S&T BANCORP INC 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Financial Statements Consolidated Balance Sheets 51 Consolidated Statements of Net Income 52 Consolidated Statements of Comprehensive Income 53 Consolidated Statements of Changes in Shareholders’ Equity 54 Consolidated Statements of Cash Flows 55 Notes to Consolidated Financial Statements 57 Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID: 42 ) 103 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting 105 50 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (in thousands, except share and per share data) 2024 2023 ASSETS Cash and due from banks, including interest-bearing deposits of $ 175,606 and $ 160,802 at December 31, 2024 and December 31, 2023 $ 244,820 $ 233,612 Securities available for sale, at fair value 987,591 970,391 Loans held for sale — 153 Portfolio loans, net of unearned income 7,742,958 7,653,341 Allowance for credit losses ( 101,494 ) ( 107,966 ) Portfolio loans, net 7,641,464 7,545,375 Bank owned life insurance 85,012 84,008 Premises and equipment, net 45,033 49,006 Federal Home Loan Bank and other restricted stock, at cost 15,231 25,082 Goodwill 373,424 373,424 Other intangible assets, net 3,055 4,059 Other assets 262,342 266,416 Total Assets $ 9,657,972 $ 9,551,526 LIABILITIES Deposits: Noninterest-bearing demand $ 2,185,242 $ 2,221,942 Interest-bearing demand 812,768 825,787 Money market 2,040,285 1,941,842 Savings 877,859 950,546 Certificates of deposit 1,866,963 1,581,652 Total Deposits 7,783,117 7,521,769 Short-term borrowings 150,000 415,000 Long-term borrowings 50,896 39,277 Junior subordinated debt securities 49,418 49,358 Other liabilities 244,247 242,677 Total Liabilities 8,277,678 8,268,081 SHAREHOLDERS’ EQUITY Common stock ($ 2.50 par value) Authorized— 50,000,000 shares Issued— 41,449,444 shares at December 31, 2024 and December 31, 2023 Outstanding— 38,259,449 shares at December 31, 2024 and 38,232,806 shares at December 31, 2023 103,623 103,623 Additional paid-in capital 411,785 409,034 Retained earnings 1,039,035 959,604 Accumulated other comprehensive loss ( 76,992 ) ( 90,901 ) Treasury stock — 3,189,995 shares at December 31, 2024 and 3,216,638 shares at December 31, 2023, at cost ( 97,157 ) ( 97,915 ) Total Shareholders’ Equity 1,380,294 1,283,445 Total Liabilities and Shareholders’ Equity $ 9,657,972 $ 9,551,526 See Notes to Consolidated Financial Statements 51 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET INCOME Twelve Months Ended December 31, (dollars in thousands, except per share data) 2024 2023 2022 INTEREST AND DIVIDEND INCOME Loans, including fees $ 476,382 $ 443,124 $ 314,866 Investment Securities: Taxable 37,744 31,611 23,743 Tax-exempt 690 852 1,579 Dividends 1,056 2,314 563 Total Interest and Dividend Income 515,872 477,901 340,751 INTEREST EXPENSE Deposits 159,411 92,836 19,907 Borrowings, junior subordinated debt securities and other 21,655 35,655 5,061 Total Interest Expense 181,066 128,491 24,968 NET INTEREST INCOME 334,806 349,410 315,783 Provision for credit losses 133 17,892 8,366 Net Interest Income After Provision for Credit Losses 334,673 331,518 307,417 NONINTEREST INCOME Net (loss) gain on sale of securities ( 7,938 ) — 198 Debit and credit card 18,263 18,248 19,008 Service charges on deposit accounts 16,273 16,193 16,829 Wealth management 12,259 12,186 12,717 Other 10,226 10,993 9,507 Total Noninterest Income 49,083 57,620 58,259 NONINTEREST EXPENSE Salaries and employee benefits 121,990 111,462 103,221 Data processing and information technology 19,510 17,437 16,918 Occupancy 15,102 14,814 14,812 Furniture, equipment and software 13,559 12,912 11,606 Marketing 6,351 6,488 5,600 Other taxes 7,452 6,813 6,620 Professional services and legal 5,468 7,823 8,318 FDIC insurance 4,201 4,122 2,854 Other 25,305 28,463 26,797 Total Noninterest Expense 218,938 210,334 196,746 Income Before Taxes 164,818 178,804 168,930 Income tax expense 33,553 34,023 33,410 Net Income $ 131,265 $ 144,781 $ 135,520 Earnings per share—basic $ 3.43 $ 3.76 $ 3.47 Earnings per share—diluted $ 3.41 $ 3.74 $ 3.46 Dividends declared per share $ 1.33 $ 1.29 $ 1.20 See Notes to Consolidated Financial Statements 52 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, (dollars in thousands) 2024 2023 2022 Net Income $ 131,265 $ 144,781 $ 135,520 Available-for-Sale Debt Securities Net change in fair value of available-for-sale debt securities 2,328 20,317 ( 111,539 ) Tax effect ( 458 ) ( 4,407 ) 23,805 Net available-for-sale securities losses (gains) reclassified into earnings (1) 7,938 — ( 198 ) Tax effect ( 1,563 ) — 42 Net effect on other comprehensive income 8,245 15,910 ( 87,890 ) Interest Rate Swaps Net change in fair value of interest rate swaps ( 8,253 ) ( 5,753 ) ( 21,459 ) Tax effect 1,722 1,237 4,581 Net interest rate swap losses reclassified into earnings (2) 13,403 12,382 91 Tax effect ( 2,796 ) ( 2,662 ) ( 19 ) Net effect on other comprehensive income 4,076 5,204 ( 16,806 ) Employee Benefit Plans Adjustment to funded status of employee benefit plans 1,969 142 ( 2,526 ) Tax effect ( 381 ) ( 32 ) 608 Net employee benefit plan losses reclassified into earnings (3) — — 2,080 Tax effect — — ( 501 ) Net effect on other comprehensive income 1,588 110 ( 339 ) Other Comprehensive Income (Loss) 13,909 21,224 ( 105,035 ) Comprehensive Income $ 145,174 $ 166,005 $ 30,485 (1) Reclassification adjustments are comprised of realized security gains or losses. The realized gains or losses have been recorded in net (loss) gain on sale of securities in the Consolidated Statements of Net Income. (2) Reclassification adjustments have been recorded in loan 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 53 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (dollars in thousands, except share and per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Balance at January 1, 2022 $ 103,623 $ 403,095 $ 773,659 $ ( 7,090 ) $ ( 66,833 ) $ 1,206,454 Net income for the year ended December 31, 2022 — — 135,520 — — 135,520 Other comprehensive loss, net of tax — — — ( 105,035 ) — ( 105,035 ) Cash dividends declared ($ 1.20 per share) — — ( 47,023 ) — — ( 47,023 ) 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 Balance at December 31, 2022 $ 103,623 $ 406,283 $ 863,948 $ ( 112,125 ) $ ( 77,070 ) $ 1,184,659 Net income for the year ended December 31, 2023 — — 144,781 — — 144,781 Other comprehensive income, net of tax — — — 21,224 — 21,224 Impact of adoption of ASU 2022-02 — — ( 447 ) — — ( 447 ) Cash dividends declared ($ 1.29 per share) — — ( 49,850 ) — — ( 49,850 ) Treasury stock issued for restricted stock awards ( 36,166 shares) — ( 1,123 ) — — 1,123 — Forfeitures of restricted stock awards ( 63,667 shares) — — 1,172 — ( 1,970 ) ( 798 ) Repurchase of S&T stock ( 739,426 shares) — — — — ( 19,998 ) ( 19,998 ) Recognition of restricted stock compensation expense — 3,874 — — — 3,874 Balance at December 31, 2023 $ 103,623 $ 409,034 $ 959,604 $ ( 90,901 ) $ ( 97,915 ) $ 1,283,445 Net income for the year ended December 31, 2024 — — 131,265 — — 131,265 Other comprehensive income, net of tax — — — 13,909 — 13,909 Impact of adoption of ASU 2023-02 — — ( 1,002 ) — — ( 1,002 ) Cash dividends declared ($ 1.33 per share) — — ( 51,075 ) — — ( 51,075 ) Treasury stock issued for restricted stock awards ( 61,484 shares) — ( 1,871 ) — — 1,871 — Forfeitures of restricted stock awards ( 34,841 shares) — — 243 — ( 1,113 ) ( 870 ) Recognition of restricted stock compensation expense — 4,622 — — — 4,622 Balance at December 31, 2024 $ 103,623 $ 411,785 $ 1,039,035 $ ( 76,992 ) $ ( 97,157 ) $ 1,380,294 See Notes to Consolidated Financial Statements 54 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, (dollars in thousands) 2024 2023 2022 OPERATING ACTIVITIES Net income $ 131,265 $ 144,781 $ 135,520 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 133 17,892 8,366 Net depreciation, amortization and accretion 10,865 7,520 9,027 Net amortization of discounts and premiums on securities 2,837 4,666 6,062 Stock-based compensation expense 4,622 3,874 3,188 Loss (gain) on sale of securities 7,938 — ( 198 ) Deferred income taxes ( 296 ) 601 ( 2,932 ) Loss (gain) on sale of fixed assets 196 ( 100 ) 61 Gain on sale of loans, net ( 69 ) ( 81 ) ( 1,229 ) Loss (gain) on sale and fair value adjustments of other real estate owned, net 58 ( 3,898 ) ( 3,119 ) Proceeds from the sale of mortgage loans 4,552 3,839 38,583 Mortgage loans originated for sale ( 4,330 ) ( 3,895 ) ( 35,848 ) Net change in: Net decrease (increase) in interest receivable 2,703 ( 7,094 ) ( 10,033 ) Net increase in interest payable 4,998 17,763 2,901 Net (increase) decrease in other assets ( 1,732 ) 14,311 ( 24,628 ) Net increase (decrease) in other liabilities 9,627 ( 28,430 ) 114,804 Net Cash Provided by Operating Activities 173,367 171,749 240,525 INVESTING ACTIVITIES Purchases of securities ( 313,552 ) ( 99,583 ) ( 401,054 ) Proceeds from maturities, prepayments and calls of securities 159,606 147,710 160,830 Proceeds from sales of securities 136,401 — 30,490 Redemption (purchases) of Federal Home Loan Bank stock 9,851 ( 2,047 ) ( 13,515 ) Net increase in loans ( 106,239 ) ( 492,795 ) ( 192,403 ) Proceeds from sale of portfolio loans 8,923 11,641 8,024 Proceeds from sale of other real estate owned 131 7,051 12,529 Purchases of premises and equipment ( 2,994 ) ( 6,219 ) ( 3,863 ) Proceeds from the sale of premises and equipment 58 710 161 Proceeds from life insurance settlement 1,003 1,696 214 Net payments from cash flow hedge ( 11,480 ) ( 12,383 ) ( 91 ) Net Cash Used in Investing Activities ( 118,292 ) ( 444,219 ) ( 398,678 ) FINANCING ACTIVITIES Net decrease in demand, money market and savings deposits ( 23,963 ) ( 345,260 ) ( 623,076 ) Net increase (decrease) in certificates of deposit 285,321 647,111 ( 153,400 ) Net (decrease) increase in short-term borrowings ( 265,000 ) 45,000 285,509 Proceeds from long-term borrowings 50,000 25,000 — Repayments on long-term borrowings ( 38,381 ) ( 5,464 ) ( 7,689 ) Repurchase of shares for taxes on restricted stock ( 870 ) ( 798 ) ( 808 ) Cash dividends paid to common shareholders ( 50,974 ) ( 49,708 ) ( 46,952 ) Repurchase of common stock — ( 19,808 ) ( 7,637 ) Net Cash (Used in) Provided by Financing Activities ( 43,867 ) 296,073 ( 554,053 ) Net increase (decrease) in cash and due from banks 11,208 23,603 ( 712,206 ) Cash and due from banks at beginning of period 233,612 210,009 922,215 Cash and Due From Banks at End of Period $ 244,820 $ 233,612 $ 210,009 See Notes to Consolidated Financial Statements 55 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, (dollars in thousands) 2024 2023 2022 Supplemental Disclosures Right of use assets obtained in exchange for lease obligations $ 604 $ 2,009 $ — Cash paid for interest $ 176,068 $ 111,303 $ 22,068 Cash paid for income taxes, net of refunds $ 29,730 $ 36,886 $ 31,175 Transfers of loans to other real estate owned $ 122 $ 163 $ 23 See Notes to Consolidated Financial Statements 56 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. 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 four active direct wholly owned subsidiaries, S&T Bank, 9th Street Holdings, Inc., STBA Capital Trust I and DNB Capital Trust II, and owns 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: 9th Street Holdings, Inc.; S&T Bancholdings, Inc.; CTCLIC; S&T Insurance Group, LLC; Stewart Capital Advisors, LLC; and DN Acquisition Company, Inc. Our investment holding companies are 9th Street Holdings, Inc. and S&T Bancholdings, Inc. 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. S&T Insurance Group, LLC, through its subsidiaries, offers a variety of insurance products. Stewart Capital Advisors, LLC is a registered investment advisor that manages private investment accounts for individuals and institutions. DN Acquisition Company, Inc. 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 consolidated financial statements have been prepared in accordance with 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. Our significant accounting policies are described below. Principles of Consolidation The consolidated financial statements include the accounts of S&T and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Investments of 20 percent to 50 percent of the outstanding common stock of investees are accounted for using the equity method of accounting. Reclassification Amounts in prior years' financial statements and footnotes are reclassified whenever necessary to conform to the current period presentation. Reclassifications had no effect on our results of operations or financial condition. Business Combinations We account for business combinations using the acquisition method of accounting. All identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree are recognized and measured as of the acquisition date at fair value. We record goodwill for the excess of the purchase price over the fair value of net assets acquired. Results of operations of the acquired entities are included in the Consolidated Statements of Net Income from the date of acquisition. Acquired loans are recorded at fair value on the date of acquisition with no carryover of the related allowance for credit losses, or ACL. Determining the fair value of acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. In estimating the fair value of our acquired loans, we consider a number of factors including loss rates, internal risk rating, delinquency status, loan type, loan term, prepayment rates, recovery periods and the current interest rate environment. The premium or discount estimated through the loan fair value calculation is recognized into interest income on a level yield basis over the remaining life of the loans. Acquired loans, including those acquired in a business combination, are evaluated to determine if they have experienced more-than-insignificant deterioration in credit quality since origination. When the condition exists, these loans are referred to as purchased credit deteriorated, or PCD. An allowance is recognized for a PCD loan by adding it to the purchase price or fair value in a business combination. There is no provision for credit losses, or PCL, recognized upon acquisition of a PCD loan since the initial allowance is established through the purchase accounting. After initial recognition, the accounting for a PCD loan follows the credit loss model that applies to that type of asset. 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. An ACL is recorded with a corresponding charge to PCL. 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. 57 Table of Contents 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. 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, loans individually evaluated, 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. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. In determining fair value, we use various valuation approaches, including market, income and cost approaches. The fair value standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability, which are developed based on market data we have obtained from independent sources. Unobservable inputs reflect our estimates of assumptions that market participants would use in pricing an asset or liability, which are developed based on the best information available in the circumstances. The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1: valuation is based upon unadjusted quoted market prices for identical instruments traded in active markets. Level 2: valuation is based upon quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by market data. Level 3: valuation is derived from other valuation methodologies, including discounted cash flow models and similar techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in determining fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our policy is to recognize transfers between any of the fair value hierarchy levels at the end of the reporting period in which the transfer occurred. The following are descriptions of the valuation methodologies that we use for financial instruments recorded at fair value on either a recurring or nonrecurring basis. Recurring Basis 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. We validate prices received from our pricing service through comparison to a secondary pricing service and broker quotes. We review the methodologies of the pricing services which provide us with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of our debt securities. The fair value of U.S. treasury securities are based on quoted market prices in active markets and are classified as Level 1. The market valuation sources for other debt securities include observable inputs rather than significant unobservable inputs and are classified as Level 2. The service provider utilizes pricing models that vary by asset class and include available trade, bid and other market information. Generally, the methodologies include broker quotes, proprietary models and extensive quality control programs. 