UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________
FORM 10-Q
______________________________________ 
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020March 31, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to                
Commission file number 0-12508
______________________________________ 
S&T BANCORP INC.
(Exact name of registrant as specified in its charter)
______________________________________ 
Pennsylvania 25-1434426
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
800 Philadelphia StreetIndianaPA 15701
(Address of principal executive offices) (zip code)
800-325-2265
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $2.50 par valueSTBAThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 


Large accelerated filer☒Accelerated filer☐
Non-accelerated filer
☐ 
Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.
Common Stock, $2.50 Par Value - 39,251,63839,360,750 shares as of August 3, 2020April 30, 2021


Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES



INDEX
S&T BANCORP, INC. AND SUBSIDIARIES
 
  Page No.    
2
3
4
65
76
4837
6853
7055
7055
7055
7156
7156
7257
7257
7257
7358
1
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)


June 30, 2020December 31, 2019
(dollars in thousands, except per share data)(Unaudited)(Audited)
ASSETS
Cash and due from banks, including interest-bearing deposits of $277,670 and $124,491 at June 30, 2020 and December 31, 2019$351,365 $197,823 
Securities, at fair value804,366 784,283 
Loans held for sale14,259 5,256 
Portfolio loans, net of unearned income7,548,558 7,137,152 
Allowance for credit losses on loans(114,609)(62,224)
Portfolio loans, net7,433,949 7,074,928 
Bank owned life insurance81,443 80,473 
Premises and equipment, net56,441 56,940 
Federal Home Loan Bank and other restricted stock, at cost15,151 22,977 
Goodwill373,289 371,621 
Other intangible assets, net9,743 10,919 
Other assets334,290 159,429 
Total Assets$9,474,296 $8,764,649 
LIABILITIES
Deposits:
Noninterest-bearing demand$2,250,958 $1,698,082 
Interest-bearing demand1,055,261 962,331 
Money market2,121,588 1,949,811 
Savings916,268 830,919 
Certificates of deposit1,523,841 1,595,433 
Total Deposits7,867,916 7,036,576 
Securities sold under repurchase agreements92,159 19,888 
Short-term borrowings84,541 281,319 
Long-term borrowings49,489 50,868 
Junior subordinated debt securities64,053 64,277 
Other liabilities180,361 119,723 
Total Liabilities8,338,519 7,572,651 
SHAREHOLDERS’ EQUITY
Common stock ($2.50 par value)
Authorized—50,000,000 shares
Issued—41,449,444 shares at June 30, 2020 and December 31, 2019
Outstanding— 39,263,460 shares at June 30, 2020 and 39,560,304 shares at December 31, 2019103,623 103,623 
Additional paid-in capital400,417 399,944 
Retained earnings692,240 761,083 
Accumulated other comprehensive income (loss)9,232 (11,670)
Treasury stock (2,185,984 shares at June 30, 2020 and 1,889,140 shares at December 31, 2019, at cost)(69,735)(60,982)
Total Shareholders’ Equity1,135,777 1,191,998 
Total Liabilities and Shareholders’ Equity$9,474,296 $8,764,649 
March 31, 2021December 31, 2020
( in thousands, except share and per share data)(Unaudited)(Audited)
ASSETS
Cash and due from banks, including interest-bearing deposits of $601,134 and $158,903 at March 31, 2021 and December 31, 2020$671,429 $229,666 
Securities, at fair value817,299 773,693 
Loans held for sale12,794 18,528 
Portfolio loans, net of unearned income7,183,168 7,225,860 
Allowance for credit losses on loans(115,101)(117,612)
Portfolio loans, net7,068,067 7,108,248 
Bank owned life insurance82,677 82,303 
Premises and equipment, net54,720 55,614 
Federal Home Loan Bank and other restricted stock, at cost12,199 13,030 
Goodwill373,424 373,424 
Other intangible assets, net8,211 8,675 
Other assets228,159 304,716 
Total Assets$9,328,979 $8,967,897 
LIABILITIES
Deposits:
Noninterest-bearing demand$2,539,594 $2,261,994 
Interest-bearing demand976,225 864,510 
Money market2,002,857 1,937,063 
Savings1,036,927 969,508 
Certificates of deposit1,320,425 1,387,463 
Total Deposits7,876,028 7,420,538 
Securities sold under repurchase agreements67,417 65,163 
Short-term borrowings0 75,000 
Long-term borrowings23,282 23,681 
Junior subordinated debt securities64,097 64,083 
Other liabilities129,877 164,721 
Total Liabilities8,160,701 7,813,186 
SHAREHOLDERS’ EQUITY
Common stock ($2.50 par value)
Authorized—50,000,000 shares
Issued—41,449,444 shares at March 31, 2021 and December 31, 2020
Outstanding—39,268,359 shares at March 31, 2021 and 39,298,007 shares at December 31, 2020		103,623 103,623 
Additional paid-in capital401,353 400,668 
Retained earnings731,718 710,061 
Accumulated other comprehensive income1,061 8,971 
Treasury stock — 2,181,085 shares at March 31, 2021 and 2,151,437 shares at December 31, 2020, at cost(69,477)(68,612)
Total Shareholders’ Equity1,168,278 1,154,711 
Total Liabilities and Shareholders’ Equity$9,328,979 $8,967,897 

See Notes to Consolidated Financial Statements
2
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30, Three months ended March 31,
(dollars in thousands, except per share data)(dollars in thousands, except per share data)2020201920202019(dollars in thousands, except per share data)20212020
INTEREST AND DIVIDEND INCOMEINTEREST AND DIVIDEND INCOMEINTEREST AND DIVIDEND INCOME
Loans, including feesLoans, including fees$75,498  $74,728  $157,549  $148,120  Loans, including fees$70,232 $82,051 
Investment Securities:Investment Securities:Investment Securities:
TaxableTaxable3,791  3,647  8,074  7,437  Taxable3,563 4,215 
Tax-exemptTax-exempt959  834  1,762  1,679  Tax-exempt813 870 
DividendsDividends231  415  684  978  Dividends173 453 
Total Interest and Dividend IncomeTotal Interest and Dividend Income80,479  79,624  168,069  158,214  Total Interest and Dividend Income74,781 87,589 
INTEREST EXPENSEINTEREST EXPENSEINTEREST EXPENSE
DepositsDeposits9,227  16,055  24,565  31,036  Deposits3,481 15,338 
Borrowings and junior subordinated debt securitiesBorrowings and junior subordinated debt securities1,104  2,742  3,320  5,995  Borrowings and junior subordinated debt securities641 2,215 
Total Interest ExpenseTotal Interest Expense10,331  18,797  27,885  37,031  Total Interest Expense4,122 17,553 
NET INTEREST INCOMENET INTEREST INCOME70,148  60,827  140,184  121,183  NET INTEREST INCOME70,659 70,036 
Provision for credit lossesProvision for credit losses86,759  2,205  106,809  7,854  Provision for credit losses3,137 20,050 
Net Interest (Loss) Income After Provision for Credit Losses(16,611) 58,622  33,375  113,329  
Net Interest Income After Provision for Credit LossesNet Interest Income After Provision for Credit Losses67,522 49,986 
NONINTEREST INCOMENONINTEREST INCOMENONINTEREST INCOME
Net gain on sale of securitiesNet gain on sale of securities142  —  142  —  Net gain on sale of securities0 0 
Mortgage bankingMortgage banking4,310 1,236 
Debit and credit cardDebit and credit card3,612  3,501  7,093  6,476  Debit and credit card4,162 3,482 
Mortgage banking2,623  637  3,859  1,131  
Service charges on deposit accountsService charges on deposit accounts3,474 4,008 
Wealth managementWealth management2,586  2,062  4,949  4,109  Wealth management2,944 2,362 
Service charges on deposit accounts2,342  3,212  5,900  6,365  
Commercial loan swap incomeCommercial loan swap income945  1,102  3,429  1,683  Commercial loan swap income95 2,484 
OtherOther2,974  2,387  2,255  4,499  Other2,252 (1,169)
Total Noninterest IncomeTotal Noninterest Income15,224  12,901  27,627  24,263  Total Noninterest Income17,236 12,403 
NONINTEREST EXPENSENONINTEREST EXPENSENONINTEREST EXPENSE
Salaries and employee benefitsSalaries and employee benefits21,419  20,290  42,754  41,199  Salaries and employee benefits23,327 21,335 
Data processing and information technologyData processing and information technology3,585  3,414  7,453  6,646  Data processing and information technology4,225 3,868 
Net occupancy3,437  2,949  7,202  5,986  
OccupancyOccupancy3,827 3,765 
Furniture, equipment and softwareFurniture, equipment and software3,006  2,301  5,525  4,531  Furniture, equipment and software2,640 2,519 
Professional services and legalProfessional services and legal1,932  1,145  2,980  2,329  Professional services and legal1,531 1,048 
Other taxes1,604  1,456  3,205  2,641  
FDIC insurance1,048  695  1,818  1,211  
Other TaxesOther Taxes1,436 1,600 
MarketingMarketing979  1,310  2,090  2,452  Marketing1,322 1,111 
FDIC InsuranceFDIC Insurance1,046 770 
Merger related expensesMerger related expenses—  618  2,342  618  Merger related expenses0 2,342 
OtherOther6,468  6,174  14,501  11,658  Other6,226 8,033 
Total Noninterest ExpenseTotal Noninterest Expense43,478  40,352  89,869  79,271  Total Noninterest Expense45,580 46,391 
(Loss) Income Before Taxes(44,865) 31,171  (28,867) 58,321  
Income tax (benefit) expense(11,793) 5,070  (9,026) 9,292  
Net (Loss) Income$(33,072) $26,101  $(19,841) $49,029  
(Loss) earnings per share—basic$(0.85) $0.76  $(0.51) $1.43  
(Loss) earnings per share—diluted$(0.85) $0.76  $(0.51) $1.43  
Income Before TaxesIncome Before Taxes39,178 15,998 
Income tax expenseIncome tax expense7,276 2,767 
Net IncomeNet Income$31,902 $13,231 
Earnings per share—basicEarnings per share—basic$0.81 $0.34 
Earnings per share—dilutedEarnings per share—diluted$0.81 $0.34 
Dividends declared per shareDividends declared per share$0.28  $0.27  $0.56  $0.54  Dividends declared per share$0.28 $0.28 
Comprehensive (Loss) Income$(29,512) $33,513  $1,061  $62,617  
Comprehensive IncomeComprehensive Income$23,992 $30,573 
See Notes to Consolidated Financial Statements

