHLB advances and finance leases.

Total borrowings decreased $253.3 million to $250.3 million at December 31, 2024 compared to $503.6 million at December 31, 2023, primarily due to strong growth in customer deposits.

(dollars in thousands) December 31, 2024 December 31, 2023 $ Change

3 unchanged sentences

Total Borrowings $ 250,314 $ 503,635 $ (253,321)

Borrowings are an additional source of funding for us.

Total borrowings increased $64.4 million to $503.6 million compared to $439.2 million at December 31, 2022 primarily due to loan growth.

Information pertaining to short-term borrowings is summarized in the table below for the years ended December 31, 2024 and December 31, 2023.

Short-Term Borrowings

(dollars in thousands) 2023 2022

(dollars in thousands) December 31, 2024 December 31, 2023

Balance at the period end $ 150,000 $ 415,000

5 unchanged sentences

Long-Term Borrowings

(dollars in thousands) 2023 2022

(dollars in thousands) December 31, 2024 December 31, 2023

Balance at the period end $ 50,896 $ 39,277

4 unchanged sentences

Junior Subordinated Debt Securities

(dollars in thousands) 2023 2022

(dollars in thousands) December 31, 2024 December 31, 2023

Balance at the period end $ 49,418 $ 49,358

3 unchanged sentences

Average interest rate at the period end 6.96 % 7.98 %

In 2023, we redeemed $5.0 million of junior subordinated debt securities, along with $0.2 million in common equity issued by DNB Capital Trust I and held by us.

Wealth Management Assets

The fair value of the S&T Bank Wealth Management assets under administration, which are not accounted for as part of our assets, amounted to $2.0 billion at December 31, 2024 and $2.2 billion at December 31, 2023.

At December 31, 2024, assets under administration consisted of $0.7 billion in S&T Trust and $1.3 billion in S&T Financial Services.

S&T BANCORP, INC.

1 unchanged sentence

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Wealth Management Assets

The fair value of the S&T Bank Wealth Management assets under administration, which are not accounted for as part of our assets, remained unchanged at $2.2 billion at December 31, 2023 and December 31, 2022.

Assets under administration consisted of $1.0 billion in S&T Trust, $1.0 billion in S&T Financial Services and $0.2 billion in Stewart Capital Advisors.

Liquidity and Capital Resources

10 unchanged sentences

Although deposits are the primary source of funds, we have identified various other funding sources that can be used as part of our normal funding program.

Additional funding sources accessible to S&T include borrowing availability at the Federal Home Loan Bank of Pittsburgh, or FHLB, federal funds lines with other financial institutions and the brokered deposit market.

Additionally, S&T has borrowing availability through the Federal Reserve Borrower-in-Custody Program and the Federal Reserve BTFP.

In response to recent bank failures, the Federal Reserve authorized additional funding availability to eligible depository institutions through the BTFP.

The program is intended to help assure depositors that their institutions have an additional source of liquidity to meet their needs.

Under the BTFP, any collateral eligible for purchase by the Federal Reserve Banks in open market operations can be pledged including U.S.

Additional funding sources accessible to S&T include borrowing availability at the FHLB, federal funds lines with other financial institutions and the brokered deposit market.

We also have borrowing availability at the Federal Reserve Discount Window through the Borrower-in-Custody Program.

In response to the bank failures in March 2023, the Federal Reserve authorized additional funding availability to eligible depository institutions through the Federal Reserve Bank Term Funding Program, or BTFP.

The temporary program was intended to help assure depositors that their institutions have an additional source of liquidity to meet their needs.

Under the BTFP, any collateral eligible for purchase by the Federal Reserve Banks in open market operations could be pledged including U.S.

Treasury securities, U.S.

1 unchanged sentence

Agency mortgage-backed securities.

Collateral advances will be equal to 100 percent of the par value of the collateral pledged with a term of up to one year.

Collateral advances were equal to 100 percent of the par value of the collateral pledged with a term of up to one year.

Interest was charged at a fixed rate equal to the one-year overnight index swap rate plus 10 basis points with no prepayment penalty.

The rate on new advances, beginning on January 25, 2024, is set to be no lower than the interest rate on reserve balances in effect on the day the loan is made.

As of December 31, 2023, we have $637.0 million of collateral available to pledge under the program and no outstanding balance.

The Federal Reserve has announced that it is ending the BTFP and will cease making new loans under this program on March 11, 2024.

The BTFP ceased making new fundings on March 11, 2024.

Available borrowing capacity exceeds uninsured deposits of $2.6 billion at December 31, 2024 and $2.3 billion at December 31, 2023.

1 unchanged sentence

December 31, 2024 December 31, 2023

(dollars in thousands) Borrowing Capacity Balance Available Borrowing Capacity Balance Available

(dollars in thousands) Borrowing Capacity Balance (1)

Available Borrowing Capacity Balance Available

FHLB $ 1,980,615 $ 304,565 $ 1,676,050 $ 3,241,098 $ 552,136 $ 2,688,962

3 unchanged sentences

Total $ 3,976,104 $ 304,565 $ 3,671,539 $ 4,647,714 $ 552,136 $ 4,095,578

(1) Emergency lending program created by the Federal Reserve in March 2023.

At December 31, 2023, we had available borrowing capacity of $4.1 billion, of which $2.7 billion was remaining borrowing availability with the FHLB of Pittsburgh.