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 are classified as Level 2. Securities Held in a Deferred Compensation Plan 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. Accordingly, these assets are classified as Level 1. Deferred compensation plan assets are reported in other assets in the Consolidated Balance Sheets. 58 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Derivative Financial Instruments 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. Each valuation considers the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, such as interest rate curves and implied volatilities. 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. 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. Nonrecurring Basis Loans Held for Sale 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, 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 either the present value of expected future cash flows discounted at the loan's original effective interest rate, 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. Collateral values are generally based upon appraisals by approved, independent state certified appraisers. Appraisals may be discounted based on our historical knowledge, changes in market conditions from the time of appraisal or our knowledge of the borrower and the borrower’s business. 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 OREO and other repossessed assets obtained in partial or total satisfaction of a loan are recorded at fair value less cost to sell. Fair value, when recorded, is generally based upon appraisals by approved, independent state certified appraisers. 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. 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 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. The expected rate of mortgage loan prepayments is the most significant factor driving the value of MSRs. MSRs are considered impaired if the carrying value exceeds fair value. The valuation model includes significant unobservable inputs; therefore, MSRs are classified as Level 3 when marked to fair value. 59 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Many of these instruments lack an available trading market as characterized by a willing buyer and willing seller engaged in an exchange transaction. Also, it is our general practice and intent to hold our financial instruments to maturity and to not engage in trading or sales activities with respect to such financial instruments. For fair value disclosure purposes, we substantially utilize the fair value measurement criteria as required and explained above. In cases where quoted fair values are not available, we use present value methods to determine the fair value of our financial instruments. Cash and Cash Equivalents The carrying amounts reported in the Consolidated Balance Sheets for cash and due from banks, including interest-bearing deposits approximate fair value. Loans Our methodology to fair value loans includes an exit price notion. The fair value of loans is estimated using discounted cash flow analyses that utilize interest rates currently being offered for similar loans and 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 It is not practical to determine the fair value of our FHLB and other restricted stock due to the restrictions placed on the transferability of these stocks; it is presented at carrying value. Collateral Receivable Collateral receivable is cash that is made available to counterparties as collateral for our interest rate swaps. The carrying amount included in other assets in our Consolidated Balance Sheets approximates fair value. Deposits 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. Short-Term Borrowings The carrying amounts of short-term borrowings approximate their fair values. Fair values are based on observable inputs in a secondary market; therefore, these are classified as Level 2. Long-Term Borrowings The fair values disclosed for fixed rate long-term borrowings are determined by discounting their contractual cash flows using current interest rates for long-term borrowings of similar remaining maturities. 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. Junior Subordinated Debt Securities The interest rate on the variable rate junior subordinated debt securities is reset quarterly; 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. 60 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 in our Consolidated Balance Sheets approximates fair value. Cash and Cash Equivalents We consider cash and due from banks, interest-bearing deposits with banks and federal funds sold as cash and cash equivalents. Securities We determine the appropriate classification of securities at the time of purchase. Debt securities are classified as available-for-sale with the intent to hold for an indefinite period of time, but may be sold in response to changes in interest rates, prepayment risk, liquidity needs or other factors. 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 (Loss), or 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. Both the allowance and the adjustment to net income can be reversed if conditions change. Our policy for credit impairment within the available-for-sale debt securities portfolio is based upon a number of factors, including but not limited to, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its estimated fair value and whether management intends to sell the security or if it is more likely than not that management will be required to sell the investment security prior to the security’s recovery of any decline in its estimated fair value. 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, 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. Loans Held for Sale 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. If a loan is transferred from the loan portfolio to the held for sale category, any write-down in the carrying amount of the loan at the date of transfer is recorded as a charge-off against the ACL. Subsequent declines in fair value are recognized as a charge to other noninterest income. When a loan is placed in the held for sale category, we stop amortizing the related deferred fees and costs. The remaining unamortized fees and costs are recognized as part of the cost basis of the loan at the time it is sold. Gains and losses on sales of mortgage loans held for sale are included in other noninterest income in the Consolidated Statements of Net Income. Loans Loans are reported at the principal amount outstanding net of unearned income. Unearned income consists of net deferred loan origination fees and costs and a discount or premium on acquired loans. 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. Accretion of discounts and amortization of premiums on loans are included in interest income in the Consolidated Statements of Net Income. Interest is accrued and interest income is recognized on loans as earned. 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. 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. 61 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Nonaccrual Loans We stop accruing interest on a loan when the borrower’s payment is 90 days past due. Loans are also placed on nonaccrual status when we have doubt about the borrower’s ability to comply with contractual repayment terms, even if payment is not past due. When the interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. As a general rule, a nonaccrual loan may be restored to accrual status when its principal and interest is paid current and the bank expects repayment of the remaining contractual principal and interest, or when the loan otherwise becomes well secured and in the process of collection. 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. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers our historical loss experience, current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. 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 similar risk characteristics with other loans and are individually evaluated. 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) 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. We further evaluate the ACL at a disaggregated level which includes type of collateral and our internal risk rating system for the commercial and business banking segments and type of collateral, lien position and FICO score, for the consumer segments. Historical credit loss experience is the basis for the estimation of expected credit losses. Our quantitative model uses historical data back to the second quarter of 2009. We apply historical loss rates to pools of loans with similar risk characteristics. After consideration of the quantitative 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 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, 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. 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 nonaccrual loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) 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: 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 when the loan is collateral dependent. Our individual loan evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance. Our ACL Committee meets quarterly to verify the overall appropriateness of the ACL. Additionally, on an annual basis, the ACL Committee meets to validate our ACL methodology. This validation includes reviewing the loan segmentation, critical model assumptions, forecast and the qualitative framework. As a result of this ongoing monitoring process, we may make changes to our ACL to be responsive to the economic environment. Bank Owned Life Insurance We have purchased life insurance policies on certain executive officers and employees. We receive the cash surrender value of each policy upon its termination or benefits are payable to us upon the death of the insured. Changes in net cash surrender value are recognized in other noninterest income in the Consolidated Statements of Net Income. 62 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Premises and Equipment Premises and equipment, including leasehold improvements, are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred, while improvements that extend an asset’s useful life are capitalized and depreciated over the estimated remaining life of the asset. Depreciation expense is computed by the straight-line method for financial reporting purposes and accelerated methods for income tax purposes over the estimated useful lives of the particular assets. Depreciation expense is included in occupancy on the Consolidated Statements of Net Income. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. No events or changes in circumstances occurred during the years ended December 31, 2024 and 2023. The estimated useful lives for the various asset categories are as follows: 1) Land and Land Improvements Non-depreciating assets 2) Buildings 25 years 3) Furniture and Fixtures 5 years 4) Computer Equipment and Software 5 years or term of license 5) Other Equipment 5 years 6) Vehicles 5 years 7) Leasehold Improvements Lesser of estimated useful life of the asset (generally 15 years unless established otherwise) or the remaining term of the lease, including renewal options in the lease that are reasonably assured of exercise Right-of-Use Assets and Lease Liabilities We determine if a contract is or contains a lease at inception. Leases are classified as either finance or operating leases. We recognize leases in our Consolidated Balance Sheets as right-of-use, or ROU, assets and related lease liabilities. 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. Our lease liability is calculated as the present value of the lease payments over the lease term discounted using our estimated incremental borrowing rate with similar terms at commencement date. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term for operating leases. 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 in our Consolidated Statements of Net Income. Lease and non-lease components are accounted for as a single lease component in our Consolidated Balance Sheet. 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 FHLB stock is carried at cost and evaluated for impairment based on the ultimate recoverability of the par value. We hold FHLB stock because we are a member of the FHLB of Pittsburgh. The FHLB requires members to purchase and hold a specified level of FHLB stock based upon on the member's asset value, level of borrowings and participation in other programs offered. Stock in the FHLB is non-marketable and is redeemable at the discretion of the FHLB. Members do not purchase stock in the FHLB for the same reasons that traditional equity investors acquire stock in an investor-owned enterprise. Rather, members purchase stock to obtain access to the low-cost products and services offered by the FHLB. Unlike equity securities of traditional for-profit enterprises, the stock of the FHLB does not provide its holders with an opportunity for capital appreciation because, by regulation, FHLB stock can only be purchased, redeemed and transferred at par value. Both cash and stock dividends are reported as income in taxable investment securities in the Consolidated Statements of Net Income. FHLB stock is evaluated for impairment when events and circumstance indicate that impairment could exist. Goodwill and Other Intangible Assets As a result of acquisitions, we have recorded goodwill and identifiable intangible assets in our Consolidated Balance Sheets. Goodwill represents the excess of the purchase price over the fair value of net assets acquired. We have one reportable segment. 