3
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)


For the three months ended June 30, 2019
(dollars in thousands, except share and per share data)Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive (Loss) Income		Treasury
Stock		Total
Balance at March 31, 2019$90,326  $210,949  $716,078  $(16,931) $(57,266) $943,156  
Net income for the three months ended June 30, 2019—  —  26,101  —  —  26,101  
Other comprehensive income (loss), net of tax—  —  —  7,412  —  7,412  
Cash dividends declared ($0.27 per share)—  —  (9,242) —  —  (9,242) 
Treasury stock issued for restricted stock awards (83,056 shares, net of forfeitures of 10,918 shares)—  —  (2,360) —  2,345  (15) 
Repurchase of common stock (71,936 shares)—  —  —  —  (2,835) (2,835) 
Recognition of restricted stock compensation expense—  376  —  —  —  376  
Balance at June 30, 2019$90,326  $211,325  $730,577  $(9,519) $(57,756) $964,953  
For the three months ended June 30, 2020
(dollars in thousands, except share and per share data)Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive (Loss) Income		Treasury
Stock		Total
Balance at March 31, 2020$103,623  $400,387  $740,726  $5,672  $(74,157) $1,176,251  
Net loss for the three months ended June 30, 2020—  —  (33,072) —  —  (33,072) 
Other comprehensive income (loss), net of tax—  —  —  3,560  —  3,560  
Cash dividends declared ($0.28 per share)—  —  (10,961) —  —  (10,961) 
Treasury stock issued for restricted stock awards (143,744 shares, net of forfeitures of 5,709 shares)—  —  (4,453) —  4,422  (31) 
Recognition of restricted stock compensation expense—  30  —  —  —  30  
Balance at June 30, 2020$103,623  $400,417  $692,240  $9,232  $(69,735) $1,135,777  
For the three months ended March 31, 2020
(dollars in thousands, except share and per share data)Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive (Loss) Income		Treasury
Stock		Total
Balance at January 1, 2020$103,623 $399,944 $761,083 $(11,670)$(60,982)$1,191,998 
Net income for the three months ended March 31, 2020— — 13,231 — — 13,231 
Other comprehensive income, net of tax— — — 17,342 — 17,342 
Adoption of accounting standard - credit losses— — (22,590)— — (22,590)
Cash dividends declared ($0.28 per share)— — (11,051)— — (11,051)
Forfeitures of restricted stock, net of issuances (26,739 shares, net of issuance of 3,290 shares)— — 53 — (616)(563)
Repurchase of common stock (411,430 shares)— — — — (12,559)(12,559)
Recognition of restricted stock compensation expense— 443 — — — 443 
Balance at March 31, 2020$103,623 $400,387 $740,726 $5,672 $(74,157)$1,176,251 
See Notes to Consolidated Financial Statements
For the three months ended March 31, 2021
(dollars in thousands, except share and per share data)Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive Income		Treasury
Stock		Total
Balance at January 1, 2021$103,623 $400,668 $710,061 $8,971 $(68,612)$1,154,711 
Net income for the three months ended March 31, 2021— — 31,902 — — 31,902 
Other comprehensive loss, net of tax— — — (7,910)— (7,910)
Cash dividends declared ($0.28 per share)— — (10,975)— — (10,975)
Forfeitures of restricted stock, net of issuances (30,840 shares, net of issuance of 1,192 shares)— — 730 — (865)(135)
Recognition of restricted stock compensation expense— 685 — — — 685 
Balance at March 31, 2021$103,623 $401,353 $731,718 $1,061 $(69,477)$1,168,278 
See Notes to Consolidated Financial Statements
4
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
For the six months ended June 30, 2019
(dollars in thousands, except share and per share data)Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive (Loss) Income		Treasury
Stock		Total
Balance at January 1, 2019$90,326  $210,345  $701,819  $(23,107) $(43,622) $935,761  
Net income for the six months ended June 30, 2019—  —  49,029  —  —  49,029  
Other comprehensive income, net of tax—  —  —  13,588  —  13,588  
Impact of new lease standard—  —  167  —  —  167  
Cash dividends declared ($0.54 per share)—  —  (18,559) —  —  (18,559) 
Treasury stock issued for restricted stock awards (83,056 shares, net of forfeitures of 50,752 shares)—  —  (1,879) —  988  (891) 
Repurchase of common stock (385,840 shares)—  —  —  —  (15,122) (15,122) 
Recognition of restricted stock compensation expense—  980  —  —  —  980  
Balance at June 30, 2019$90,326  $211,325  $730,577  $(9,519) $(57,756) $964,953  
For the six months ended June 30, 2020
(dollars in thousands, except share and per share data)Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive Income (Loss)		Treasury
Stock		Total
Balance at January 1, 2020$103,623  $399,944  $761,083  $(11,670) $(60,982) $1,191,998  
Net (loss) income for the six months ended June 30, 2020—  —  (19,841) —  —  (19,841) 
Other comprehensive income, net of tax—  —  —  20,902  —  20,902  
Adoption of accounting standard - credit losses—  —  (22,590) —  —  (22,590) 
Cash dividends declared ($0.56 per share)—  —  (22,012) —  —  (22,012) 
Treasury stock issued for restricted stock awards (147,054 shares, net of forfeitures of 32,448 shares)—  —  (4,400) —  3,806  (594) 
Repurchase of common stock (411,430 shares)—  —  —  —  (12,559) (12,559) 
Recognition of restricted stock compensation expense—  473  —  —  —  473  
Balance at June 30, 2020$103,623  $400,417  $692,240  $9,232  $(69,735) $1,135,777  
See Notes to Consolidated Financial Statements