(1) FHLB balances include advances, letters of credit, interest due on advances and the credit enhancement obligation on mortgages sold to the FHLB.

(2) Emergency lending program created by the Federal Reserve in March 2023 which ceased making new fundings in March 2024.

At December 31, 2024, we had available borrowing capacity of $3.7 billion, $2.0 billion at the Federal Reserve and $1.7 billion at the FHLB of Pittsburgh.

In 2024, we strengthened our contingency funding position by shifting loan collateral from the FHLB of Pittsburgh to the Federal Reserve.

We believe that these funding sources will provide adequate resources to fund our short-term and long-term operating and financing needs.

2 unchanged sentences

In the normal course of business, we enter into various contractual obligations, which require future payments that could impact our liquidity and capital resources.

We also utilize interest rate swaps to add stability and manage exposure to interest rate movements, under which we are required to either receive cash from, or pay cash to, counterparties depending on changes

Derivative contracts are carried at fair value representing the net present value of expected future cash receipts or payments based on market rates as of the balance sheet date.

S&T BANCORP, INC.

1 unchanged sentence

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

in interest rates.

Derivative contracts are carried at fair value representing the net present value of expected future cash receipts or payments based on market rates as of the balance sheet date.

The following table summarizes our material contractual obligations as of December 31, 2024:

18 unchanged sentences

This resulted in a highly liquid assets to total assets ratio of 9.7 percent at December 31, 2024 compared to 9.4 percent at December 31, 2023.

Highly liquid assets have increased by $27.3 million when comparing December 31, 2023 to December 31, 2022.

The majority of the increase in liquid assets is attributed to increases in cash balances.

Refer to Note 12.

Qualified Affordable Housing, Note 13 Deposits, Note 14 Short Term Borrowings, Note 15 Long Term Borrowings and Subordinated Debt and Note 7 Right-Of-Use Assets and Lease Liabilities to the consolidated financial statements included in Part II, Item 8.

Tax Credit Equity Investments, Note 13.

Deposits, Note 14.

Short Term Borrowings, Note 15.

Long Term Borrowings and Subordinated Debt and Note 7.

Right-Of-Use Assets and Lease Liabilities to the consolidated financial statements included in Part II, Item 8.

Financial Statements and Supplementary Data and the Deposits and Borrowings section of this MD&A, for more details.

1 unchanged sentence

Shareholders’ equity increased $96.8 million, or 7.6 percent, to $1.4 billion at December 31, 2024 compared to $1.3 billion at December 31, 2023.

The increase was primarily due to net income of $144.8 million and other comprehensive income of $21.2 million, partially offset by dividends of $49.9 million and common stock repurchases of $20.0 million.

The increase was primarily due to net income of $131.3 million and other comprehensive income of $13.9 million, partially offset by dividends of $51.1 million.

The other comprehensive income was primarily due to a $8.2 million improvement in unrealized losses on our available-for-sale debt securities, net of tax and an improvement of $4.1 million in unrealized losses on our interest rate swaps, net of tax.

7 unchanged sentences

We adopted CECL effective January 1, 2020 and elected to implement the five-year transition.

In July 2013, the federal banking agencies issued a final rule to implement Basel III and the minimum leverage and risk-based capital requirements of the Dodd-Frank Act.

The rule requires a banking organization to maintain a capital conservation buffer composed of common equity tier 1 capital in an amount greater than 2.50 percent of total risk-weighted assets.

Banking organizations are required to maintain a capital conservation buffer composed of common equity tier 1 capital in an amount greater than 2.50 percent of total risk-weighted assets.

Banking organizations must maintain a common equity tier 1 risk-based capital ratio greater than 7.00 percent, a tier 1 risk-based capital ratio greater than 8.50 percent and a total risk-based capital ratio greater than 10.50 percent;

1 unchanged sentence

The minimum capital requirements plus the capital conservation buffer exceeds the regulatory capital ratios required for an insured depository institution to be well-capitalized under the FDIC's prompt corrective action framework.

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Federal regulators periodically propose amendments to the regulatory capital rules and the related regulatory framework and consider changes to the capital standards that could significantly increase the amount of capital needed to meet applicable standards.

1 unchanged sentence

We have filed a shelf registration statement on Form S-3 under the Securities Act of 1933 as amended, with the SEC, which allows for the issuance of a variety of securities including debt and capital securities, preferred and common stock and warrants.

We may use the proceeds from the sale of securities for general corporate purposes, which could include investments at the holding company level, investing in, or extending credit to subsidiaries, possible acquisitions and stock repurchases.

We may use the proceeds from the sale of securities for general corporate purposes, which could include investments

S&T BANCORP, INC.

AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

at the holding company level, investing in, or extending credit to subsidiaries, possible acquisitions and stock repurchases.

As of December 31, 2024, we had not issued any securities pursuant to the shelf registration statement.

1 unchanged sentence

Inflation can influence our asset growth, deposits, noninterest income and expense and credit quality.

As a result, we closely monitor the the rate of inflation in the economy.

As a result, we closely monitor the rate of inflation in the economy.

We do so by analyzing our capability to respond to changing interest rates and our ability to manage noninterest income and expense.

9 unchanged sentences

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 7. Management’s Discussion and Analysis