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. A qualitative assessment is performed to determine whether it is more likely than not that the reporting unit's fair value is less than its carrying value. We perform a quantitative impairment test only if we 63 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. The fair value of the reporting unit is determined by using both a discounted cash flow model and a market based model. The discounted cash flow model has many assumptions including future earnings projections, a long-term growth rate and discount rate. The market based model calculates fair value based on observed price multiples for similar companies. The fair values of each method are then weighted based on relevance and reliability in the current economic environment. We determine the amount of identifiable intangible assets based upon independent core deposit and insurance contract valuations at the time of acquisition. Intangible assets with finite useful lives, consisting primarily of core deposit and customer list intangibles, are amortized using straight-line or accelerated methods over their estimated weighted average useful lives, ranging from 10 to 20 years. Intangible assets with finite useful lives are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. No such events or changes in circumstances occurred during the years ended December 31, 2024 and 2023. Variable Interest Entities Variable interest entities, or VIEs, are legal entities that generally either do not have equity investors with voting rights or that have equity investors that do not provide sufficient financial resources for the entity to support its activities. When an enterprise has both the power to direct the economic activities of the VIE and the obligation to absorb losses of the VIE or the right to receive benefits of the VIE, the entity has a controlling financial interest in the VIE. A VIE often holds financial assets, including loans, receivables or other property. The company with a controlling financial interest, the primary beneficiary, is required to consolidate the VIE into its Consolidated Balance Sheets. S&T has two wholly-owned trust subsidiaries, STBA Capital Trust I and DNB Capital Trust II, or the Trusts, for which it does not absorb a majority of expected losses or receive a majority of the expected residual returns. DNB Capital Trust II was acquired with the DNB merger. At inception, these Trusts issued floating rate trust preferred securities to the Trustees and used the proceeds from the sale to invest in junior subordinated debt securities issued by us. The Trusts pay dividends on the trust preferred securities at the same rate as the interest we pay on the junior subordinated debt held by the Trusts. The Trusts are VIEs with the third-party investors as their primary beneficiaries, and accordingly, the Trusts and their net assets are not included in our consolidated financial statements. However, the junior subordinated debt securities issued by S&T are included in liabilities in our Consolidated Balance Sheets. Tax Credit Equity Investments We have made investments directly in Low Income Housing Tax Credit, or LIHTC, partnerships formed with third parties. As a limited partner in these operating partnerships, we receive tax credits and tax deductions for losses incurred by the underlying properties. These investments are amortized in proportion to the income tax credits and other income tax benefits received. Our investments in Low Income Housing Partnerships, or LIHPs, represent unconsolidated 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 the economic performance of the partnership nor do we have both the obligation to absorb expected losses and the right to receive benefits. We adopted ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the PAM, effective January 1, 2024 and elected to utilize the proportional amortization method, or PAM, to account for these partnerships. As a result, these investments are recorded in other assets and the remaining funding commitment is recorded in other liabilities in our Consolidated Balance Sheets. Amortization expense is included in income tax expense in the Consolidated Statements of Net Income. Prior to adopting PAM, the cost method was used to account for these partnerships. Prior period results reflect these investments in other assets in our Consolidated Balance Sheets and amortization expense is included in other noninterest expense in the Consolidated Statements of Net Income. OREO and Other Repossessed Assets OREO and other repossessed assets are included in other assets in the Consolidated Balance Sheets and are comprised of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of a foreclosure. OREO and other repossessed assets are recorded at fair value less cost to sell at the time of acquisition and when subsequent declines in fair value occur. Subsequent declines in the fair value of OREO are recorded through a valuation allowance. Subsequent increases in the fair value reduce the valuation allowance, but only to the amount that does not exceed the OREO foreclosure date cost basis. Loan losses arising from the acquisition of any such property initially are charged against the ACL. 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. 64 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Securities Held in a Deferred Compensation Plan A nonqualified deferred compensation plan is offered to certain management employees providing an opportunity to continue to defer income on a tax deferred basis in excess of annual contribution or compensation limits for qualified plans. The plan assets are held in a grantor trust, are legal assets of S&T and are beneficially owned by the participants. The assets are available to satisfy the claims of general creditors in the event we would need to file bankruptcy. Securities held in the nonqualified deferred compensation plan are recorded in other assets in the Consolidated Balance Sheets at fair value. A corresponding deferred compensation liability is recorded in other liabilities in the Consolidated Balance Sheets. Gains and losses related to the change in value of plan assets and the deferred compensation liability offset resulting in no impact to net income. Mortgage Servicing Rights MSRs are recognized as separate assets when a mortgage loan is sold. MSRs represent the estimated fair value of future net cash flows expected to be realized for performing the servicing activities. The fair value of the MSRs is estimated by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. The expected rate of mortgage loan prepayments is the most significant factor driving the value of MSRs. Increases in mortgage loan prepayments reduce estimated future net servicing cash flows because the life of the underlying loan is reduced. MSRs are reported in other assets in the Consolidated Balance Sheets and are amortized into other noninterest income in the Consolidated Statements of Net Income in proportion to, and over the period of, the estimated future net servicing income of the underlying mortgage loans. MSRs are evaluated for impairment based on the estimated fair value of those rights. MSRs are stratified by certain risk characteristics, primarily loan term and note rate. If temporary impairment exists within a risk stratification tranche, a valuation allowance is established through a charge to income equal to the amount by which the carrying value exceeds the estimated fair value. 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. Derivative Financial Instruments Derivatives are recognized as either other assets or other 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 based on 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. Interest income on collateral receivable is included in loan interest income in the Consolidated Statements of Net Income. Interest expense on collateral payable is included in borrowings, junior subordinated debt securities and other interest expense in the Consolidated Statements of Net Income. 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 in the Consolidated Balance Sheets. 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 65 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS loan interest income as interest payments are received. The change in the fair value is included in the change in other liabilities in the Consolidated Statements of Cash Flows. 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. The notional amounts on which the interest payments are based are not exchanged. These derivative positions relate to transactions in which we enter into an interest rate swap with a commercial customer, while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed rate. 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, 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. 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 and included in the change in other assets and other liabilities in the Consolidated Statements of Cash Flows. Interest Rate Lock Commitments and Forward Sale Contracts In the normal course of business, we sell originated mortgage loans into the secondary mortgage loan market. We also offer interest rate lock commitments to potential borrowers. The commitments are generally for a period of 60 days and guarantee a specified interest rate for a loan if underwriting standards are met, but the commitment does not obligate the potential borrower to close on the loan. Accordingly, some commitments expire prior to becoming loans. We may encounter pricing risks if interest rates increase significantly before the loan can be closed and sold. We may utilize forward sale contracts in order to mitigate this pricing risk. Whenever a customer desires these products, a mortgage originator quotes a secondary market rate guaranteed for that day by the investor. The rate lock is executed between the mortgagee and us and in turn a forward sale contract may be executed between us and the investor. Both the rate lock commitment and the corresponding forward sale contract for each customer are considered derivatives, but are not accounted for using hedge accounting. As such, changes in the estimated fair value of the derivatives during the commitment period are recorded in current earnings and included in other noninterest income in the Consolidated Statements of Net Income. Treasury Stock The repurchase of our common stock is recorded at cost. At the time of reissuance, the treasury stock account is reduced using the average cost method. Gains and losses on the reissuance of common stock are recorded in additional paid-in capital. We pay an excise tax equal to 1 percent of the fair value of shares repurchased. The excise tax is included in the cost of treasury stock with an offset to other liabilities in the Consolidated Balance Sheets. The excise tax liability is reduced by the fair market value of any reissuance occurring in the same taxable year. Revenue Recognition - Contracts with Customers We earn revenue from contracts with our customers when we have completed our performance obligations and recognize that revenue when services are provided to our customers. Our contracts with customers are primarily in the form of account agreements. Generally, our services are transferred at a point in time in response to transactions initiated and controlled by our customers under service agreements with an expected duration of one year or less. Our customers have the right to terminate their service agreements at any time. We do not defer incremental direct costs to obtain contracts with customers that would be amortized in one year or less. These costs are primarily salaries and employee benefits recognized as expense in the period incurred. Service charges on deposit accounts - We recognize monthly service charges for both commercial and personal banking customers based on account fee schedules. Our performance obligation is generally satisfied and the related revenue recognized at a point in time or over time when the services are provided. Other fees are earned based on specific transactions or customer activity within the customers' deposit accounts. These are earned at the time the transaction or customer activity occurs. Debit and credit card services - Interchange fees are earned whenever debit and credit cards are processed through third-party card payment networks. ATM fees are based on transactions by our customers' and other customers' use of our ATMs or other ATMs. Debit and credit card revenue is recognized at a point in time when the transaction is settled. Our performance obligation to our customers is generally satisfied and the related revenue is recognized at a point in time when the service is 66 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS provided. Third-party service contracts include annual volume and marketing incentives which are recognized over a period of twelve months when we meet thresholds as stated in the service contract. Wealth management services - Wealth management services are primarily comprised of fees earned from the management and administration of trusts, assets under administration and other financial advisory services. Generally, wealth management fees are earned over a period of time between monthly and annually, per the related fee schedules. Our performance obligations with our customers are generally satisfied when we provide the services as stated in the customers' agreements. 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, check sale 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. Wealth Management Fees Assets held in a fiduciary capacity by our subsidiary bank, S&T Bank, are not our assets and are therefore not included in our consolidated financial statements. Wealth management fee income is reported in the Consolidated Statements of Net Income on an accrual basis. Stock-Based Compensation Stock-based compensation includes restricted stock awards and restricted stock units, which are measured using the fair value at the time of issuance. A Monte Carlo simulation is used to estimate the fair value of performance-based restricted stock with a market condition. 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 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. Pensions 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. It requires us to make economic assumptions regarding future interest rates and asset returns and various demographic assumptions. We estimate the discount rate used to measure benefit obligations by applying the projected cash flow for future benefit payments to a yield curve of high-quality corporate bonds available in the marketplace and by employing a model that matches bonds to our pension cash flows. The expected return on plan assets is an estimate of the long-term rate of return on plan assets, which is determined based on the current asset mix and estimates of return by asset class. 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 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. The funding policy for the qualified plan is to contribute an amount each year that is at least equal to the minimum required contribution, but not more than the maximum amount permissible for taxable plan sponsors. Our nonqualified plans are unfunded. On January 25, 2016, the Board of Directors approved an amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016. As a result, no additional benefits are earned by participants in those plans based on service or pay after March 31, 2016. The plan was previously closed to new participants effective December 31, 2007. Marketing Costs We expense all marketing-related costs, including advertising costs, as incurred. 67 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes We estimate income tax expense based on amounts expected to be owed to the tax jurisdictions where we conduct business. On a quarterly basis, management assesses the reasonableness of our effective tax rate based upon our current estimate of the amount and components of net income, tax credits and the applicable statutory tax rates expected for the full year. We classify interest and penalties as an element of tax expense. Deferred income tax assets and liabilities are determined using the asset and liability method and are reported in other assets or other liabilities, as appropriate, in the Consolidated Balance Sheets. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities and recognizes enacted changes in tax rate and laws. When deferred tax assets are recognized, they are subject to a valuation allowance based on management’s judgment as to whether realization is more likely than not. Accrued taxes represent the net estimated amount due to taxing jurisdictions and are reported in other assets or other liabilities, as appropriate, in the Consolidated Balance Sheets. We evaluate and assess the relative risks and appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent and other information and maintain tax accruals consistent with the evaluation of these relative risks and merits. Changes to the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations being conducted by taxing authorities and changes to statutory, judicial and regulatory guidance. These changes, when they occur, can affect deferred taxes, accrued taxes and the current period’s income tax expense and can be significant to our operating results. Tax positions are recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded. Earnings Per Share Basic and diluted earnings per share, or EPS, are calculated using the more dilutive of either the treasury stock method or the two-class method. Unvested share-based payment awards that contain nonforfeitable rights to dividends are considered participating securities under the two-class method. Income allocated to common shareholders is then divided by the weighted average number of common shares outstanding during the period. Potentially dilutive securities are excluded from the basic EPS calculation. Under the treasury stock method, the weighted average number of common shares outstanding is increased by the potentially dilutive common shares. For the two-class method, diluted EPS is calculated for each class of shareholders using the weighted average number of shares attributed to each class. Potentially dilutive common shares are related to restricted stock. Segments We have one operating segment, Community Banking, based upon our current reporting structure at the consolidated level. The chief operating decision maker, or CODM, uses consolidated net income when allocating resources and making operating decisions. The accounting policies used to measure the profit and loss of the Community Banking segment are the same as those described in the summary of significant accounting policies. The CODM does not review segment revenue or expense information at a lower level than what is included in our Consolidated Statements of Net Income. Significant expenses reviewed by the CODM are consistent with what is presented in the Consolidated Statements of Net Income. Expenses included within other expenses in the Consolidated Statements of Net Income include loan related expenses, travel and entertainment, telephone and contributions. 68 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Recently Adopted Accounting Standards Updates, or ASU, or Updated Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method In March 2023, the FASB issued ASU 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the PAM to allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits. If certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the PAM regardless of the program from which it receives income tax credits, instead of only low-income-housing tax credit, or LIHTC, structures. This amendment also eliminates certain LIHTC specific guidance aligning the accounting with other equity investments in tax credit structures. Under the PAM, the equity investment is amortized in proportion to the income tax credits and other income tax benefits received. Amortization expense and the income tax benefits are required to be presented on a net basis in income tax expense on the Consolidated Statements of Net Income. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. We adopted this ASU, as of January 1, 2024, using a modified retrospective transition approach, which resulted in a $ 1.0 million cumulative effect adjustment being recorded to retained earnings related to the transition of the cost method to the PAM on LIHTC partnerships. Additional disclosure requirements had minimal impact to our consolidated financial statements. Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This update does not change how a public entity identifies its operating segments; however, it does require that an entity that has a single reportable segment provide all the disclosures required by ASC 280. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. A public entity should apply the amendments in this update retrospectively to all prior periods presented in the consolidated financial statements. Early adoption is permitted. We currently have one reportable segment, Community Banking. We adopted ASU 2023-07 on January 1, 2024. This ASU does not impact our consolidated financial statements and had minimal impact to our disclosures, requiring identification of the chief operating decision maker and the information used to make operating decisions and to allocate resources. Accounting Standards Issued But Not Yet Adopted Income Taxes (Topic 740) Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of the disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual consolidated financial statements that have not yet been issued. We adopted ASU 2023-09 on January 1, 2025. This ASU is not expected to impact our consolidated financial statements, and we are currently evaluating the impact of new disclosure requirements beginning with the Form 10-K for the year ended December 31, 2025. Income Statement (Subtopic 220-40)—Reporting Comprehensive Income—Expense Disaggregation Disclosures In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40)—Reporting Comprehensive Income—Expense Disaggregation Disclosures to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. This ASU will not impact our consolidated financial statements and we are currently evaluating the impact of new disclosure requirements. 69 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2. 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 2024, 2023 and 2022 and therefore was used to determine earnings per share. The following table reconciles the numerators and denominators of basic and diluted EPS calculations for the periods presented: Twelve months ended December 31, (in thousands, except share and per share data) 2024 2023 2022 Numerator for Earnings per Share—Basic and Diluted: Net income $ 131,265 $ 144,781 $ 135,520 Less: Income allocated to participating shares 13 156 381 Net Income Allocated to Shareholders $ 131,252 $ 144,625 $ 135,139 Denominator for Earnings per Share—Two-Class Method: Weighted Average Shares Outstanding—Basic 38,237,531 38,432,447 38,988,174 Add: Average participating shares outstanding 286,157 222,958 42,760 Denominator for Two-Class Method—Diluted 38,523,688 38,655,405 39,030,934 Earnings per share—basic $ 3.43 $ 3.76 $ 3.47 Earnings per share—diluted $ 3.41 $ 3.74 $ 3.46 Restricted stock considered anti-dilutive excluded from potentially dilutive shares 190 293 12,654 70 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3. FAIR VALUE MEASUREMENTS Assets and Liabilities Recorded at Fair Value on a Recurring Basis The following tables present our assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level at the dates presented: December 31, 2024 (dollars in thousands) Level 1 Level 2 Level 3 Total ASSETS Available-for-sale debt securities: U.S. Treasury securities $ 92,768 $ — $ — $ 92,768 Obligations of U.S. government corporations and agencies — 15,071 — 15,071 Collateralized mortgage obligations of U.S. government corporations and agencies — 596,284 — 596,284 Residential mortgage-backed securities of U.S. government corporations and agencies — 33,207 — 33,207 Commercial mortgage-backed securities of U.S. government corporations and agencies — 224,798 — 224,798 Obligations of states and political subdivisions — 24,287 — 24,287 Total Available-for-Sale Debt Securities 92,768 893,647 — 986,415 Equity securities 1,176 — — 1,176 Total Securities Available for Sale 93,944 893,647 — 987,591 Securities held in a deferred compensation plan 10,876 — — 10,876 Derivative financial assets: Interest rate swap contracts - commercial loans — 60,890 — 60,890 Total Assets $ 104,820 $ 954,537 $ — $ 1,059,357 LIABILITIES Derivative financial liabilities: Interest rate swap contracts - commercial loans $ — $ 61,271 $ — $ 61,271 Interest rate swap contracts - cash flow hedge — 9,589 — 9,589 Total Liabilities $ — $ 70,860 $ — $ 70,860 December 31, 2023 (dollars in thousands) Level 1 Level 2 Level 3 Total ASSETS Available-for-sale debt securities: U.S. Treasury securities $ 133,786 $ — $ — $ 133,786 Obligations of U.S. government corporations and agencies — 32,513 — 32,513 Collateralized mortgage obligations of U.S. government corporations and agencies — 460,939 — 460,939 Residential mortgage-backed securities of U.S. government corporations and agencies — 38,177 — 38,177 Commercial mortgage-backed securities of U.S. government corporations and agencies — 273,425 — 273,425 Obligations of states and political subdivisions — 30,468 — 30,468 Total Available-for-Sale Debt Securities 133,786 835,522 — 969,308 Equity securities 1,010 73 — 1,083 Total Securities Available for Sale 134,796 835,595 — 970,391 Securities held in a deferred compensation plan 9,399 — — 9,399 Derivative financial assets: Interest rate swap contracts - commercial loans — 63,018 — 63,018 Total Assets $ 144,195 $ 898,613 $ — $ 1,042,808 LIABILITIES Derivative financial liabilities: Interest rate swap contracts - commercial loans $ — $ 63,554 $ — $ 63,554 Interest rate swap contracts - cash flow hedge — 14,739 — 14,739 Total Liabilities $ — $ 78,293 $ — $ 78,293 71 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Assets Recorded at Fair Value on a Nonrecurring Basis We may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. Nonrecurring assets are recorded at the lower of cost or fair value in our consolidated financial statements. There were no liabilities measured at fair value on a nonrecurring basis at both December 31, 2024 and December 31, 2023. There were $ 6.8 million of individually evaluated loans measured at fair value and classified as Level 3 on a nonrecurring basis as of December 31, 2024 and $ 5.9 million of individually evaluated loans measured at fair value and classified as Level 2 on a nonrecurring basis as of December 31, 2023. Significant unobservable inputs used in the fair value measurements of Level 3 assets on a nonrecurring basis were as follows at December 31, 2024: December 31, 2024 Valuation Technique Significant Unobservable Inputs Range Weighted Average (dollars in thousands) Loans individually evaluated $ 6,830 Appraisals of collateral Appraisal adjustments (1) 20.00 % - 75.00 % 63.06 % (1) Represents adjustments to appraised values related to market conditions and liquidation estimates based on management judgement. Fair Value of Financial Instruments The following tables present the carrying values and fair values of our financial instruments at the dates presented: Carrying Value (1) Fair Value Measurements at December 31, 2024 (dollars in thousands) Total Level 1 Level 2 Level 3 ASSETS Cash and due from banks, including interest-bearing deposits $ 244,820 $ 244,820 $ 244,820 $ — $ — Securities available for sale 987,591 987,591 93,944 893,647 — Portfolio loans, net 7,641,464 7,362,898 — — 7,362,898 Collateral receivable 2,034 2,034 2,034 — — Securities held in a deferred compensation plan 10,876 10,876 10,876 — — Mortgage servicing rights 5,646 8,533 — — 8,533 Interest rate swap contracts - commercial loans 60,890 60,890 — 60,890 — LIABILITIES Deposits $ 7,783,117 $ 7,778,740 $ 5,916,154 $ 1,862,586 $ — Collateral payable 52,516 52,516 52,516 — — Short-term borrowings 150,000 150,000 — 150,000 — Long-term borrowings 50,896 50,652 — 50,652 — Junior subordinated debt securities 49,418 49,418 — 49,418 — Interest rate swap contracts - commercial loans 61,271 61,271 — 61,271 — Interest rate swap contracts - cash flow hedge 9,589 9,589 — 9,589 — (1) As reported in the Consolidated Balance Sheets 72 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Carrying Value (1) Fair Value Measurements at December 31, 2023 (dollars in thousands) Total Level 1 Level 2 Level 3 ASSETS Cash and due from banks, including interest-bearing deposits $ 233,612 $ 233,612 $ 233,612 $ — $ — Securities available for sale 970,391 970,391 134,796 835,595 — Loans held for sale 153 153 — 153 — Portfolio loans, net 7,545,375 7,263,270 — — 7,263,270 Collateral receivable 5,356 5,356 5,356 — — Securities held in a deferred compensation plan 9,399 9,399 9,399 — — Mortgage servicing rights 6,345 8,704 — — 8,704 Interest rate swaps - commercial loans 63,018 63,018 — 63,018 — LIABILITIES Deposits $ 7,521,769 $ 7,511,598 $ 5,940,117 $ 1,571,481 $ — Collateral payable 50,920 50,920 50,920 — — Short-term borrowings 415,000 415,000 — 415,000 — Long-term borrowings 39,277 38,995 — 38,995 — Junior subordinated debt securities 49,358 49,358 — 49,358 — Interest rate swaps - commercial loans 63,554 63,554 — 63,554 — Interest rate swaps - cash flow hedge 14,739 14,739 — 14,739 — (1) As reported in the Consolidated Balance Sheets NOTE 4. DIVIDEND AND LOAN RESTRICTIONS S&T is a legal entity separate and distinct from its banking and other subsidiaries. A substantial portion of our revenues consist of dividend payments we receive from S&T Bank. S&T Bank, in turn, is subject to state laws and regulations that limit the amount of dividends it can pay to us. In addition, both S&T and S&T Bank are subject to various general regulatory policies relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. 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. Federal law prohibits us from borrowing from S&T Bank unless such loans are collateralized by specific obligations. Further, such loans are limited to 10 percent of S&T Bank’s capital stock and surplus. NOTE 5. SECURITIES The following table presents the fair values of our securities portfolio at the dates presented: (dollars in thousands) December 31, 2024 December 31, 2023 Debt securities $ 986,415 $ 969,308 Equity securities 1,176 1,083 Total Securities Available for Sale $ 987,591 $ 970,391 73 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents the amortized cost and fair value of available-for-sale debt securities as of the dates presented: December 31, 2024 December 31, 2023 (dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury securities $ 97,045 $ — $ ( 4,277 ) $ 92,768 $ 144,292 $ — $ ( 10,506 ) $ 133,786 Obligations of U.S. government corporations and agencies 15,260 — ( 189 ) 15,071 33,342 — ( 829 ) 32,513 Collateralized mortgage obligations of U.S. government corporations and agencies 643,690 872 ( 48,278 ) 596,284 507,942 1,068 ( 48,071 ) 460,939 Residential mortgage-backed securities of U.S. government corporations and agencies 40,109 3 ( 6,905 ) 33,207 44,707 7 ( 6,537 ) 38,177 Commercial mortgage-backed securities of U.S. government corporations and agencies 237,270 115 ( 12,587 ) 224,798 290,775 458 ( 17,808 ) 273,425 Obligations of states and political subdivisions 24,780 — ( 493 ) 24,287 30,255 213 — 30,468 Total Available-for-Sale Debt Securities (1) $ 1,058,154 $ 990 $ ( 72,729 ) $ 986,415 $ 1,051,313 $ 1,746 $ ( 83,751 ) $ 969,308 (1) Excludes interest receivable of $ 3.7 million at December 31, 2024 and $ 3.8 million at December 31, 2023. Interest receivable is included in other assets in the Consolidated Balance Sheets. 