5
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended June 30,
(dollars in thousands)20202019
OPERATING ACTIVITIES
Net (loss) income$(19,841) $49,029  
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses106,809  7,854  
Provision for unfunded loan commitments—  208  
Net depreciation, amortization and accretion1,868  2,872  
Net amortization of discounts and premiums on securities2,189  1,562  
Stock-based compensation expense473  980  
Gain on sale of securities(142) —  
Gain on the sale of mortgage loans, net(2,433) (683) 
Mortgage loans originated for sale(169,243) (38,720) 
Proceeds from the sale of mortgage loans162,216  33,639  
Net change in:
Interest receivable(3,201) (1,235) 
Collateral receivable(91,736) —  
Interest payable(1,837) (1,582) 
Other assets(77,724) (11,006) 
Other liabilities61,034  15,978  
Net Cash (Used in) Provided by Operating Activities(31,568) 58,896  
INVESTING ACTIVITIES
Purchases of securities(80,292) (9,438) 
Proceeds from maturities, prepayments and calls of securities81,156  40,260  
Proceeds from sales of securities1,349  —  
Net proceeds from sales of Federal Home Loan Bank stock7,826  6,944  
Net increase in loans(491,457) (95,691) 
Proceeds from sale of loans not originated for resale—  465  
Purchases of premises and equipment(2,862) (2,559) 
Proceeds from the sale of premises and equipment—  9  
Net Cash Used in Investing Activities(484,280) (60,010) 
FINANCING ACTIVITIES
Net increase in core deposits902,933  246,561  
Net decrease in certificates of deposit(71,007) (63,736) 
Net increase (decrease) in securities sold under repurchase agreements72,271  (4,229) 
Net decrease in short-term borrowings(196,778) (175,000) 
Repayments on long-term borrowings(2,864) (523) 
Treasury shares issued-net(594) (891) 
Cash dividends paid to common shareholders(22,012) (18,559) 
Repurchase of common stock(12,559) (15,122) 
Net Cash Provided by (Used in) Financing Activities669,390  (31,499) 
Net increase (decrease) in cash and cash equivalents153,542  (32,613) 
Cash and cash equivalents at beginning of period197,823  155,489  
Cash and Cash Equivalents at End of Period$351,365  $122,876  
Supplemental Disclosures
Leased right-of-use operating assets and lease liabilities$91  $37,263  
Interest paid$29,721  $38,612  
Income taxes paid, net of refunds$210  $4,557  
Transfers of loans to other real estate owned$513  $215  
Three Months Ended March 31,
(dollars in thousands)20212020
Net Cash Provided by (Used in) Operating Activities$90,145 $(59,961)
INVESTING ACTIVITIES
Purchases of securities(89,038)(30,292)
Proceeds from maturities, prepayments and calls of securities34,715 33,869 
Net proceeds from sales (purchases of) of Federal Home Loan Bank stock831 (5,277)
Net decrease (increase) in loans33,937 (122,507)
Proceeds from sale of loans not originated for resale640 0 
Purchases of premises and equipment(811)(1,429)
Proceeds from the sale of premises and equipment74 0 
Net Cash Used in Investing Activities(19,652)(125,636)
FINANCING ACTIVITIES
Net increase in core deposits522,528 28,684 
Net decrease in certificates of deposit(67,003)(7,042)
Net increase in securities sold under repurchase agreements2,254 49,756 
Net decrease (increase) in short-term borrowings(75,000)128,921 
Repayments on long-term borrowings(399)(688)
Treasury shares issued-net(135)(563)
Cash dividends paid to common shareholders(10,975)(11,051)
Repurchase of common stock0 (12,559)
Net Cash Provided by Financing Activities371,270 175,458 
Net increase (decrease) in cash and cash equivalents441,763 (10,139)
Cash and cash equivalents at beginning of period229,666 197,823 
Cash and Cash Equivalents at End of Period$671,429 $187,684 
Supplemental Disclosures
Loans transferred to held for sale$2,798 $0 
Leased right-of-use operating assets and lease liabilities$0 $91 
Interest paid$5,368 $17,795 
Income taxes paid, net of refunds$197 $210 
Transfers of loans to other real estate owned$77 $110 
See Notes to Consolidated Financial Statements
65
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION
Principles of Consolidation
The interim Consolidated Financial Statements include the accounts of S&T Bancorp, Inc., or 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.
Basis of Presentation
The accompanying unaudited interim Consolidated Financial Statements of S&T have been prepared in accordance with generally accepted accounting principles, or GAAP, in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019,2020, filed with the Securities and Exchange Commission, or SEC, on March 2, 2020.1, 2021. In the opinion of management, the accompanying interim financial information reflects all adjustments, consisting of normal recurring adjustments, necessary to present fairly our financial position and the results of operations for each of the interim periods presented. Results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any future period.
On June 5, 2019 we entered into an agreement to acquire DNB Financial Corporation, or DNB, and the transaction was completed on November 30, 2019. Refer to Note 2, Business Combinations in our Annual Report on Form 10-K for the year ended December 31, 2020 for further details on the merger.
Reclassification
Amounts in prior period 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.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Recently Adopted Accounting Standards Updates, or ASU or Update
Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)Income Taxes (Topic 740): Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service ContractIncome Taxes
In August 2018,December 2019, the Financial Accounting Standards Board, or FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)2019-12, Income Taxes (Topic 740): Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.Income Taxes. The amendments in this ASU apply to an entity that is a customer in a hosting arrangement that is a service contract. These amendments relate tosimplify the accounting for implementation costs (e.g., implementation, setupincome taxes by removing certain exceptions and improve the consistent application of GAAP by clarifying and amending other upfront costs). These amendments require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which costs to capitalize and which costs to expense. These amendments require the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This ASU is effective for annual and interim periods beginning after December 15, 2019.existing guidance. We adopted this ASU on January 1, 2020.2021. The amendments in this ASU did not materially impact our Consolidated Balance Sheets or Consolidated Statements of Comprehensive (Loss) Income.







76
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 1. BASIS OF PRESENTATION - continued
Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove certain disclosures from Topic 820, modify disclosures and/or require additional disclosures. The amendments in this Update required us to change our Fair Value disclosures beginning with the disclosures included in Form 10-Q for the period ended March 31, 2020. We adopted this ASU on January 1, 2020. The amendments in this ASU did not materially impact our Consolidated Balance Sheets or Consolidated Statements of Comprehensive (Loss) Income. Refer to Note 4, Fair Value Measurements.
Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350). The main objective of this ASU is to simplify the current requirements for testing goodwill for impairment by eliminating step two from the goodwill impairment test. The amendments are expected to reduce the complexity and costs associated with performing the goodwill impairment test, which could result in recording impairment charges sooner. This Update is effective for any interim and annual impairment tests in reporting periods in fiscal years beginning after December 15, 2019. We adopted the amendments of this ASU on January 1, 2020. The amendments in this ASU did not have any impact on our Consolidated Balance Sheets or Consolidated Statements of Comprehensive (Loss) Income.
Financial Instruments - Credit Losses
On January 1, 2020, we adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology for determining our provision for credit losses, and allowance for credit losses, or ACL, with an expected loss methodology that is referred to as the Current Expected Credit Loss, or CECL, model. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including our loans and off-balance sheet credit exposures. In addition, ASU 2016-13 made changes to the accounting for available-for-sale debt securities. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities.
We adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.
We made the accounting policy election to not measure an ACL for accrued interest receivables for loans and securities. Accrued interest deemed uncollectible will be written off through interest income.
The majority of our available-for-sale debt securities are government agency-backed securities for which the risk of loss is minimal, and accordingly the ACL is immaterial.
In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Refer to Note 7, Allowance for Credit Losses for further discussion of these portfolio segments. Our new segmentation breaks out business banking loans from our other loan segments: Commercial Real Estate, or CRE, Commercial and Industrial, or C&I, Commercial Construction, Consumer Real Estate and Other Consumer. Business banking loans are commercial loans made to small businesses that are standard, non-complex products and evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards.
8
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 1. BASIS OF PRESENTATION - continued
The following table details the impact of ASU 2016-13 and the reclassification of loans for the identification of new portfolio loan segments under CECL:
January 1, 2020
(dollars in thousands)As Reported Under ASU 2016-13Pre-ASU 2016-13Impact of ASU 2016-13 Adoption
Assets:
Loans held for investment (outstanding balance)
Commercial real estate$2,946,319  $3,416,518  $(470,199) 
Commercial and industrial1,458,541  1,720,833  (262,292) 
Commercial construction345,263  375,445  (30,182) 
Business banking1,092,908  —  1,092,908  
Consumer real estate1,235,352  1,545,323  (309,971) 
Other consumer58,769  79,033  (20,264) 
Allowance for credit losses on loans(89,577) (62,224) (27,353) 
Total loans held for investment, net$7,047,575  $7,074,928  $(27,353) 
Net deferred tax asset$19,317  $13,206  $6,111  
Liabilities:
Allowance for credit losses on unfunded loan commitments$4,462  $3,113  $1,349  
Equity:
Retained earnings$738,493  $761,083  $(22,590) 
The adoption of ASU 2016-13 resulted in an increase to our ACL of $27.4 million on January 1, 2020. The increase included $8.2 million for S&T legacy loans and $9.3 million for acquired loans from the DNB merger. Under the previously applicable accounting guidance, a credit reserve was not recorded for acquired loans upon acquisition, however, ASU 2016-13 requires an ACL to be recognized for acquired loans similar to originated loans. We also recorded a day one adjustment of $9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020. We obtained information on the relationship subsequent to filing our December 31, 2019 Form 10-K, but before the end of the first quarter of 2020. The updated information supported a loss existed at January 1, 2020. As of January 1, 2020, we recorded a cumulative-effect adjustment of $22.6 million to decrease retained earnings related to the adoption of ASU 2016-13.

Allowance for Credit Losses Policy
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. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. 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 risk characteristics with other loans.
The ACL for homogeneous loans is calculated using a life-time loss rate methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis. The ACL model is comprised of six distinct portfolio segments: 1) Construction, 2) CRE, 3) 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, loan participations, non-owner occupied and our internal risk rating system for the commercial segments and type of collateral, lien position, and FICO score, for the consumer segments. Historical credit loss experience is the basis for the estimation of expected credit losses. We apply historical loss rates to pools of loans with similar risk characteristics. After consideration of the historic loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Our reasonable and supportable forecast adjustment is based on the unemployment forecast and management judgment. For periods beyond our two year reasonable and supportable forecast, we revert to the historical loss rate. 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
9
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 1. BASIS OF PRESENTATION - continued
bank’s loan review system, value of underlying collateral for collateral dependent loans, the existence of and changes in concentrations and other external factors. These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve. A similar process is employed to calculate a reserve assigned to off-balance sheet commitments, specifically unfunded loan commitments and letters of credit, and any needed reserve is recorded in other liabilities.
The 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 $0.5 million that meet the following criteria: 1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) any commercial troubled debt restructuring, or TDR, or any loan reasonably expected to become a TDR whether on accrual or nonaccrual status and 4) when it is determined by management that a loan does not share similar risk characteristics with other loans. Specific reserves are established based on the following three acceptable methods for measuring the ACL: 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.
Although we believe our process for determining the ACL appropriately considers all the factors that would likely result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual losses are higher than management estimates, additional provision for credit losses could be required and could adversely affect our earnings or financial position in future periods.
Accounting Standards Issued But Not Yet Adopted
Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this ASU apply to all employers that sponsor defined benefit pension or other postretirement plans. These amendments remove certain disclosures from Topic 715-20 and require additional disclosures. The amendments in this ASU will require S&T to update our employee benefits disclosures beginning with our Form 10-Q for the period ended March 31, 2021. The amendments in this ASU will have no impact on our consolidated financial statements.
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplifies the accounting for income taxes by removing certain exceptions and improves the consistent application of GAAP by clarifying and amending other existing guidance. The amendments in this ASU will be effective on January 1, 2021 and are not expected to have any impact on our consolidated financial statements.
Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments provide optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. Modified contracts that meet certain scope guidance are eligible for relief from the modification accounting requirements in US GAAP. The optional guidance generally allows for the modified contract to be accounted for as a continuation of the existing contract and does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. We are evaluating the impactsimpact of this ASU and havewe do not yet determined whether LIBOR transition and this ASU will have material effects on our business operations and consolidated financial statements.
10
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 1. BASIS OF PRESENTATION - continued
SEC Release No. 2020-118 - Amendments to Improve Financial Disclosures about Acquisitions and Dispositions of Businesses
In May 2020,expect the Securities and Exchange Commission adopted amendments to the financial disclosure requirements in Regulation S-X for acquisitions and dispositions of businesses, including real estate operations, in Rules 3-05, 3-14, 8-04, 8-05, 8-06, and Article 11, as well as in other related rules and forms. In conjunction with these changes, the Commission also amended the significance tests in the “significant subsidiary” definition in Rule 1-02(w), Securities Act Rule 405, and Exchange Act Rule 12b-2 to improve their application and to assist registrants in making more meaningful determinations of whether a subsidiary or an acquired or disposed business is significant. In addition, to address the unique attributes of investment companies and business development companies, the Commission adopted new requirements regarding fund acquisitions specific to registered investment companies and business development companies. The amendments in this final rule are effective beginning January 1, 2021. We are evaluating theASU to materially impact our Consolidated Balance Sheets or Consolidated Statements of this final rule and we expect these amendments to impact disclosures in our consolidated financial statements relating to any future acquisitions and disposition of businesses.

Comprehensive Income.
11
Table of Contents
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued



NOTE 2. BUSINESS COMBINATIONS
On November 30, 2019, we completed our acquisition of DNB Financial Corporation, or DNB, and DNB First National Association, its wholly-owned bank subsidiary, located in Downingtown, Pennsylvania. The acquisition of DNB expanded our Eastern Pennsylvania market by adding 14 banking locations, in an all-stock transaction structured as a merger of DNB with and into S&T, with S&T being the surviving entity. The related systems conversion of DNB into S&T Bank occurred on February 7 2020.
DNB shareholders received, without interest, 1.22 shares of S&T common stock for each share of DNB common stock. The total purchase price was approximately $201.0 million, which included $0.4 million of cash and 5,318,964 S&T common shares at a fair value of $37.72 per share. The fair value of $37.72 per share of S&T common stock was based on the November 30, 2019 closing price.
The Merger was accounted for under the acquisition method of accounting and our Consolidated Financial Statements include all DNB Bank transactions beginning on December 1, 2019. Goodwill of $85.8 million at June 30, 2020 was calculated as the excess of the consideration exchanged over the fair value of the identifiable net assets acquired. All of the goodwill was assigned to our Community Banking segment. The goodwill recognized is not deductible for tax purposes.
The following table provides a summary of the assets acquired and liabilities assumed from DNB, the preliminary estimates of the fair value adjustments necessary to adjust those acquired assets and assumed liabilities to estimated fair value and the preliminary estimates of the resultant fair values of those assets and liabilities by S&T at November 30, 2019, the acquisition date. Preliminary estimates were adjusted by $1.7 million during the six months ended June 30, 2020. These measurement period adjustments primarily related to $2.4 million reduction in the fair value of loans, $0.3 million reduction in the fair value of borrowings and $0.3 million in deferred income taxes. As information becomes known, additional fair value adjustments to loans, other real estate owned, or OREO, and income taxes may be recognized during the measurement period, which may not extend beyond one year following the acquisition.
The following table presents the preliminary fair value adjustments and the measurement period adjustments as of the dates presented:
November 30, 2019June 30, 2020
As Recorded by DNBPreliminary Fair Value AdjustmentsAs Recorded by S&TMeasurement Period AdjustmentsAs Recorded by S&T
Fair Value of Assets Acquired
Cash and cash equivalents$64,119  $—  $64,119  $—  $64,119  
Securities and other investments108,715  183  108,898  —  108,898  
Loans917,127  (8,143) 908,984  (2,377) 906,607  
Allowance for credit losses(6,487) 6,487  —  —  —  
Goodwill15,525  (15,525) —  —  —  
Premises and equipment6,782  8,090  14,872  —  14,872  
Accrued interest receivable4,138  —  4,138  —  4,138  
Deferred income taxes2,017  (3,298) (1,281) 311  (970) 
Core deposits and other intangible assets269  (269) —  —  —  
Other assets24,883  (4,278) 20,605  74  20,679  
Total Assets Acquired1,137,088  (16,753) 1,120,335  (1,992) 1,118,343  
Fair Value of Liabilities Assumed
Deposits966,263  1,002  967,265  —  967,265  
Borrowings37,617  (276) 37,341  (257) 37,084  
Accrued interest payable and other liabilities11,157  (3,184) 7,973  (68) 7,905  
Total Liabilities Assumed1,015,037  (2,458) 1,012,579  (325) 1,012,254  
Total Net Assets Acquired$122,051  $(14,295) $107,756  $(1,667) $106,089  
Core Deposit Intangible Asset$7,288  $—  $7,288  
Wealth Management Intangible Asset1,772  —  1,772  
Total Fair Value of Net Assets Acquired and Identified$116,816  $(1,667) $115,149  
Consideration Paid
Cash$360  $—  $360  
Common stock200,631  —  200,631  
Fair Value of Total Consideration$200,991  $—  $200,991  
Goodwill$84,175  $1,667  $85,842  
12
Table of Contents
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 2. BUSINESS COMBINATIONS – continued
Loans acquired in the Merger were recorded at fair value with 0 carryover of the related ACL from DNB. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The preliminary fair value of the loans acquired was estimated at $909.0 million, net of a $10.5 million discount. The discount is accreted to interest income over the remaining contractual life of the loans. During the six month period ended June 30, 2020, the fair value of acquired loans was reduced by an additional $2.5 million as we continue to finalize our evaluation of the loan portfolio.
As of June 30, 2020, direct costs related to the DNB merger of $13.7 million were recognized and expensed as incurred. During the six months ended June 30, 2020, we recognized $2.3 million of merger related expenses including $0.2 million in legal and professional fees, $1.4 million in severance payments and stay-bonuses, $0.4 million for data processing and $0.3 million in other expenses. As of December 31, 2019, we recognized $11.4 million of merger related expenses, including $4.7 million for data processing contract termination and system conversion costs, $2.8 million in legal and professional expenses, $3.4 million in severance payments and $0.5 million in other expenses.
13
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 3. (LOSS)2. EARNINGS PER SHARE
Diluted (loss) earnings per share is calculated using both the two-class and the treasury stock methods with the more dilutive method used to determine diluted earnings per share. For the three months ended March 31, 2021 and 2020, diluted EPS was reported using the two-class method. The following table reconciles the numerators and denominators of basic and diluted (loss) earnings per share calculations for the periods presented.
Three Months Ended June 30,Six Months Ended June 30,Three months ended March 31,
(in thousands, except share and per share data)(in thousands, except share and per share data)2020201920202019(in thousands, except share and per share data)20212020
Numerator for (Loss) Earnings per Share—Basic:
Net (loss) income$(33,072) $26,101  $(19,841) $49,029  
Numerator for Earnings per Share—Basic:Numerator for Earnings per Share—Basic:
Net incomeNet income$31,902 $13,231 
Less: Income allocated to participating sharesLess: Income allocated to participating shares—  72  —  137  Less: Income allocated to participating shares141 29 
Net (Loss) Income Allocated to Shareholders$(33,072) $26,029  $(19,841) $48,892  
Net Income Allocated to ShareholdersNet Income Allocated to Shareholders$31,761 $13,202 
Numerator for (Loss) Earnings per Share—Diluted:
Net (loss) income$(33,072) $26,101  $(19,841) $49,029  
Net (Loss) Income Available to Shareholders$(33,072) $26,101  $(19,841) $49,029  
Numerator for Earnings per Share—Diluted:Numerator for Earnings per Share—Diluted:
Net incomeNet income$31,902 $13,231 
Net Income Available to ShareholdersNet Income Available to Shareholders$31,902 $13,231 
Denominators for (Loss) Earnings per Share:
Denominators for Earnings per Share:Denominators for Earnings per Share:
Weighted Average Shares Outstanding—BasicWeighted Average Shares Outstanding—Basic39,013,161  34,158,136  39,142,351  34,298,185  Weighted Average Shares Outstanding—Basic39,021,208 39,271,540 
Add: Potentially dilutive sharesAdd: Potentially dilutive shares—  52,850  —  88,121  Add: Potentially dilutive shares99,922 108,116 
Denominator for Treasury Stock Method—DilutedDenominator for Treasury Stock Method—Diluted39,013,161  34,210,986  39,142,351  34,386,306  Denominator for Treasury Stock Method—Diluted39,121,130 39,379,656 
Weighted Average Shares Outstanding—BasicWeighted Average Shares Outstanding—Basic39,013,161  34,158,136  39,142,351  34,298,185  Weighted Average Shares Outstanding—Basic39,021,208 39,271,540 
Add: Average participating shares outstandingAdd: Average participating shares outstanding—  93,433  —  96,261  Add: Average participating shares outstanding0 54,398 
Denominator for Two-Class Method—DilutedDenominator for Two-Class Method—Diluted39,013,161  34,251,569  39,142,351  34,394,446  Denominator for Two-Class Method—Diluted39,021,208 39,325,938 
(Loss) Earnings per share—basic$(0.85) $0.76  $(0.51) $1.43  
(Loss) Earnings per share—diluted$(0.85) $0.76  $(0.51) $1.43  
Earnings per share—basicEarnings per share—basic$0.81 $0.34 
Earnings per share—dilutedEarnings per share—diluted$0.81 $0.34 
Restricted stock considered anti-dilutive excluded from potentially dilutive sharesRestricted stock considered anti-dilutive excluded from potentially dilutive shares21,333  5,183  82,624  44,153  Restricted stock considered anti-dilutive excluded from potentially dilutive shares165 41 
148
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued




NOTE 4.3. FAIR VALUE MEASUREMENTS
We use fair value measurements when recording and disclosing certain financial assets and liabilities. Debt securities, equity securities and derivative financial instruments are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other assets at fair value on a nonrecurring basis, such as loans held for sale, individually assessed loans, held for investment,other real estate owned, or 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 that 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 market valuation sources for debt securities include observable inputs rather than significant unobservable inputs and are classified as Level 2. The service provider utilizes pricing models that vary by asset class and include available trade, bid and other market information. Generally, the methodologies include broker quotes, proprietary models, vast descriptive terms and conditions databases and extensive quality control programs.

Equity Securities
Marketable equity securities that have an active, quotable market are classified as Level 1. Marketable equity securities that are quotable, but are thinly traded or inactive, are classified as Level 2. Marketable equity securities that are not readily traded and do not have a quotable market are classified as Level 3.
159
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4.3. FAIR VALUE MEASUREMENTS - continued
Securities Held in a Deferred Compensation Plan Assets
We use quoted market prices to determine the fair value of our equity security assets. These securities are reported at fair value with the gains and losses included in noninterest income in our Consolidated Statements of Comprehensive (Loss) 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.
Derivative Financial Instruments
We use derivative instruments, including interest rate swaps for commercial loans with our customers, interest rate lock commitments and the sale of mortgage loans in the secondary market. We calculate the fair value for derivatives using accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Each valuation considers the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, such as interest rate curves and implied volatilities. Accordingly, derivatives are classified as Level 2. We incorporate credit valuation adjustments into the valuation models to appropriately reflect both our own nonperformance risk and the respective counterparties’ nonperformance risk in calculating fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements and collateral postings.
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 are transferred from the loan portfolio to loans held for sale, all of which are carried at the lower of cost or fair value. The fair value of 1-4 family residential loans is based on the principal or most advantageous market currently offered for similar loans using observable market data. The fair value of the loans transferred from the loan portfolio is based on the amounts offered for these loans in currently pending sales transactions. Loans held for sale carried at fair value are classified as Level 3.
Loans Held for InvestmentIndividually Evaluated
Loans that are individually evaluated to determine whether a specific allocation of ACL is needed are reported at fair value. Fair value is determined using the following methods: 1) the present value of expected future cash flows discounted at the loan’s original effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral less estimated selling costs when the loan is collateral dependent and we expect to liquidate the collateral. However, if repayment is expected to come from the operation of the collateral, rather than liquidation, then we do not consider estimated selling costs in determining the fair value of the collateral. Collateral values are generally based upon appraisals by approved, independent state certified appraisers. Appraisals may be discounted based on our historical knowledge, changes in market conditions from the time of appraisal or our knowledge of the borrower and the borrower’s business. Loans carried at fair value are classified as Level 3.
OREO and Other Repossessed Assets
OREO and other repossessed assets obtained in partial or total satisfaction of a loan are recorded at the lower of recorded investment in the loan or fair value less cost to sell. Subsequent to foreclosure, these assets are carried at the lower of the amount recorded at acquisition date or fair value less cost to sell. Accordingly, it may be necessary to record nonrecurring fair value adjustments. 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. OREO and other repossessed assets carried at fair value are classified as Level 3. OREO and other repossessed assets are reported in other assets in the Consolidated Balance Sheets.
1610
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4.3. FAIR VALUE MEASUREMENTS - continued
Mortgage Servicing Rights
TheMSRs are reported pursuant to the amortization method and evaluated for impairment quarterly by comparing the carrying to the fair value of the MSRs. 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. Since the valuation model includes significant unobservable inputs as listed above, MSRs are classified as Level 3. MSRs are reported in other assets in the Consolidated Balance Sheets and are amortized into mortgage banking income in the Consolidated Statements of Comprehensive (Loss) Income.
Other Assets
We measure certain other assets at fair value on a nonrecurring basis. Fair value is based on the application of lower of cost or fair value accounting, or write-downs of individual assets. Valuation methodologies used to measure fair value are consistent with overall principles of fair value accounting and consistent with those described above.
Financial Instruments
In addition to financial instruments recorded at fair value in our financial statements, fair value accounting guidance requires disclosure of the fair value of all of an entity’s assets and liabilities that are considered financial instruments. 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 a 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 variable rate loans that may reprice frequently at short-term market rates is based on carrying values adjusted for liquidity and credit risk. The fair value of variable rate loans that reprice at intervals of one year or longer, such as adjustable rate mortgage products, 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 fair value of fixed rate loans is estimated using a discounted cash flow analysis that utilizes interest rates currently being offered for similar loans adjusted for liquidity and credit risk.
Bank Owned Life Insurance
Fair value approximates net cash surrender value of bank owned life insurance, or BOLI.
Federal Home Loan Bank, or FHLB, and Other Restricted Stock
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
The carrying amount included in Other Assetsother assets on our Consolidated Balance Sheets approximates fair value.
17
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4. FAIR VALUE MEASUREMENTS - continued
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. 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. The carrying amount of accrued interest approximates fair value.
11
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 3. FAIR VALUE MEASUREMENTS - continued
Short-Term Borrowings
The carrying amounts of securities sold under repurchase agreements, or REPOs, and other short-term borrowings approximate their fair values.
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.
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.
Loan Commitments and Standby Letters of Credit
Off-balance sheet financial instruments consist of commitments to extend credit and letters of credit. Except for interest rate lock commitments, estimates of the fair value of these off-balance sheet items are not made because of the short-term nature of these arrangements and the credit standing of the counterparties.
Other
Estimates of fair value are not made for items that are not defined as financial instruments, including such items as our core deposit intangibles and the value of our trust operations.
1812
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4.3. FAIR VALUE MEASUREMENTS - continued
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 June 30, 2020March 31, 2021 and December 31, 2019. There were 0 transfers between Level 1 and Level 2 for items measured at fair value on a recurring basis during the periods presented.2020.
June 30, 2020March 31, 2021
(dollars in thousands)(dollars in thousands)Level 1Level 2Level 3Total(dollars in thousands)Level 1Level 2Level 3Total
ASSETSASSETSASSETS
Available-for-sale debt securities:Available-for-sale debt securities:Available-for-sale debt securities:
U.S. Treasury securitiesU.S. Treasury securities$—  $10,355  $—  $10,355  U.S. Treasury securities$0 $63,268 $0 $63,268 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies—  163,703  —  163,703  Obligations of U.S. government corporations and agencies0 82,028 0 82,028 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies—  181,162  —  181,162  Collateralized mortgage obligations of U.S. government corporations and agencies0 217,916 0 217,916 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies—  19,768  —  19,768  Residential mortgage-backed securities of U.S. government corporations and agencies0 63,911 0 63,911 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies—  284,550  —  284,550  Commercial mortgage-backed securities of U.S. government corporations and agencies0 277,253 0 277,253 
Corporate obligationsCorporate obligations—  5,038  —  5,038  Corporate obligations0 2,002 0 2,002 
Obligations of states and political subdivisionsObligations of states and political subdivisions—  137,127  —  137,127  Obligations of states and political subdivisions0 107,505 0 107,505 
Total Available-for-sale Debt SecuritiesTotal Available-for-sale Debt Securities—  801,703  —  801,703  Total Available-for-sale Debt Securities0 813,883 0 813,883 
Marketable equity securitiesMarketable equity securities2,602  61  —  2,663  Marketable equity securities3,328 88 0 3,416 
Total SecuritiesTotal Securities2,602  801,764  —  804,366  Total Securities3,328 813,971 0 817,299 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan5,489  —  —  5,489  Securities held in a deferred compensation plan7,178 0 0 7,178 
Derivative financial assets:Derivative financial assets:Derivative financial assets:
Interest rate swapsInterest rate swaps—  94,371  —  94,371  Interest rate swaps0 40,415 0 40,415 
Interest rate lock commitmentsInterest rate lock commitments—  2,583  —  2,583  Interest rate lock commitments0 0 1,509 1,509 
Forward sale contractsForward sale contracts0 0 226 226 
Total AssetsTotal Assets$8,091  $898,718  $—  $906,809  Total Assets$10,506 $854,386 $1,735 $866,627 
LIABILITIESLIABILITIESLIABILITIES
Derivative financial liabilities:Derivative financial liabilities:Derivative financial liabilities:
Interest rate swapsInterest rate swaps$—  $94,286  $—  $94,286  Interest rate swaps$0 $40,818 $— $40,818 
Forward sale contracts—  594  —  594  
Total LiabilitiesTotal Liabilities$—  $94,880  $—  $94,880  Total Liabilities$0 $40,818 $0 $40,818 
December 31, 2019December 31, 2020
(dollars in thousands)(dollars in thousands)Level 1Level 2Level 3Total(dollars in thousands)Level 1Level 2Level 3Total
ASSETSASSETSASSETS
Available-for-sale debt securities:Available-for-sale debt securities:Available-for-sale debt securities:
U.S. Treasury securitiesU.S. Treasury securities$—  $10,040  $—  $10,040  U.S. Treasury securities$0 $10,282 $0 $10,282 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies—  157,697  —  157,697  Obligations of U.S. government corporations and agencies0 82,904 0 82,904 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies—  189,348  —  189,348  Collateralized mortgage obligations of U.S. government corporations and agencies0 209,296 0 209,296 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies—  22,418  —  22,418  Residential mortgage-backed securities of U.S. government corporations and agencies0 67,778 0 67,778 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies—  275,870  —  275,870  Commercial mortgage-backed securities of U.S. government corporations and agencies0 273,681 0 273,681 
Corporate Bonds—  7,627  —  7,627  
Corporate obligationsCorporate obligations0 2,025 0 2,025 
Obligations of states and political subdivisionsObligations of states and political subdivisions—  116,133  —  116,133  Obligations of states and political subdivisions0 124,427 0 124,427 
Total Available-for-Sale Debt Securities—  779,133  —  779,133  
Total Available-for-sale Debt SecuritiesTotal Available-for-sale Debt Securities0 770,393 0 770,393 
Marketable equity securitiesMarketable equity securities5,078  72  —  5,150  Marketable equity securities3,228 72 0 3,300 
Total SecuritiesTotal Securities5,078  779,205  —  784,283  Total Securities3,228 770,465 0 773,693 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan5,987  —  —  5,987  Securities held in a deferred compensation plan6,794 0 0 6,794 
Derivative financial assets:Derivative financial assets:Derivative financial assets:
Interest rate swapsInterest rate swaps—  25,647  —  25,647  Interest rate swaps0 78,319 0 78,319 
Interest rate lock commitmentsInterest rate lock commitments—  321  —  321  Interest rate lock commitments0 0 2,900 2,900 
Forward sale contracts—  1  —  1  
Total AssetsTotal Assets$11,065  $805,174  $—  $816,239  Total Assets$10,022 $848,784 $2,900 $861,706 
LIABILITIESLIABILITIESLIABILITIES
Derivative financial liabilities:Derivative financial liabilities:Derivative financial liabilities:
Interest rate swapsInterest rate swaps$—  $25,615  $—  $25,615  Interest rate swaps$0 $79,033 $0 $79,033 
Forward sale contractsForward sale contracts0 385 0 385 
Total LiabilitiesTotal Liabilities$—  $25,615$—$25,615Total Liabilities$0 $79,418 $0 $79,418 
1913
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4.3. FAIR VALUE MEASUREMENTS - continued
There were no transfers between Level 1, Level 2 and Level 3 for the three months ended March 31, 2021. Interest rate lock commitments to borrowers were transferred from Level 2 to Level 3 during the year ended December 31, 2020 due to pull-through factors being a significant unobservable input.
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 financial statements. There were 0 liabilities measured at fair value on a nonrecurring basis at either June 30, 2020March 31, 2021 or December 31, 2019.2020.
For Level 3 assets measured at fair value on a nonrecurring basis as of June 30, 2020March 31, 2021 and December 31, 2019,2020, the significant unobservable inputs used in the fair value measurements were as follows:
June 30, 2020Valuation TechniqueSignificant Unobservable InputsRange
Weighted Average (1) (2) (3)
March 31, 2021Valuation TechniqueSignificant Unobservable InputsRange
Weighted Average
(1) (2) (3)
(dollars in thousands)(dollars in thousands)(dollars in thousands)Range
Weighted Average
(1) (2) (3)
Loans held for investment$61,068  Collateral methodCosts to sell0%-17%6.81%
Discounted cash flow methodDiscount rate3.25%3.25%
Loans individually evaluatedLoans individually evaluated$78,186 Collateral methodAppraisal adjustment0%-47%16.91%
Other real estate ownedOther real estate owned2,413  Collateral methodCosts to sell0%-7.00%4.52%Other real estate owned1,563 Collateral methodCosts to sell4%-7.00%5.06%
Mortgage servicing rightsMortgage servicing rights$4,278  Discounted cash flow methodDiscount rate9.33%-12.55%9.44%Mortgage servicing rights6,590 Discounted cash flow methodDiscount rate9.02%-13.77%9.40%
Constant prepayment rates7.59%-13.58%12.95%Mortgage servicing rightsDiscounted cash flow methodConstant prepayment rates9.24%-12.54%11.08%
Loans held for saleLoans held for sale2,798 Contractual agreementNANA
Total AssetsTotal Assets$67,759  Total Assets$89,137 
December 31, 2019Valuation TechniqueSignificant Unobservable InputsRange
Weighted Average (1) (2) (3)
December 31, 2020Valuation TechniqueSignificant Unobservable InputsRange
Weighted Average
(1) (2) (3)
(dollars in thousands)(dollars in thousands)(dollars in thousands)Range
Weighted Average
(1) (2) (3)
Loans held for investment$38,697  Collateral methodCosts to sell0%-20%8.55%
Discounted cash flow methodDiscount rate4.75%-5.50%5.28%
Loans individually evaluatedLoans individually evaluated$67,402 Collateral methodAppraisal adjustment0%-47%16.90%
Other real estate ownedOther real estate owned3,231  Collateral methodCosts to sell7.00%7.00%Other real estate owned1,953 Collateral methodCosts to sell4%-7.00%4.92%
Mortgage servicing rightsMortgage servicing rights$1,134  Discounted cash flow methodDiscount rate9.39%-12.54%9.49%Mortgage servicing rights4,976 Discounted cash flow methodDiscount rate9.24%-12.55%9.42%
Constant prepayment rates7.46%-12.74%9.73%Mortgage servicing rightsDiscounted cash flow methodConstant prepayment rates8.82%-14.58%13.37%
Loans held for saleLoans held for sale586 Contractual agreementNANA
Total AssetsTotal Assets$43,062  Total Assets$74,917 
NA - not applicableNA - not applicable
(1) Weighted averages for loans held for investment were weighted by loan amounts.
(2) Weighted averages for other real estate owned were weighted by OREO balances.
(3) Weighted averages for mortgage services rights discount rate and prepayment rates are based on note rate tranches and voluntary constant prepayment rates.
(1) Weighted averages for loans held for investment were weighted by loan amounts.
(2) Weighted averages for other real estate owned were weighted by OREO balances.
(3) Weighted averages for mortgage services rights discount rate and prepayment rates are based on note rate tranches and voluntary constant prepayment rates.
(1) Weighted averages for loans held for investment were weighted by loan amounts.
(2) Weighted averages for other real estate owned were weighted by OREO balances.
(3) Weighted averages for mortgage services rights discount rate and prepayment rates are based on note rate tranches and voluntary constant prepayment rates.