74 Table of Contents 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, 2024 Less Than 12 Months 12 Months or More Total (dollars in thousands) Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses U.S. Treasury securities 5 $ 45,045 $ ( 362 ) 5 $ 47,723 $ ( 3,915 ) 10 $ 92,768 $ ( 4,277 ) Obligations of U.S. government corporations and agencies — — 2 15,071 ( 189 ) 2 15,071 ( 189 ) Collateralized mortgage obligations of U.S. government corporations and agencies 22 209,511 ( 3,393 ) 56 318,104 ( 44,885 ) 78 527,615 ( 48,278 ) Residential mortgage-backed securities of U.S. government corporations and agencies 1 8 — 21 33,030 ( 6,905 ) 22 33,038 ( 6,905 ) Commercial mortgage-backed securities of U.S. government corporations and agencies 9 88,040 ( 1,741 ) 12 122,833 ( 10,846 ) 21 210,873 ( 12,587 ) Obligations of states and political subdivisions 4 24,286 ( 493 ) — — — 4 24,286 ( 493 ) Total 41 $ 366,890 $ ( 5,989 ) 96 $ 536,761 $ ( 66,740 ) 137 $ 903,651 $ ( 72,729 ) December 31, 2023 Less Than 12 Months 12 Months or More Total (dollars in thousands) Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses U.S. Treasury securities 1 $ 10,036 $ ( 52 ) 13 $ 123,750 $ ( 10,454 ) 14 $ 133,786 $ ( 10,506 ) Obligations of U.S. government corporations and agencies — — — 5 32,513 ( 829 ) 5 32,513 ( 829 ) Collateralized mortgage obligations of U.S. government corporations and agencies 4 35,161 ( 318 ) 57 351,220 ( 47,753 ) 61 386,381 ( 48,071 ) Residential mortgage-backed securities of U.S. government corporations and agencies 10 100 ( 1 ) 14 37,877 ( 6,536 ) 24 37,977 ( 6,537 ) Commercial mortgage-backed securities of U.S. government corporations and agencies — — — 29 249,005 ( 17,808 ) 29 249,005 ( 17,808 ) Total 15 $ 45,297 $ ( 371 ) 118 $ 794,365 $ ( 83,380 ) 133 $ 839,662 $ ( 83,751 ) We evaluate securities with unrealized losses quarterly to determine if the decline in fair value has resulted from credit impairment or other factors. We do not believe any individual unrealized loss as of December 31, 2024 represents a credit impairment. There were 137 debt securities in an unrealized loss position at December 31, 2024 and 133 debt securities in an unrealized loss position at December 31, 2023. The unrealized losses on debt securities were attributable to changes in interest rates and not related to the credit quality of the issuers. All debt securities were determined to be investment grade and paying principal and interest according to the contractual terms of the security. At December 31, 2024, we do not intend to sell, and it is more likely than not that we will not be required to sell, the securities in an unrealized loss position before recovery of their amortized cost. 75 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents net unrealized gains and losses, net of tax, on available-for-sale debt securities included in accumulated other comprehensive income (loss), for the periods presented: December 31, 2024 December 31, 2023 (dollars in thousands) Gross Unrealized Gains Gross Unrealized Losses Net Unrealized Losses Gross Unrealized Gains Gross Unrealized Losses Net Unrealized Losses Total unrealized gains (losses) on available-for-sale debt securities $ 990 $ ( 72,729 ) $ ( 71,739 ) $ 1,746 $ ( 83,751 ) $ ( 82,005 ) Income tax (expense) benefit ( 213 ) 15,644 15,431 ( 372 ) 17,824 17,452 Net Unrealized Gains (Losses), Net of Tax Included in Accumulated Other Comprehensive Income (Loss) $ 777 $ ( 57,085 ) $ ( 56,308 ) $ 1,374 $ ( 65,927 ) $ ( 64,553 ) The amortized cost and fair value of available-for-sale debt securities at December 31, 2024 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. December 31, 2024 (dollars in thousands) Amortized Cost Fair Value Obligations of the U.S. Treasury, U.S. government corporations and agencies and obligations of states and political subdivisions Due in one year or less $ 25,302 $ 25,090 Due after one year through five years 92,010 87,731 Due after five years through ten years 19,773 19,305 Due after ten years — — Available-for-Sale Debt Securities With Fixed Maturities 137,085 132,126 Debt Securities without a single maturity date Collateralized mortgage obligations of U.S. government corporations and agencies 643,690 596,284 Residential mortgage-backed securities of U.S. government corporations and agencies 40,109 33,207 Commercial mortgage-backed securities of U.S. government corporations and agencies 237,270 224,798 Total Available-for-Sale Debt Securities $ 1,058,154 $ 986,415 Debt securities are pledged in order to meet various regulatory and legal requirements. Restricted pledged securities had a carrying value of $ 21.6 million at December 31, 2024 and $ 18.4 million at December 31, 2023. Unrestricted pledged securities had a carrying value of $ 201.8 million at December 31, 2024 and $ 214.0 million at December 31, 2023. Any changes to restricted pledged securities require approval of the pledge beneficiary. Approval is not required for unrestricted pledged securities. 76 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6. LOANS AND ALLOWANCE FOR CREDIT LOSSES Loans and Loans Held for Sale Loans are presented net of unearned income. Unearned income consisted of net deferred loan fees and costs of $ 4.3 million at December 31, 2024 and $ 6.6 million at December 31, 2023 and a discount related to purchase accounting fair value adjustments of $ 2.5 million at December 31, 2024 and $ 3.1 million at December 31, 2023. The following table summarizes the composition of originated and acquired loans as of the dates presented: (dollars in thousands) December 31, 2024 December 31, 2023 Commercial real estate $ 2,708,531 $ 2,659,135 Commercial and industrial 1,351,637 1,436,183 Commercial construction 341,266 350,583 Business banking 1,303,258 1,360,765 Consumer real estate 1,933,509 1,731,778 Other consumer 104,757 114,897 Total Portfolio Loans $ 7,742,958 $ 7,653,341 Loans held for sale — 153 Total Loans (1) $ 7,742,958 $ 7,653,494 (1) Excludes interest receivable of $ 32.7 million at December 31, 2024 and $ 35.3 million at December 31, 2023. Interest receivable is included in other assets in the Consolidated Balance Sheets. Modifications to Borrowers Experiencing Financial Difficulty The following tables present the amortized cost of loans to borrowers experiencing financial difficulty by portfolio segment and type of modification during the periods presented: Twelve Months Ended December 31, 2024 (dollars in thousands) Term Extension Payment Delays (Other Than Insignificant) Term Extension and Payment Delays Total % of Portfolio Segment Commercial real estate $ 3,004 $ — $ 685 $ 3,689 0.14 % Commercial and industrial 9,437 12,264 — 21,701 1.61 % Consumer real estate 493 — — 493 0.03 % Total (1) $ 12,934 $ 12,264 $ 685 $ 25,883 0.33 % Twelve Months Ended December 31, 2023 (dollars in thousands) Term Extension Payment Delays (Other Than Insignificant) Term Extension and Interest Rate Reduction Total % of Portfolio Segment Commercial real estate $ 13,836 $ — $ — $ 13,836 0.52 % Commercial and industrial 16,877 — — 16,877 1.18 % Business banking 120 — — 120 0.01 % Consumer real estate 61 — 189 250 0.01 % Total (1) $ 30,894 $ — $ 189 $ 31,083 0.41 % 77 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables describe the effect of loan modifications made to borrowers experiencing financial difficulty during the periods presented: Twelve Months Ended December 31, 2024 Weighted-Average Term Extension (in months) Weighted-Average Payment Delays (in months) Weighted-Average Term Extension (in months) and Payment Delays Commercial real estate 1 — 22 Commercial and industrial 10 6 — Consumer real estate 101 — — Twelve Months Ended December 31, 2023 Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction Commercial real estate 4 — Commercial and industrial 5 — Business banking 19 — Consumer real estate 168 2 % We closely monitor the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of the modification efforts. The following tables present the aging analysis of modifications in the last 12 months to borrowers experiencing financial difficulty as of the dates presented: December 31, 2024 (dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total Commercial real estate $ 3,689 $ — $ — $ — $ 3,689 Commercial and industrial 14,226 7,475 — — 21,701 Consumer real estate 347 — 40 106 493 Total $ 18,262 $ 7,475 $ 40 $ 106 $ 25,883 December 31, 2023 (dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total Commercial real estate $ 13,836 $ — $ — $ — $ 13,836 Commercial and industrial 16,468 — — 409 16,877 Business banking 120 — — — 120 Consumer real estate 250 — — — 250 Total $ 30,674 $ — $ — $ 409 $ 31,083 A payment default is defined as a loan having a payment past due 90 days or more. There was one payment default for $ 0.1 million during the twelve months ended December 31, 2024 compared to none in the same period in 2023 related to loans that were modified within the 12 months prior to default. Additionally, we had five commitments to lend an additional $ 0.8 million to borrowers experiencing financial difficulty that had a modification during the twelve months ended December 31, 2024 and three commitments to lend an additional $ 1.6 million to borrowers experiencing financial difficulty that had a modification during the same period in 2023. The effect of modifications made to borrowers experiencing financial difficulty is already included in the ACL because of the measurement methodologies used to estimate the ACL, therefore, a change to the ACL is generally not recorded upon modification. If principal forgiveness is provided, that portion of the loan will be charged-off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL. An assessment of whether the borrower is experiencing financial difficulty is made on the date of a modification. 78 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table is a summary of nonperforming assets as of the dates presented: Nonperforming Assets (dollars in thousands) December 31, 2024 December 31, 2023 Nonperforming Assets Nonaccrual Loans $ 27,937 $ 22,947 OREO 8 75 Total Nonperforming Assets $ 27,945 $ 23,022 The following table presents a summary of the aggregate amount of loans to certain officers and directors of S&T or any affiliates of such persons as of the dates presented: December 31, (dollars in thousands) 2024 2023 Balance at beginning of year $ 4,183 $ 4,128 New loans 1,484 936 Repayments or no longer considered a related party ( 2,107 ) ( 881 ) Balance at End of Year $ 3,560 $ 4,183 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 an instrument 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 the following portfolio segments: 1) CRE, 2) C&I, 3) Commercial Construction, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer. The following are key risks within each portfolio segment: CRE —Loans secured by commercial purpose real estate, including both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. Operations of the individual projects and global cash flows of the debtors are the primary sources of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee, if the project is not owner-occupied. C&I —Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the company is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. Collateral for these types of loans often does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt. Commercial Construction —Loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While these loans are generally confined to the construction/development period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer. Business Banking —Commercial purpose 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. The business banking portfolio is monitored by utilizing a standard and closely managed process focusing on behavioral and performance criteria. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and business. Consumer Real Estate —Loans secured by first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt. 79 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 of credit. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. 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. We monitor the commercial and business banking loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans within the pass rating generally have a lower risk of loss than loans risk rated as special mention or substandard. Our risk ratings are consistent with regulatory guidance and are as follows: Pass —The loan is currently performing and is of high quality. Special Mention —A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in the strength of our credit position at some future date. Substandard —A substandard loan is not adequately protected by the net worth and/or paying capacity of the borrower or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. 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. 80 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES 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: December 31, 2024 Risk Rating (dollars in thousands) 2024 2023 2022 2021 2020 2019 and Prior Revolving Revolving-Term Total Commercial Real Estate Pass $ 278,187 $ 287,081 $ 362,174 $ 413,781 $ 213,384 $ 1,040,703 $ 35,737 $ — $ 2,631,047 Special mention — 2,000 370 1,840 — 46,104 254 — 50,568 Substandard — — 985 — 1,834 23,683 — — 26,502 Doubtful — — — — 414 — — — 414 Total Commercial Real Estate 278,187 289,081 363,529 415,621 215,632 1,110,490 35,991 — 2,708,531 Year-to-date Gross Charge-offs — — — — — 5,205 — — 5,205 Commercial and Industrial Pass 119,580 147,007 194,363 131,877 30,093 175,359 466,640 — 1,264,919 Special mention — 20 1,221 142 10 14,896 11,033 — 27,322 Substandard 563 1,073 172 20,586 740 7,171 25,355 — 55,660 Doubtful — — — 366 469 — 2,901 — 3,736 Total Commercial and Industrial 120,143 148,100 195,756 152,971 31,312 197,426 505,929 — 1,351,637 Year-to-date Gross Charge-offs — 78 — 1,235 — 91 1,032 — 2,436 Commercial Construction Pass 119,355 121,816 57,853 14,911 884 2,139 8,310 — 325,268 Special mention — — 15,998 — — — — — 15,998 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total Commercial Construction 119,355 121,816 73,851 14,911 884 2,139 8,310 — 341,266 Year-to-date Gross Charge-offs — — — — — — — — — Business Banking Pass 149,603 230,784 225,318 173,763 76,087 332,707 92,756 597 1,281,615 Special mention — — 49 130 147 4,302 35 268 4,931 Substandard 21 2,257 1,287 3,790 409 8,318 190 440 16,712 Doubtful — — — — — — — — — Total Business Banking 149,624 233,041 226,654 177,683 76,643 345,327 92,981 1,305 1,303,258 Year-to-date Gross Charge-offs — 79 124 — 56 1,486 — — 1,745 Consumer Real Estate Pass 217,250 334,532 324,346 133,155 95,301 223,799 569,386 24,940 1,922,709 Special mention — — — — — 99 — — 99 Substandard — 1,231 43 192 203 5,564 1,172 2,296 10,701 Doubtful — — — — — — — — — Total Consumer Real Estate 217,250 335,763 324,389 133,347 95,504 229,462 570,558 27,236 1,933,509 Year-to-date Gross Charge-offs — — — — 9 37 86 1,216 1,348 Other Consumer Pass 8,456 6,849 7,349 3,228 1,758 468 71,039 5,425 104,572 Special mention — — — — — — — Substandard — — — 21 10 150 — 4 185 Doubtful — — — — — — — — — Total Other Consumer 8,456 6,849 7,349 3,249 1,768 618 71,039 5,429 104,757 Year-to-date Gross Charge-offs 839 34 164 103 26 18 — 270 1,454 Pass 892,431 1,128,069 1,171,403 870,715 417,507 1,775,175 1,243,868 30,962 7,530,130 Special mention — 2,020 17,638 2,112 157 65,401 11,322 268 98,918 Substandard 584 4,561 2,487 24,589 3,196 44,886 26,717 2,740 109,760 Doubtful — — — 366 883 — 2,901 — 4,150 Total Loan Balance $ 893,015 $ 1,134,650 $ 1,191,528 $ 897,782 $ 421,743 $ 1,885,462 $ 1,284,808 $ 33,970 $ 7,742,958 Year-to-date Gross Charge-offs $ 839 $ 191 $ 288 $ 1,338 $ 91 $ 6,837 $ 1,118 $ 1,486 $ 12,188 81 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 Risk Rating (dollars in thousands) 2023 2022 2021 2020 2019 2018 and Prior Revolving Revolving-Term Total Commercial Real Estate Pass $ 276,677 $ 323,463 $ 433,308 $ 237,901 $ 383,799 $ 781,465 $ 32,418 $ — $ 2,469,031 Special mention — 1,006 6,000 — 24,887 75,428 — — 107,321 Substandard — — — 2,355 10,685 69,743 — — 82,783 Doubtful — — — — — — — — — Total Commercial Real Estate 276,677 324,469 439,308 240,256 419,371 926,636 32,418 — 2,659,135 Year-to-date Gross Charge-offs — — — — — 1,706 — — 1,706 Commercial and Industrial Pass 171,672 231,114 185,884 53,101 47,063 183,165 482,490 — 1,354,489 Special mention 189 620 10,242 — — 8,848 4,126 — 24,025 Substandard — 244 14,510 1,595 5,795 1,892 33,633 — 57,669 Doubtful — — — — — — — — — Total Commercial and Industrial 171,861 231,978 210,636 54,696 52,858 193,905 520,249 — 1,436,183 Year-to-date Gross Charge-offs — — — — 3,412 15,842 — — 19,254 Commercial Construction Pass 75,596 154,456 82,313 14,845 151 4,054 14,208 — 345,623 Special mention — — — — — — — — — Substandard — — — — 4,576 384 — — 4,960 Doubtful — — — — — — — — — Total Commercial Construction 75,596 154,456 82,313 14,845 4,727 4,438 14,208 — 350,583 Year-to-date Gross Charge-offs — — — — 451 — — — 451 Business Banking Pass 270,129 262,535 204,874 87,346 96,371 321,360 96,618 523 1,339,756 Special mention — 55 251 224 33 3,508 37 172 4,280 Substandard — 16 2,486 448 3,170 9,898 99 612 16,729 Doubtful — — — — — — — — — Total Business Banking 270,129 262,606 207,611 88,018 99,574 334,766 96,754 1,307 1,360,765 Year-to-date Gross Charge-offs — 67 43 1 88 1,073 34 — 1,306 Consumer Real Estate Pass 311,887 334,879 147,652 101,999 67,402 183,283 551,368 22,206 1,720,676 Special mention — — — — — 189 — — 189 Substandard — 583 198 42 488 6,322 712 2,568 10,913 Doubtful — — — — — — — — — Total Consumer Real Estate 311,887 335,462 147,850 102,041 67,890 189,794 552,080 24,774 1,731,778 Year-to-date Gross Charge-offs — 1 — 5 1 43 75 296 421 Other Consumer Pass 11,286 11,965 6,483 3,842 1,062 526 76,426 3,109 114,699 Special mention — — — — — — — — — Substandard — — 24 5 20 146 — 3 198 Doubtful — — — — — — — — — Total Other Consumer 11,286 11,965 6,507 3,847 1,082 672 76,426 3,112 114,897 Year-to-date Gross Charge-offs 830 146 175 19 37 5 — 288 1,500 Pass 1,117,247 1,318,412 1,060,514 499,034 595,848 1,473,853 1,253,528 25,838 7,344,274 Special Mention 189 1,681 16,493 224 24,920 87,973 4,163 172 135,815 Substandard — 843 17,218 4,445 24,734 88,385 34,444 3,183 173,252 Doubtful — — — — — — — — — Total Loan Balance $ 1,117,436 $ 1,320,936 $ 1,094,225 $ 503,703 $ 645,502 $ 1,650,211 $ 1,292,135 $ 29,193 $ 7,653,341 Year-to-date Gross Charge-offs $ 830 $ 214 $ 218 $ 25 $ 3,989 $ 18,669 $ 109 $ 584 $ 24,638 82 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis. 