2014
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4.3. FAIR VALUE MEASUREMENTS - continued
The carrying values and fair values of our financial instruments at June 30, 2020March 31, 2021 and December 31, 20192020 are presented in the following tables:
Carrying
Value(1)
Fair Value Measurements at June 30, 2020
Carrying
Value(1)
Fair Value Measurements at March 31, 2021
(dollars in thousands)(dollars in thousands)TotalLevel 1Level 2Level 3(dollars in thousands)
Carrying
Value(1)
TotalLevel 1Level 2Level 3
ASSETSASSETSASSETS
Cash and due from banks, including interest-bearing depositsCash and due from banks, including interest-bearing deposits$351,365  $351,365  $351,365  $—  $—  Cash and due from banks, including interest-bearing deposits$671,429 $671,429 $671,429 $0 $0 
SecuritiesSecurities804,366  804,366  2,602  801,764  —  Securities817,299 817,299 0 817,299 0 
Loans held for saleLoans held for sale14,259  14,072  —  —  14,072  Loans held for sale12,794 12,794 0 0 12,794 
Portfolio loans, netPortfolio loans, net7,433,949  7,422,797  —  —  7,422,797  Portfolio loans, net7,068,067 6,976,120 0 0 6,976,120 
Bank owned life insuranceBank owned life insurance81,443  81,443  —  81,443  —  Bank owned life insurance82,677 82,677 0 82,677 0 
FHLB and other restricted stockFHLB and other restricted stock15,151  15,151  —  —  15,151  FHLB and other restricted stock12,199 12,199 0 0 12,199 
Collateral receivableCollateral receivable91,736  91,736  91,736  —  —  Collateral receivable43,343 43,343 43,343 0 0 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan5,489  5,489  5,489  —  —  Securities held in a deferred compensation plan7,178 7,178 7,178 0 0 
Mortgage servicing rightsMortgage servicing rights4,279  4,279  —  —  4,279  Mortgage servicing rights6,590 6,590 0 0 6,590 
Interest rate swapsInterest rate swaps94,371  94,371  —  94,371  —  Interest rate swaps40,415 40,415 0 40,415 0 
Interest rate lock commitmentsInterest rate lock commitments2,583  2,583  —  2,583  —  Interest rate lock commitments1,509 1,509 0 0 1,509 
Forward sale contractsForward sale contracts226 226 0 0 226 
LIABILITIESLIABILITIESLIABILITIES
DepositsDeposits$7,867,916  $7,874,298  $6,344,076  $1,530,222  $—  Deposits$7,876,028 $7,876,232 $6,555,603 $1,320,629 $0 
Securities sold under repurchase agreementsSecurities sold under repurchase agreements92,159  92,159  92,159  —  —  Securities sold under repurchase agreements67,417 67,417 67,417 0 0 
Short-term borrowingsShort-term borrowings84,541  84,541  84,541  —  —  Short-term borrowings0 0 0 0 0 
Long-term borrowingsLong-term borrowings49,489  50,538  4,585  45,953  —  Long-term borrowings23,282 23,903 4,447 19,456 0 
Junior subordinated debt securitiesJunior subordinated debt securities64,053  64,053  64,053  —  —  Junior subordinated debt securities64,097 64,097 64,097 0 0 
Interest rate swapsInterest rate swaps94,286  94,286  —  94,286  —  Interest rate swaps40,818 40,818 0 40,818 0 
Forward sales contracts594  594  —  594  —  
(1) As reported in the Consolidated Balance Sheets
(1) As reported in the Consolidated Balance Sheets
(1) As reported in the Consolidated Balance Sheets
Carrying
Value(1)
Fair Value Measurements at December 31, 2019
Carrying
Value(1)
Fair Value Measurements at December 31, 2020
(dollars in thousands)(dollars in thousands)TotalLevel 1Level 2Level 3(dollars in thousands)
Carrying
Value(1)
TotalLevel 1Level 2Level 3
ASSETSASSETSASSETS
Cash and due from banks, including interest-bearing depositsCash and due from banks, including interest-bearing deposits$197,823  $197,823  $197,823  $—  $—  Cash and due from banks, including interest-bearing deposits$229,666 $229,666 $229,666 $0 $0 
SecuritiesSecurities784,283  784,283  5,078  779,205  —  Securities773,693 773,693 3,228 770,465 0 
Loans held for saleLoans held for sale5,256  5,256  —  —  5,256  Loans held for sale18,528 18,528 0 0 18,528 
Portfolio loans, netPortfolio loans, net7,074,928  6,940,875  —  —  6,940,875  Portfolio loans, net7,108,248 7,028,446 0 0 7,028,446 
Bank owned life insuranceBank owned life insurance80,473  80,473  —  80,473  —  Bank owned life insurance82,303 82,303 0 82,303 0 
FHLB and other restricted stockFHLB and other restricted stock22,977  22,977  —  —  22,977  FHLB and other restricted stock13,030 13,030 0 0 13,030 
Securities held in a Deferred Compensation Plan5,987  5,987  5,987  —  —  
Collateral receivableCollateral receivable77,936 77,936 77,936 0 0 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan6,794 6,794 6,794 0 0 
Mortgage servicing rightsMortgage servicing rights4,662  4,650  —  —  4,650  Mortgage servicing rights4,976 4,976 0 0 4,976 
Interest rate swapsInterest rate swaps25,647  25,647  —  25,647  —  Interest rate swaps78,319 78,319 0 78,319 0 
Interest rate lock commitmentsInterest rate lock commitments321  321  —  321  —  Interest rate lock commitments2,900 2,900 0 0 2,900 
Forward sale contracts1  1  —  1  —  
LIABILITIESLIABILITIESLIABILITIES
DepositsDeposits$7,036,576  $7,034,595  $5,441,143  $1,593,452  $—  Deposits$7,420,538 $7,422,894 $6,033,075 $1,389,819 $0 
Securities sold under repurchase agreementsSecurities sold under repurchase agreements19,888  19,888  19,888  —  —  Securities sold under repurchase agreements65,163 65,163 65,163 0 0 
Short-term borrowingsShort-term borrowings281,319  281,319  281,319  —  —  Short-term borrowings75,000 75,000 75,000 0 0 
Long-term borrowingsLong-term borrowings50,868  51,339  4,678  46,661  —  Long-term borrowings23,681 24,545 4,494 20,051 0 
Junior subordinated debt securitiesJunior subordinated debt securities64,277  64,277  64,277  —  —  Junior subordinated debt securities64,083 64,083 64,083 0 0 
Interest rate swapsInterest rate swaps25,615  25,615  —  25,615  —  Interest rate swaps79,033 79,033 0 79,033 0 
Forward sale contractsForward sale contracts385 385 0 385 0 
(1) As reported in the Consolidated Balance Sheets
(1) As reported in the Consolidated Balance Sheets
(1) As reported in the Consolidated Balance Sheets
2115
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5.4. SECURITIES