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, 2024 (dollars in thousands) 2024 2023 2022 2021 2020 2019 and Prior Revolving Revolving-Term Total Commercial Real Estate Accrual $ 278,187 $ 289,081 $ 362,544 $ 415,621 $ 214,589 $ 1,109,290 $ 35,991 $ — $ 2,705,303 Nonaccrual — — 985 — 1,043 1,200 — — 3,228 Total Commercial Real Estate 278,187 289,081 363,529 415,621 215,632 1,110,490 35,991 — 2,708,531 Commercial and Industrial Accrual 120,143 148,070 195,584 151,976 30,103 197,426 497,162 — 1,340,464 Nonaccrual — 30 172 995 1,209 — 8,767 — 11,173 Total Commercial and Industrial 120,143 148,100 195,756 152,971 31,312 197,426 505,929 — 1,351,637 Commercial Construction Accrual 119,355 121,816 73,851 14,911 884 2,139 8,310 — 341,266 Nonaccrual — — — — — — — — — Total Commercial Construction 119,355 121,816 73,851 14,911 884 2,139 8,310 — 341,266 Business Banking Accrual 149,624 232,649 226,654 177,683 76,344 343,064 92,981 1,271 1,300,270 Nonaccrual — 392 — — 299 2,263 — 34 2,988 Total Business Banking 149,624 233,041 226,654 177,683 76,643 345,327 92,981 1,305 1,303,258 Consumer Real Estate Accrual 217,250 333,279 324,389 133,224 94,971 225,225 569,423 25,430 1,923,191 Nonaccrual — 2,484 — 123 533 4,237 1,135 1,806 10,318 Total Consumer Real Estate 217,250 335,763 324,389 133,347 95,504 229,462 570,558 27,236 1,933,509 Other Consumer Accrual 8,456 6,849 7,349 3,246 1,683 476 71,039 5,429 104,527 Nonaccrual — — — 3 85 142 — — 230 Total Other Consumer 8,456 6,849 7,349 3,249 1,768 618 71,039 5,429 104,757 Accrual 893,015 1,131,744 1,190,371 896,661 418,574 1,877,620 1,274,906 32,130 7,715,021 Nonaccrual — 2,906 1,157 1,121 3,169 7,842 9,902 1,840 27,937 Total Loan Balance $ 893,015 $ 1,134,650 $ 1,191,528 $ 897,782 $ 421,743 $ 1,885,462 $ 1,284,808 $ 33,970 $ 7,742,958 83 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 (dollars in thousands) 2023 2022 2021 2020 2019 2018 and Prior Revolving Revolving-Term Total Commercial Real Estate Accrual $ 276,677 $ 324,469 $ 439,308 $ 240,256 $ 419,371 $ 920,316 $ 32,418 $ — $ 2,652,815 Nonaccrual — — — — — 6,320 — — 6,320 Total Commercial Real Estate 276,677 324,469 439,308 240,256 419,371 926,636 32,418 — 2,659,135 Commercial and Industrial Accrual 171,861 231,978 210,636 54,696 52,858 193,257 520,019 — 1,435,305 Nonaccrual — — — — — 648 230 — 878 Total Commercial and Industrial 171,861 231,978 210,636 54,696 52,858 193,905 520,249 — 1,436,183 Commercial Construction Accrual 75,596 154,456 82,313 14,845 151 4,054 14,208 — 345,623 Nonaccrual — — — — 4,576 384 — — 4,960 Total Commercial Construction 75,596 154,456 82,313 14,845 4,727 4,438 14,208 — 350,583 Business Banking Accrual 270,129 262,606 207,611 87,979 99,354 330,902 96,754 1,283 1,356,618 Nonaccrual — — — 39 220 3,864 — 24 4,147 Total Business Banking 270,129 262,606 207,611 88,018 99,574 334,766 96,754 1,307 1,360,765 Consumer Real Estate Accrual 311,887 335,086 147,689 101,518 67,577 186,909 551,858 22,942 1,725,466 Nonaccrual — 376 161 523 313 2,885 222 1,832 6,312 Total Consumer Real Estate 311,887 335,462 147,850 102,041 67,890 189,794 552,080 24,774 1,731,778 Other Consumer Accrual 11,286 11,965 6,499 3,656 1,082 541 76,426 3,112 114,567 Nonaccrual — — 8 191 — 131 — — 330 Total Other Consumer 11,286 11,965 6,507 3,847 1,082 672 76,426 3,112 114,897 Accrual 1,117,436 1,320,560 1,094,056 502,950 640,393 1,635,979 1,291,683 27,337 7,630,394 Nonaccrual — 376 169 753 5,109 14,232 452 1,856 22,947 Total Loan Balance $ 1,117,436 $ 1,320,936 $ 1,094,225 $ 503,703 $ 645,502 $ 1,650,211 $ 1,292,135 $ 29,193 $ 7,653,341 The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented: December 31, 2024 (dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due Nonaccrual Total Past Due Loans Total Loans Commercial real estate $ 2,705,303 $ — $ — $ 3,228 $ 3,228 $ 2,708,531 Commercial and industrial 1,338,053 415 1,996 11,173 13,584 1,351,637 Commercial construction 340,230 — 1,036 — 1,036 341,266 Business banking 1,297,651 2,336 283 2,988 5,607 1,303,258 Consumer real estate 1,918,150 2,464 2,577 10,318 15,359 1,933,509 Other consumer 104,156 216 155 230 601 104,757 Total $ 7,703,543 $ 5,431 $ 6,047 $ 27,937 $ 39,415 $ 7,742,958 December 31, 2023 (dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due Nonaccrual Total Past Due Loans Total Loans Commercial real estate $ 2,649,412 $ — $ 3,403 $ 6,320 $ 9,723 $ 2,659,135 Commercial and industrial 1,435,301 4 — 878 882 1,436,183 Commercial construction 345,623 — — 4,960 4,960 350,583 Business banking 1,351,048 3,525 2,045 4,147 9,717 1,360,765 Consumer real estate 1,719,751 3,352 2,363 6,312 12,027 1,731,778 Other consumer 114,138 366 63 330 759 114,897 Total $ 7,615,273 $ 7,247 $ 7,874 $ 22,947 $ 38,068 $ 7,653,341 84 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables present loans on nonaccrual status by class of loan for the year-to-date periods presented: December 31, 2024 (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 $ 6,320 $ 3,228 $ 984 $ 116 Commercial and industrial 878 11,173 311 85 Commercial construction 4,960 — — 700 Business banking 4,147 2,988 — 93 Consumer real estate 6,312 10,318 — 392 Other consumer 330 230 — 3 Total $ 22,947 $ 27,937 $ 1,295 $ 1,389 (1) Represents only cash payments received and applied to interest on nonaccrual loans. December 31, 2023 (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 $ 7,100 $ 6,320 $ 5,940 $ 46 Commercial and industrial 283 878 — 38 Commercial construction 384 4,960 4,576 — Business banking 4,490 4,147 — 209 Consumer real estate 6,526 6,312 — 308 Other consumer 269 330 — 2 Total $ 19,052 $ 22,947 $ 10,516 $ 603 (1) Represents only cash payments received and applied to interest on nonaccrual loans. The following tables present collateral-dependent loans as of the dates presented: December 31, 2024 Type of Collateral (dollars in thousands) Real Estate Business Assets Commercial real estate $ 2,028 $ — Commercial and industrial — 9,937 Total $ 2,028 $ 9,937 December 31, 2023 Type of Collateral (dollars in thousands) Real Estate Business Assets Commercial real estate $ 5,940 $ — Commercial construction 4,576 — Total $ 10,516 $ — 85 Table of Contents 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, 2024 (dollars in thousands) Commercial Real Estate Commercial and Industrial Commercial Construction Business Banking Consumer Real Estate Other Consumer Total Loans Allowance for credit losses on loans: Balance at beginning of period $ 37,886 $ 34,538 $ 5,382 $ 12,858 $ 14,663 $ 2,639 $ 107,966 Provision for credit losses on loans (1) ( 4,295 ) 3,939 ( 489 ) ( 627 ) 2,184 1,097 1,809 Charge-offs ( 5,205 ) ( 2,436 ) — ( 1,745 ) ( 1,348 ) ( 1,454 ) ( 12,188 ) Recoveries 1,868 1,043 — 195 277 524 3,907 Net (Charge-offs)/ Recoveries ( 3,337 ) ( 1,393 ) — ( 1,550 ) ( 1,071 ) ( 930 ) ( 8,281 ) Balance at End of Period $ 30,254 $ 37,084 $ 4,893 $ 10,681 $ 15,776 $ 2,806 $ 101,494 (1) Excludes the provision for credits losses for unfunded commitments. Twelve Months Ended December 31, 2023 (dollars in thousands) Commercial Real Estate Commercial and Industrial Commercial Construction Business Banking Consumer Real Estate Other Consumer Total Loans Allowance for credit losses on loans: Balance at beginning of period $ 41,428 $ 25,710 $ 6,264 $ 12,547 $ 12,105 $ 3,286 $ 101,340 Impact of ASU 2022-02 — 75 215 251 278 ( 251 ) 568 Provision for credit losses on loans (1) ( 2,803 ) 18,366 ( 648 ) 1,088 2,493 744 19,240 Charge-offs ( 1,706 ) ( 19,254 ) ( 451 ) ( 1,306 ) ( 421 ) ( 1,500 ) ( 24,638 ) Recoveries 967 9,641 2 278 208 360 11,456 Net (Charge-offs)/ Recoveries ( 739 ) ( 9,613 ) ( 449 ) ( 1,028 ) ( 213 ) ( 1,140 ) ( 13,182 ) Balance at End of Period $ 37,886 $ 34,538 $ 5,382 $ 12,858 $ 14,663 $ 2,639 $ 107,966 (1) Excludes the provision for credits losses for unfunded commitments. NOTE 7. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES We have 41 lease contracts, including 39 operating leases and 2 finance leases at December 31, 2024. 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 2024, 2023 and 2022. One new lease agreement was entered into in 2024. The following table presents our lease expense for finance and operating leases for the years ended December 31: (dollars in thousands) 2024 2023 2022 Operating lease expense $ 5,126 $ 5,199 $ 5,169 Amortization of ROU assets - finance leases 90 90 179 Interest on lease liabilities - finance leases 56 60 65 Total Lease Expense $ 5,272 $ 5,349 $ 5,413 86 Table of Contents 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: (dollars in thousands) 2024 2023 Operating Leases ROU assets $ 40,331 $ 42,100 Operating cash flows $ 7,253 $ 6,996 Finance Leases ROU assets $ 695 $ 786 Operating cash flows $ 56 $ 60 Financing cash flows $ 75 $ 69 Weighted Average Lease Term - Years Operating leases 17.2 17.8 Finance leases 11.4 12.0 Weighted Average Discount Rate Operating leases 5.99 % 5.93 % Finance leases 6.03 % 6.02 % The following table presents the maturity analysis of lease liabilities for finance and operating leases as of December 31, 2024: (dollars in thousands) Finance Operating Total Maturity Analysis 2025 $ 132 $ 4,920 $ 5,052 2026 133 4,816 4,949 2027 134 4,565 4,699 2028 130 4,603 4,733 2029 60 4,461 4,521 Thereafter 687 55,037 55,724 Total 1,276 78,402 79,678 Less: Present value discount ( 380 ) ( 31,549 ) ( 31,929 ) Lease Liabilities $ 896 $ 46,853 $ 47,749 NOTE 8. PREMISES AND EQUIPMENT The following table is a summary of premises and equipment as of the dates presented: December 31, (dollars in thousands) 2024 2023 Land $ 8,651 $ 8,651 Premises 62,140 62,150 Furniture and equipment 54,468 52,638 Leasehold improvements 12,555 12,527 137,814 135,966 Accumulated depreciation ( 92,781 ) ( 86,960 ) Total $ 45,033 $ 49,006 Depreciation expense related to premises and equipment was $ 6.7 million in 2024, $ 6.5 million in 2023 and $ 6.4 million in 2022. 87 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9. GOODWILL AND OTHER INTANGIBLES The following table presents goodwill as of the dates presented: December 31, (dollars in thousands) 2024 2023 Balance at beginning of year $ 373,424 $ 373,424 Additions — — Balance at End of Year $ 373,424 $ 373,424 Goodwill is reviewed for impairment annually or more frequently if it is determined that a triggering event has occurred. In our qualitative assessment performed for our annual impairment analysis as of October 1, 2024, we concluded that it is not more likely than not that fair value is less than carrying value. Based on this conclusion, a quantitative impairment test was not performed and we concluded that goodwill was not impaired. No events or circumstances since the October 1, 2024 annual impairment test were noted that would indicate goodwill was impaired at December 31, 2024. The following table presents a summary of intangible assets as of the dates presented: December 31, (dollars in thousands) 2024 2023 Gross carrying amount at beginning of year $ 31,340 $ 31,340 Additions — — Accumulated amortization ( 28,285 ) ( 27,281 ) Balance at End of Year $ 3,055 $ 4,059 Intangible assets of $ 3.1 million at December 31, 2024 relate to core deposit and wealth management customer relationships resulting from acquisitions. We determined the amount of identifiable intangible assets for our core deposits based upon an independent valuation. Other intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. There were no triggering events in 2024 requiring an impairment analysis to be completed. Amortization expense on finite-lived intangible assets totaled $ 1.0 million, $ 1.3 million and $ 1.5 million for 2024, 2023 and 2022. 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, 2024 and thereafter: (dollars in thousands) Amount 2025 $ 846 2026 701 2027 593 2028 511 2029 404 Thereafter — Total $ 3,055 88 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivatives Designated as Hedging Instruments The following table indicates the amounts representing the value of derivative assets and derivative liabilities as of the dates presented: Derivative Assets (Included in Other Assets) Derivative Liabilities (Included in Other Liabilities) December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 (dollars in thousands) Notional Amount Fair Value Notional Amount Fair Value Notional Amount Fair Value Notional Amount Fair Value Derivatives Designated as Hedging Instruments Interest rate swap contracts - cash flow hedges $ — $ — $ — $ — $ 500,000 $ 9,589 $ 500,000 $ 14,739 Total Derivatives Designated as Hedging Instruments $ — $ — $ — $ — $ 500,000 $ 9,589 $ 500,000 $ 14,739 Derivatives Not Designated as Hedging Instruments Interest rate swap contracts - commercial loans 850,104 60,890 892,712 63,018 850,104 61,271 892,712 63,554 Total Derivatives Not Designated as Hedging Instruments $ 850,104 $ 60,890 $ 892,712 $ 63,018 $ 850,104 $ 61,271 $ 892,712 $ 63,554 Total Derivatives $ 850,104 $ 60,890 $ 892,712 $ 63,018 $ 1,350,104 $ 70,860 $ 1,392,712 $ 78,293 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: Derivative Assets (Included in Other Assets) Derivative Liabilities (Included in Other Liabilities) (dollars in thousands) December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Gross amounts recognized $ 60,890 $ 63,018 $ 70,860 $ 78,293 Gross amounts offset — — — — Net amounts presented in the Consolidated Balance Sheets 60,890 63,018 70,860 78,293 Netting adjustments (1) ( 8,317 ) ( 10,424 ) ( 8,317 ) ( 10,424 ) Cash collateral (2) ( 52,516 ) ( 50,920 ) ( 2,034 ) ( 5,356 ) Net Amount $ 57 $ 1,674 $ 60,509 $ 62,513 (1) Netting adjustments represent the amounts recorded to convert derivative 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. 89 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables present the effect, net of tax, of the cash flow hedges on OCI and on the Condensed Consolidated Statements of Comprehensive Income for the periods presented: Amount of Gain Recognized in Other Comprehensive Income Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Interest Income (dollars in thousands) Twelve months ended December 31, 2024 Twelve months ended December 31, 2023 Twelve months ended December 31, 2024 Twelve months ended December 31, 2023 Derivatives in Cash Flow Hedging Relationships: Interest rate swap contracts - cash flow hedges $ 4,076 $ 5,204 $ ( 10,607 ) $ ( 9,720 ) Total $ 4,076 $ 5,204 $ ( 10,607 ) $ ( 9,720 ) 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 $ 6.4 million will be reclassified as a decrease to interest income. Our current interest rate swap agreements have 3 to 5 year terms with maturity dates extending into 2027. The following table indicates the gain (loss) recognized in income on derivatives not designated as hedging instruments for the periods presented: Twelve months ended December 31, (dollars in thousands) 2024 2023 2022 Derivatives not Designated as Hedging Instruments Interest rate swap contracts—commercial loans $ 154 $ ( 554 ) $ 103 Interest rate lock commitments—mortgage loans — ( 5 ) ( 396 ) Forward sale contracts—mortgage loans — ( 2 ) ( 2 ) Total Derivatives Gain (Loss) $ 154 $ ( 561 ) $ ( 295 ) NOTE 11. MORTGAGE SERVICING RIGHTS For the years ended December 31, 2024, 2023 and 2022, the 1-4 family mortgage loans that were sold to Fannie Mae amounted to $ 2.8 million, $ 0.2 million and $ 28.6 million. At December 31, 2024, 2023 and 2022, our servicing portfolio unpaid principal balance was $ 648.9 million, $ 707.8 million and $ 772.9 million. The following table indicates MSRs and the net carrying values: (dollars in thousands) Servicing Rights Valuation Allowance Net Carrying Value Balance at December 2022 $ 7,147 $ — $ 7,147 Additions 2 — 2 Amortization ( 804 ) — ( 804 ) Temporary recapture — — — Balance at December 2023 $ 6,345 $ — $ 6,345 Additions 27 — 27 Amortization ( 726 ) — ( 726 ) Temporary recapture — — — Balance at December 31, 2024 $ 5,646 $ — $ 5,646 NOTE 12. TAX CREDIT EQUITY INVESTMENTS As part of our responsibilities under the Community Reinvestment Act and due to their favorable federal income tax benefits, we invest in LIHTC and historic tax credit, or HTC, partnerships. As a limited partner in these operating partnerships, we receive tax credits and tax deductions for losses incurred by the underlying properties. Effective January 1, 2024, we adopted ASU 2023-02 and elected to apply the PAM to both LIHTC and HTC equity investments. The adoption of this ASU resulted in a $ 1.0 million cumulative effect adjustment which decreased retained earnings and other assets. Tax credit equity investment balances of $ 40.6 million were included in other assets in the Consolidated Balance Sheets at December 31, 2024. Unfunded commitments of $ 5.9 million were included in other liabilities in the Consolidated Balance Sheets at December 31, 2024. 90 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the twelve months ended December 31, 2024, amortization expense of $ 4.3 million as well as tax credits of $ 4.6 million were recognized in income tax expense in the Consolidated Statements of Net Income. No impairment losses were recognized for the twelve months ended December 31, 2024. Prior to the adoption of ASU 2023-02, the cost method was used to account for our investments in tax credit equity investments. For the twelve months ended December 31, 2023 and December 31, 2022, amortization expense of $ 2.0 million and $ 1.4 million was included in other expense and tax credits of $ 2.6 million and $ 1.2 million were recognized as a reduction to income tax expense in our Consolidated Statements of Net Income. NOTE 13. DEPOSITS The following table presents the composition of deposits at December 31 and interest expense for the years ended December 31: 2024 2023 2022 (dollars in thousands) Balance Interest Expense Balance Interest Expense Balance Interest Expense Noninterest-bearing demand $ 2,185,242 $ — $ 2,221,942 $ — $ 2,588,692 $ — Interest-bearing demand 812,768 8,837 825,787 6,056 846,653 1,025 Money market 2,040,285 64,666 1,941,842 39,480 1,731,521 11,948 Savings 877,859 6,273 950,546 4,352 1,118,511 1,121 Certificates of deposit 1,866,963 79,635 1,581,652 42,948 934,593 5,813 Total $ 7,783,117 $ 159,411 $ 7,521,769 $ 92,836 $ 7,219,970 $ 19,907 The aggregate of all certificates of deposits over $250,000 was $ 479.2 million at December 31, 2024 and $ 350.7 million at December 31, 2023. The following table indicates the scheduled maturities of certificates of deposit at December 31, 2024: (dollars in thousands) Amount 2025 $ 1,745,518 2026 90,341 2027 14,453 2028 8,225 2029 5,619 Thereafter 2,807 Total $ 1,866,963 NOTE 14. SHORT TERM BORROWINGS Short-term borrowings are for terms under or equal to one year and at December 31, 2024 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. The following table presents the composition of short-term borrowings, the weighted average interest rate as of December 31, 2024 and interest expense for the years ended December 31: 2024 2023 2022 (dollars in thousands) Balance Weighted Average Interest Rate Interest Expense (1) Balance Weighted Average Interest Rate Interest Expense Balance Weighted Average Interest Rate Interest Expense FHLB advances 150,000 4.60 % 13,206 415,000 5.65 % 27,234 370,000 4.49 % 1,649 Total Short-term Borrowings $ 150,000 4.60 % $ 13,206 $ 415,000 5.65 % $ 27,234 $ 370,000 4.49 % $ 1,649 (1) Includes interest expense on advances from the Federal Reserve Bank Term Funding Program which ceased making new fundings in March 2024. 91 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15. LONG TERM BORROWINGS AND SUBORDINATED DEBT Long-term borrowings are for original terms greater than one year and are comprised of FHLB advances and finance leases. Our long-term borrowings were $ 50.9 million as of December 31, 2024 and $ 39.3 million as of December 31, 2023. Long-term FHLB advances are secured by the same loans as short-term FHLB advances. Total loans pledged as collateral at the FHLB were $ 2.8 billion at December 31, 2024. We were eligible to borrow up to an additional $ 1.7 billion based on qualifying collateral and up to a maximum borrowing capacity of $ 2.0 billion at December 31, 2024. The following table represents the balance of long-term borrowings, the weighted average interest rate as of December 31 and interest expense for the years ended December 31: (dollars in thousand) 2024 2023 2022 Long-term borrowings $ 50,896 $ 39,277 $ 14,741 Weighted average interest rate 3.75 % 4.52 % 2.61 % Interest expense $ 1,964 $ 1,332 $ 411 Scheduled annual maturities and average interest rates for all of our long-term debt for each of the five years subsequent to December 31, 2024 and thereafter are as follows: (dollars in thousands) Balance Average Rate 2025 $ 81 5.98 % 2026 50,087 3.71 % 2027 93 6.02 % 2028 94 6.05 % 2029 28 6.08 % Thereafter 513 5.88 % Total $ 50,896 3.75 % Junior Subordinated Debt Securities The following table represents the composition of junior subordinated debt securities at December 31 and the interest expense for the years ended December 31: 2024 2023 2022 (dollars in thousands) Balance Interest Expense Balance Interest Expense Balance Interest Expense Junior subordinated debt $ 25,000 $ 1,796 $ 25,000 $ 1,738 $ 25,000 $ 850 Junior subordinated debt—trust preferred securities 24,418 2,180 24,358 2,372 29,453 1,545 Total $ 49,418 $ 3,976 $ 49,358 $ 4,110 $ 54,453 $ 2,395 The following table summarizes the key terms of our junior subordinated debt securities: (dollars in thousands) 2005 Trust Preferred Securities 2006 Junior Subordinated Debt 2008 Trust Preferred Securities Junior Subordinated Debt $— $ 25,000 $— Trust Preferred Securities $ 4,124 — $ 20,619 Stated Maturity Date 5/23/2035 12/15/2036 3/15/2038 Optional redemption date at par Any time after 5/23/2010 Any time after 9/15/2011 Any time after 3/15/2013 Regulatory Capital Tier 1 Tier 2 Tier 1 Interest Rate 3 Month CME Term SOFR plus 203 bps 3 month CME Term SOFR plus 186 bps 3 month CME Term SOFR plus 376 bps Interest Rate at December 31, 2024 6.55 % 6.22 % 8.12 % 92 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We own 100 percent of the common equity of STBA Capital Trust I and DNB Capital Trust II, or the Trusts. The Trusts were formed to issue mandatorily redeemable capital securities to third-party investors. The proceeds from the sale of the securities and the issuance of the common equity by the Trusts were invested in junior subordinated debt securities issued by us. The third-party investors are considered the primary beneficiaries of the Trusts; therefore, the Trusts qualify as VIEs, but are not consolidated into our financial statements. 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 II was acquired with the DNB merger. NOTE 16. COMMITMENTS AND CONTINGENCIES 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 consolidated 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 following table sets forth our commitments and letters of credit as of the dates presented: (dollars in thousands) December 31, 2024 December 31, 2023 Commitments to extend credit $ 2,382,847 $ 2,566,154 Standby letters of credit 69,558 61,889 Total $ 2,452,405 $ 2,628,043 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 inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a draw-down on the commitment. The provision for credit losses on unfunded loan commitments is included in the provision for credit losses in our Consolidated Statements of Net Income. The allowance for unfunded commitments is included in other liabilities in our Consolidated Balance Sheets. The following table presents activity in the ACL on unfunded loan commitments for the periods presented: Twelve months ended December 31, (dollars in thousands) 2024 2023 Balance at beginning of period $ 6,848 $ 8,196 Provision for credit losses ( 1,676 ) ( 1,348 ) Total $ 5,172 $ 6,848 Litigation 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. NOTE 17. REVENUE FROM CONTRACTS WITH CUSTOMERS The information presented in the following table presents the point of revenue recognition for revenue from contracts with customers. Other revenue streams are excluded such as: interest income, net securities gains and losses, insurance, mortgage banking and other revenues that are accounted for under other GAAP. 93 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, (dollars in thousands) 2024 2023 2022 Revenue Streams (1) Point of Revenue Recognition Service charges on deposit accounts Over a period of time $ 1,667 $ 1,659 $ 1,703 At a point in time 14,606 14,534 15,126 $ 16,273 $ 16,193 $ 16,829 Debit and credit card Over a period of time $ 1,461 $ 1,288 $ 1,709 At a point in time 16,802 16,960 17,299 $ 18,263 $ 18,248 $ 19,008 Wealth management Over a period of time $ 6,550 $ 7,969 $ 8,714 At a point in time 5,709 4,217 4,003 $ 12,259 $ 12,186 $ 12,717 Other fee revenue At a point in time $ 1,324 $ 1,310 $ 1,550 (1) Refer to Note 1. Summary of Significant Accounting Policies for the types of revenue streams that are included within each category . NOTE 18. INCOME TAXES The following table presents the composition of income tax expense (benefit) for the years ended December 31: (dollars in thousands) 2024 2023 2022 Federal Current $ 32,536 $ 33,070 $ 35,514 Deferred ( 31 ) 459 ( 2,801 ) Total Federal 32,505 33,529 32,713 State Current 1,313 352 828 Deferred ( 265 ) 142 ( 131 ) Total State 1,048 494 697 Total Federal and State (1) $ 33,553 $ 34,023 $ 33,410 [1] With the adoption of PAM on January 1, 2024, the amortization related to LIHTC and HTC equity investments is recognized in income tax expense in the Consolidated Statements of Net Income in 2024 and other noninterest expense in 2023 and 2022. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. We ordinarily generate an annual effective tax rate that is less than the statutory rate of 21 percent primarily due to benefits resulting from certain partnership investments, such as low income housing and historic rehabilitation projects, tax-exempt interest, excludable dividend income and tax-exempt income on BOLI. The following table presents a reconciliation of the statutory tax rate to the effective tax rate for the years ended December 31: 2024 2023 2022 Statutory tax rate 21.0 % 21.0 % 21.0 % Tax-exempt interest ( 0.8 ) % ( 0.8 ) % ( 1.0 ) % Low income housing tax credits ( 0.2 ) % ( 1.5 ) % ( 0.7 ) % Bank owned life insurance ( 0.3 ) % ( 0.2 ) % ( 0.2 ) % Other 0.7 % 0.5 % 0.7 % Effective Tax Rate (1) 20.4 % 19.0 % 19.8 % [1] With the adoption of PAM on January 1, 2024, the amortization related to LIHTC and HTC equity investments is recognized in income tax expense in the Consolidated Statements of Net Income in 2024 and other noninterest expense in 2023 and 2022. 94 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents significant components of our temporary differences as of the dates presented: December 31, (dollars in thousands) 2024 2023 Deferred Tax Assets: Allowance for credit losses and other reserves $ 22,953 $ 24,465 Net unrealized holding losses on securities available-for-sale 15,431 17,452 Lease liabilities 10,271 10,572 State net operating loss carryforwards 3,782 3,464 Net unrealized losses on interest rate swaps 2,063 3,137 Cumulative adjustment to funded status of pension 3,606 3,987 Low income housing partnerships and other investments — 174 Other employee benefits 4,688 3,740 Depreciation on premises and equipment 5 — Capital loss carryforward 1,300 2,092 Other 1,243 1,202 Deferred Tax Assets 65,342 70,285 Less: Valuation allowance ( 3,782 ) ( 3,464 ) Total Deferred Tax Assets 61,560 66,821 Deferred Tax Liabilities: Right-of-use lease assets ( 8,825 ) ( 9,127 ) Deferred loan income, net ( 5,216 ) ( 4,633 ) Prepaid pension ( 3,131 ) ( 3,360 ) Purchase accounting adjustments ( 1,650 ) ( 1,823 ) Mortgage servicing rights ( 61 ) ( 1,350 ) Depreciation on premises and equipment — ( 1,182 ) Other partnership investments (1) ( 491 ) — Other ( 113 ) ( 78 ) Total Deferred Tax liabilities ( 19,487 ) ( 21,553 ) Net Deferred Tax Asset $ 42,073 $ 45,268 (1) With the adoption of PAM on January 1, 2024, the LIHTC and HTC equity investments no longer have a deferred tax impact. We establish a valuation allowance when it is more likely than not that we will not be able to realize the benefit of the deferred tax assets. Except for Pennsylvania net operating losses, or NOLs, we have determined that no valuation allowance is needed for deferred tax assets because it is more likely than not that these assets will be realized through future reversals of existing temporary differences and through future taxable income. 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 $ 3.8 million in 2024 compared to $ 3.5 million in 2023 related to Pennsylvania income tax NOLs. The Pennsylvania NOL carryforwards total $ 75.8 million and will expire in the years 2025-2044. 95 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Unrecognized Tax Benefits The following table reconciles the change in Federal and State gross unrecognized tax benefits, or UTB, for the years ended December 31: (dollars in thousands) 2024 2023 2022 Balance at beginning of year $ 1,940 $ 1,648 $ 1,331 Prior period tax positions 146 ( 434 ) — Current period tax positions — 726 317 Balance at End of Year $ 2,086 $ 1,940 $ 1,648 Amount That Would Affect the Effective Tax Rate if Recognized $ 1,648 $ 1,551 $ 1,148 As of December 31, 2024, we had $ 2.1 million of unrecognized gross tax benefits. Gross tax benefits do not reflect the federal tax effect associated with state income tax amounts. The total amount of the net unrecognized tax benefits at December 31, 2024 that would have affected the effective tax rate, if recognized, was $ 1.6 million. We classify interest and penalties as an element of tax expense. We monitor changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2024, no significant changes to UTB are projected; however, tax audit examinations are possible. As of December 31, 2024, all income tax returns filed for the tax years 2021 - 2023 remain subject to examination by the respective taxing authorities. The Bank's income tax returns for the audit years January 1, 2020 through December 31, 2022 are currently under audit by the New York Department of Taxation. This audit remains open as of December 31, 2024. NOTE 19. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME The following table presents the changes in the components of Accumulated Other Comprehensive Income (Loss) for the periods presented: (dollars in thousands) Available-for-Sale Debt Securities Interest Rate Swaps Employee Benefit Plans Total Balance at December 31, 2022 $ ( 80,463 ) $ ( 16,806 ) $ ( 14,856 ) $ ( 112,125 ) Net Change 15,910 5,204 110 21,224 Balance at December 31, 2023 $ ( 64,553 ) $ ( 11,602 ) $ ( 14,746 ) $ ( 90,901 ) Net Change 8,245 4,076 1,588 13,909 Balance at December 31, 2024 $ ( 56,308 ) $ ( 7,526 ) $ ( 13,158 ) $ ( 76,992 ) All amounts are net of tax. NOTE 20. EMPLOYEE BENEFITS We maintain a qualified defined benefit pension plan, or Plan, covering substantially all employees hired prior to January 1, 2008. The benefits are based on years of service and the employee’s compensation for the highest 5 consecutive years in the last 10 years through March 31, 2016 when the Plan was frozen. 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, 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. 96 Table of Contents 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: (dollars in thousands) 2024 2023 Change in Projected Benefit Obligation Projected benefit obligation at beginning of year $ 73,187 $ 73,366 Interest cost 3,437 3,812 Actuarial gain/(loss) ( 4,101 ) 2,248 Benefits paid ( 7,606 ) ( 6,239 ) Projected Benefit Obligation at End of Year $ 64,917 $ 73,187 Change in Plan Assets Fair value of plan assets at beginning of year $ 71,574 $ 73,086 Actual gain/(loss) on plan assets ( 62 ) 4,727 Benefits paid ( 7,606 ) ( 6,239 ) Fair Value of Plan Assets at End of Year $ 63,906 $ 71,574 Funded Status $ ( 1,011 ) $ ( 1,613 ) The following table sets forth the amounts recognized in accumulated OCI at December 31: (dollars in thousands) 2024 2023 Net actuarial loss 17,247 19,137 Total (Before Tax Effects) $ 17,247 $ 19,137 Below are the actuarial weighted average assumptions used in determining the benefit obligation: 2024 2023 Discount rate 5.58 % 5.03 % Rate of compensation increase (1) — % — % (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: (dollars in thousands) 2024 2023 2022 Components of Net Periodic Pension Cost Interest cost on projected benefit obligation $ 3,437 $ 3,812 $ 3,160 Expected return on plan assets ( 3,535 ) ( 3,932 ) ( 3,158 ) Recognized net actuarial loss 1,386 1,725 1,229 Settlement charge — — 1,097 Net Periodic Pension Expense $ 1,288 $ 1,605 $ 2,328 Other Changes in Plan Assets and Benefit Obligation Recognized in Other Comprehensive Income (Loss) Net actuarial (gain) loss $ ( 504 ) $ 1,453 $ 3,706 Recognized net actuarial loss ( 1,386 ) ( 1,725 ) ( 1,229 ) Settlement gain (loss) recognized — $ — ( 1,097 ) Total Changes in Plan Assets and Benefit Obligation (Before Tax Effects) $ ( 1,890 ) $ ( 272 ) $ 1,380 Total Recognized in Net Benefit Cost and Other Comprehensive Income (Before Tax Effects) $ ( 602 ) $ 1,333 $ 3,708 The following table summarizes the actuarial weighted average assumptions used in determining net periodic pension cost: 2024 2023 2022 Discount rate 5.03 % 5.41 % 2.80 % Rate of compensation increase (1) — % — % — % Expected return on assets 5.18 % 5.72 % 3.29 % (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. 97 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The accumulated benefit obligation for the Plan was $ 64.9 million at December 31, 2024 and $ 73.2 million at December 31, 2023. We consider many factors when setting the assumed rate of return on Plan assets. As a general guideline the assumed rate of return is equal to the weighted average of the expected returns for each asset category and is estimated based on historical returns as well as expected future returns. The weighted average discount rate is derived from corporate yield curves. S&T Bank’s Retirement Plan Committee determines the investment policy for the Plan. In general, the targeted investment allocation is 5 percent to 10 percent return seeking and 90 percent to 95 percent liability hedging. A strategic allocation within each investment allocation is based on the Plan’s duration, time horizon, risk tolerances, performance expectations and preferences. Investment managers have discretion to invest in any equity or fixed-income asset class, subject to the securities guidelines of the Plan’s Investment Policy Statement. At this time, S&T Bank is not required to make a cash contribution to the Plan in 2025. The following table provides information regarding estimated future benefit payments to be paid in each of the next five years and in the aggregate for the five years thereafter: (dollars in thousands) Amount 2025 $ 6,038 2026 5,852 2027 5,872 2028 5,786 2029 5,952 2030-2034 26,436 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 $ 2.9 million in 2024, $ 2.7 million in 2023 and $ 2.5 million in 2022. Fair Value Measurements The following tables present our retirement plan assets measured at fair value on a recurring basis by fair value hierarchy level at December 31, 2024 and 2023. During the years ended December 31, 2024 and 2023, there were no transfers between Level 1 and Level 2 for items of a recurring basis. There were no purchases or transfers of Level 3 plan assets in 2024 or 2023. December 31, 2024 Fair Value Asset Classes (1) (dollars in thousands) Level 1 Level 2 Level 3 Total Cash and cash equivalents (2) $ 1,040 $ — $ — $ 1,040 Fixed income (3) 56,301 — — 56,301 Equity mutual funds (4) 6,565 — — 6,565 Total Assets at Fair Value $ 63,906 $ — $ — $ 63,906 (1) Refer to Note 1. Summary of Significant Accounting Policies, Fair Value Measurements for a description of levels within the fair value hierarchy. (2) This asset class includes FDIC insured money market instruments. (3) This asset class includes a variety of fixed income mutual funds which primarily invest in investment grade rated securities. Investment managers have discretion to invest in fixed income related securities including futures, options and other derivatives. Investments may be made in currencies other than the U.S. dollar. (4) This asset class includes equity mutual funds invested in an active all-cap strategy. It may also include convertible bonds. 98 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 Fair Value Asset Classes (1) (dollars in thousands) Level 1 Level 2 Level 3 Total Cash and cash equivalents (2) $ 934 $ — $ — $ 934 Fixed income (3) 63,629 — — 63,629 Equity mutual funds (4) 7,011 — — 7,011 Total Assets at Fair Value $ 71,574 $ — $ — $ 71,574 (1) Refer to Note 1. Summary of Significant Accounting Policies, Fair Value Measurements for a description of levels within the fair value hierarchy. (2) This asset class includes FDIC insured money market instruments. (3) This asset class includes a variety of fixed income mutual funds which primarily invest in investment grade rated securities. Investment managers have discretion to invest in fixed income related securities including futures, options and other derivatives. Investments may be made in currencies other than the U.S. dollar. (4) This asset class includes equity mutual funds invested in an active all-cap strategy. It may also include convertible bonds. NOTE 21. INCENTIVE AND RESTRICTED STOCK PLAN AND DIVIDEND REINVESTMENT PLAN The 2021 Incentive Plan provides for cash performance awards and for granting incentive stock options, nonstatutory stock options, restricted stock, restricted stock units and appreciation rights. The 2021 plan replaced and superseded the S&T Bancorp, Inc. 2014 Incentive Plan. Since the 2021 plan has been approved by our shareholders, no new awards will be granted under the 2014 plan. A maximum of 1,000,000 shares of our common stock were available for awards granted under the 2021 Incentive Plan and the plan expires ten years from the date of board approval, which occurred in May of 2021. Previously granted but forfeited shares are added to the shares available for issuance. Restricted Stock We periodically issue restricted stock to employees and directors pursuant to our 2021 Incentive Plan. Restricted stock awards are part of the compensation arrangements approved by the Compensation and Benefits Committee. Restricted shares granted under the plan consist of both time and performance-based restricted stock units. The awards are granted in accordance with performance levels set by the Compensation and Benefits Committee. Under the 2021 plan, we issued 165,711 restricted stock awards during 2024, 162,677 restricted stock awards in 2023 and 181,392 restricted stock awards in 2022. The following table provides information about restricted stock awards granted for the periods presented: December 31, Vesting Period 2024 2023 2022 2021 Stock Plan Directors One year 15,601 17,145 16,488 Other Awards Three years 150,110 145,532 164,904 Total Restricted Stock Grants 165,711 162,677 181,392 Common stock is issued as vesting restrictions lapse, which varies according to the terms of the vesting schedules in the award agreements. The vesting of time based awards is generally 1 to 3 years. The vesting of performance-based awards is based on S&T's achievement of relative return on average equity and total shareholder return, over a 3 year performance period compared to a peer group as defined in the award agreements. Restricted stock grants are forfeited if a grantee leaves S&T before the end of the vesting period except where accelerated vesting provisions are defined within the award agreements. During 2024, 2023 and 2022, we recognized compensation expense of $ 4.6 million, $ 3.9 million and $ 3.2 million and realized a tax benefit of $ 1.0 million, $ 0.8 million and $ 0.7 million related to restricted stock grants. 99 Table of Contents 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: (dollars in thousands), except per share data Restricted Stock Weighted Average Grant Date Fair Value Non-vested at December 31, 2022 292,145 $ 25.56 Granted 162,677 30.84 Vested 91,955 26.92 Forfeited 47,157 26.52 Non-vested at December 31, 2023 315,710 $ 27.75 Granted 165,711 32.59 Vested 95,589 30.77 Forfeited 34,368 31.47 Non-vested at December 31, 2024 351,464 $ 31.41 The maximum number of shares that can be issued if performance is achieved at the maximum level is approximately 515,000 shares at December 31, 2024. As of December 31, 2024, there was $ 4.8 million of total unrecognized compensation cost related to restricted stock that will be recognized as compensation expense over a weighted average period of 1.78 years. Dividend Reinvestment Plan We also sponsor a Dividend Reinvestment and Stock Purchase Plan, or Dividend Plan, where shareholders may purchase shares of S&T common stock at the average fair value with reinvested dividends and voluntary cash contributions. 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. NOTE 22. PARENT COMPANY CONDENSED FINANCIAL INFORMATION The following condensed financial statements summarize the financial position of S&T Bancorp, Inc. as of December 31, 2024 and 2023 and the results of its operations and cash flows for each of the three years ended December 31, 2024, 2023 and 2022. BALANCE SHEETS December 31, (dollars in thousands) 2024 2023 ASSETS Cash $ 39,304 $ 20,733 Investments in: Bank subsidiary 1,352,177 1,268,441 Nonbank subsidiaries 4,169 4,658 Other assets 9,666 14,695 Total Assets $ 1,405,316 $ 1,308,527 LIABILITIES Long-term debt $ 24,515 $ 24,474 Other liabilities 507 608 Total Liabilities 25,022 25,082 Total Shareholders’ Equity 1,380,294 1,283,445 Total Liabilities and Shareholders’ Equity $ 1,405,316 $ 1,308,527 100 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF NET INCOME Years ended December 31, (dollars in thousands) 2024 2023 2022 Dividends from subsidiaries $ 66,775 $ 86,950 $ 61,426 Total Income 66,775 86,950 61,426 Interest expense on long-term debt 2,180 2,372 1,545 Other expenses 4,973 4,764 4,112 Total expense 7,153 7,136 5,657 Income before income tax and undistributed net income of subsidiaries 59,622 79,814 55,769 Income tax benefit ( 1,309 ) ( 1,478 ) ( 1,208 ) Income before undistributed net income of subsidiaries 60,931 81,292 56,977 Equity in undistributed net income (distribution in excess of net income) of: Bank subsidiary 70,823 63,337 79,566 Nonbank subsidiaries ( 489 ) 152 ( 1,023 ) Net Income $ 131,265 $ 144,781 $ 135,520 STATEMENTS OF CASH FLOWS Years ended December 31, (dollars in thousands) 2024 2023 2022 OPERATING ACTIVITIES Net Income $ 131,265 $ 144,781 $ 135,520 Equity in undistributed (earnings) losses of subsidiaries ( 70,334 ) ( 63,489 ) ( 78,543 ) Other 9,484 1,402 1,468 Net Cash Provided by Operating Activities 70,415 82,694 58,445 FINANCING ACTIVITIES Repayment of long term debt — ( 5,464 ) — Repurchase of shares for taxes on restricted stock ( 870 ) ( 798 ) ( 808 ) Repurchase of common stock — ( 19,808 ) ( 7,637 ) Cash dividends paid to common shareholders ( 50,974 ) ( 49,708 ) ( 46,952 ) Net Cash Used in Financing Activities ( 51,844 ) ( 75,778 ) ( 55,397 ) Net increase (decrease) in cash 18,571 6,916 3,048 Cash at beginning of year 20,733 13,817 10,769 Cash at End of Year $ 39,304 $ 20,733 $ 13,817 NOTE 23. REGULATORY MATTERS We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our consolidated financial statements. Under capital guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by the regulators about risk weightings and other factors. The most recent notifications from the Federal Reserve and the FDIC categorized S&T and S&T Bank as well capitalized under the regulatory framework for corrective action. There have been no conditions or events that we believe have changed S&T's or S&T Bank’s status during 2024 and 2023. 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 OCI from capital. For regulatory purposes, trust preferred securities totaling $ 24.0 million, issued by an unconsolidated trust subsidiary of S&T underlying junior subordinated debt, are included in Tier 1 capital for S&T. Total capital consists of Tier 1 capital plus junior subordinated debt and the ACL subject to limitation. We currently have $ 25.0 million in junior subordinated debt which is included in Tier 2 capital for S&T in accordance with current regulatory reporting requirements. 101 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios of Total, Tier 1 and Common Equity Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. As of December 31, 2024 and 2023, we met all capital adequacy requirements to which we are subject. The following table summarizes risk-based capital amounts and ratios for S&T and S&T Bank: Actual Minimum Regulatory Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2024 Leverage Ratio S&T $ 1,112,126 11.98 % $ 371,211 4.00 % $ 464,014 5.00 % S&T Bank 1,060,010 11.43 % 371,002 4.00 % 463,752 5.00 % Common Equity Tier 1 ratio S&T 1,088,126 14.58 % 335,888 4.50 % 485,172 6.50 % S&T Bank 1,060,010 14.21 % 335,722 4.50 % 484,932 6.50 % Tier 1 Capital (to Risk-Weighted Assets) S&T 1,112,126 14.90 % 447,851 6.00 % 597,134 8.00 % S&T Bank 1,060,010 14.21 % 447,629 6.00 % 596,839 8.00 % Total Capital (to Risk-Weighted Assets) S&T 1,230,497 16.49 % 597,134 8.00 % 746,418 10.00 % S&T Bank 1,178,335 15.79 % 596,839 8.00 % 746,049 10.00 % As of December 31, 2023 Leverage Ratio S&T $ 1,034,828 11.21 % $ 369,297 4.00 % $ 461,621 5.00 % S&T Bank 995,824 10.79 % 369,133 4.00 % 461,416 5.00 % Common Equity Tier 1 ratio S&T 1,010,828 13.37 % 340,159 4.50 % 491,341 6.50 % S&T Bank 995,824 13.18 % 339,954 4.50 % 491,045 6.50 % Tier 1 Capital (to Risk-Weighted Assets) S&T 1,034,828 13.69 % 453,545 6.00 % 604,727 8.00 % S&T Bank 995,824 13.18 % 453,272 6.00 % 604,362 8.00 % Total Capital (to Risk-Weighted Assets) S&T 1,154,376 15.27 % 604,727 8.00 % 755,909 10.00 % S&T Bank 1,115,315 14.76 % 604,362 8.00 % 755,453 10.00 % 102 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of S&T Bancorp, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of S&T Bancorp, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. 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, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. 103 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Allowance for Credit Losses (ACL) Description of the Matter At December 31, 2024, the Company’s gross portfolio of loans was $7.7 billion with an associated ACL of $101.5 million. As discussed in Notes 1 and 6 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 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 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 controls related to 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, 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 expected credit losses by comparing the overall ACL to historical losses and ACL reserves established by peer banking institutions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. Pittsburgh, Pennsylvania February 28, 2025 104 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of S&T Bancorp, Inc. Opinion on Internal Control Over Financial Reporting We have audited S&T Bancorp, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2024, 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. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, 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, 2024 and 2023, 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, 2024, and the related notes and our report dated February 28, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Pittsburgh, Pennsylvania February 28, 2025 105 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None