The following table presents the fair values of our securities portfolio at the dates presented:
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Available-for-sale debt securitiesAvailable-for-sale debt securities$801,703  $779,133  Available-for-sale debt securities$813,883 $770,393 
Marketable equity securitiesMarketable equity securities2,663  5,150  Marketable equity securities3,416 3,300 
Total SecuritiesTotal Securities$804,366  $784,283  Total Securities$817,299 $773,693 
Available-for-Sale Debt Securities
The following tables present the amortized cost and fair value of available-for-sale debt securities as of the dates presented:
June 30, 2020December 31, 2019 March 31, 2021December 31, 2020
(dollars in thousands)(dollars in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value		Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value		(dollars in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value		Amortized
Cost		Gross Unrealized GainsGross
Unrealized
Losses		Fair
Value
U.S. Treasury securitiesU.S. Treasury securities$9,975  $380  $—  $10,355  $9,969  $71  $—  $10,040  U.S. Treasury securities$63,361 $259 $(352)$63,268 $9,980 $302 $0 $10,282 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies158,869  4,835  (1) 163,703  155,969  1,773  (45) 157,697  Obligations of U.S. government corporations and agencies78,715 3,313 0 82,028 78,755 4,149 0 82,904 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies172,938  8,224  —  181,162  186,879  2,773  (304) 189,348  Collateralized mortgage obligations of U.S. government corporations and agencies213,394 5,716 (1,194)217,916 202,975 6,410 (89)209,296 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies18,891  877  —  19,768  22,120  321  (23) 22,418  Residential mortgage-backed securities of U.S. government corporations and agencies64,496 632 (1,217)63,911 66,960 818 0 67,778 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies269,673  14,877  —  284,550  273,771  2,680  (581) 275,870  Commercial mortgage-backed securities of U.S. government corporations and agencies266,292 11,085 (124)277,253 258,875 14,806 0 273,681 
Corporate obligationsCorporate obligations5,026  12  —  5,038  7,603  24  —  7,627  Corporate obligations2,001 2 (1)2,002 2,021 5 (1)2,025 
Obligations of states and political subdivisionsObligations of states and political subdivisions130,002  7,125  —  137,127  112,116  4,017  —  116,133  Obligations of states and political subdivisions101,949 5,556 0 107,505 117,439 6,988 0 124,427 
Total Available-for-Sale Debt Securities (1)
Total Available-for-Sale Debt Securities (1)
$765,374  $36,330  $(1) $801,703  $768,427  $11,659  $(953) $779,133  
Total Available-for-Sale Debt Securities (1)
$790,208 $26,563 $(2,888)$813,883 $737,005 $33,478 $(90)$770,393 
(1) Excludes interest receivable of $3.4$3.2 million at June 30, 2020 andMarch 31, 2021and $3.4 million at December 31, 2019.2020. Interest receivable is included in other assets in the consolidated balance sheets.

2216
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5.4. SECURITIES – continued
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:
June 30, 2020March 31, 2021
Less Than 12 Months12 Months or MoreTotalLess Than 12 Months12 Months or MoreTotal
(dollars in thousands)(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses		(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses
U.S. Treasury securitiesU.S. Treasury securities—$—  $—  —$—  $—  —$—  $—  U.S. Treasury securities5$53,026 $(352)0$0 $0 5$53,026 $(352)
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies149,990  (1) ——  —  149,990  (1) Obligations of U.S. government corporations and agencies00 0 00 0 00 0 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies11  —  ——  —  11  —  Collateralized mortgage obligations of U.S. government corporations and agencies110,785 (124)00 0 110,785 (124)
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies——  —  ——  —  ——  —  Residential mortgage-backed securities of U.S. government corporations and agencies249,860 (1,217)00 0 249,860 (1,217)
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies——  —  ——  —  ——  —  Commercial mortgage-backed securities of U.S. government corporations and agencies568,629 (1,194)00 0 568,629 (1,194)
Corporate bondsCorporate bonds——  —  ——  —  ——  —  Corporate bonds1499 (1)00 0 1499 (1)
Obligations of states and political subdivisionsObligations of states and political subdivisions——  —  ——  —  ——  —  Obligations of states and political subdivisions00 0 00 0 00 0 
TotalTotal2$49,991  $(1) —$—  $—  2$49,991  $(1) Total14$182,799 $(2,888)0$0 $0 14$182,799 $(2,888)
December 31, 2019December 31, 2020
Less Than 12 Months12 Months or MoreTotalLess Than 12 Months12 Months or MoreTotal
(dollars in thousands)(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses		(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses		Number of SecuritiesFair ValueUnrealized
Losses
U.S. Treasury securitiesU.S. Treasury securities—$—  $—  —$—  $—  —$—  $—  U.S. Treasury securities0$0 $0 0$0 $0 0$0 $0 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies322,638  (45) ——  —  322,638  (45) Obligations of U.S. government corporations and agencies00 0 00 0 00 0 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies623,393  (73) 625,254  (231) 1248,647  (304) Collateralized mortgage obligations of U.S. government corporations and agencies235,697 (89)00 0 235,697 (89)
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies1982  (2) 12,534  (21) 23,516  (23) Residential mortgage-backed securities of U.S. government corporations and agencies00 0 00 0 00 0 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies990,005  (581) ——  —  990,005  (581) Commercial mortgage-backed securities of U.S. government corporations and agencies00 0 00 0 00 0 
Corporate bondsCorporate bonds179  —  ——  —  179  —  Corporate bonds1499 (1)00 0 1499 (1)
Obligations of states and political subdivisionsObligations of states and political subdivisions——  —  ——  —  ——  —  Obligations of states and political subdivisions00 0 00 0 00 0 
Total Temporarily Impaired Debt Securities20$137,097  $(701) 7$27,788  $(252) 27$164,885  $(953) 
TotalTotal3$36,196 $(90)0$0 $0 3$36,196 $(90)
We evaluate quarterly securities with unrealized losses quarterly to determine if the decline in fair value has resulted from credit losses or other factors. There were 2was 14 debt securities in an unrealized loss position at June 30, 2020March 31, 2021 and 273 debt securities in an unrealized loss position at December 31, 2019.2020. We do not intend to sell and it is more likely than not that we will not be required to sell any of the securities in an unrealized loss position before recovery of their amortized cost. The unrealized losses on the debt securities were attributable to changes in interest rates and not related to the credit quality of thesethe issuers. All debt securities were determined to be investment grade and paying principal and interest according to the contractual terms of the security. We concluded that the allowance for credit losses for debt securities was immaterial at June 30, 2020. Priordid not record an ACL related to the adoption of ASU 2016-13 there was 0 other than temporary impairment, or OTTI, recorded during the six months ended June 30, 2019.securities portfolio at March 31, 2021 and December 31, 2020.


2317
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5.4. SECURITIES – continued
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:
June 30, 2020December 31, 2019March 31, 2021December 31, 2020
(dollars in thousands)(dollars in thousands)Gross Unrealized GainsGross Unrealized LossesNet Unrealized Gains/(Losses)Gross Unrealized GainsGross Unrealized LossesNet Unrealized Gains/(Losses)(dollars in thousands)Gross Unrealized GainsGross Unrealized LossesNet Unrealized Gains/(Losses)Gross Unrealized GainsGross Unrealized LossesNet Unrealized Gains/(Losses)
Total unrealized gains/(losses) on available-for-sale debt securitiesTotal unrealized gains/(losses) on available-for-sale debt securities$36,330  $(1) $36,329  $11,659  $(953) $10,706  Total unrealized gains/(losses) on available-for-sale debt securities$26,563 $(2,888)$23,675 $33,478 $(90)$33,388 
Income tax (expense) benefitIncome tax (expense) benefit(7,736) —  (7,736) (2,486) 203  (2,283) Income tax (expense) benefit(5,668)615 (5,053)(7,128)19 (7,109)
Net Unrealized Gains/(Losses), Net of Tax Included in Accumulated Other Comprehensive Income/(Loss)Net Unrealized Gains/(Losses), Net of Tax Included in Accumulated Other Comprehensive Income/(Loss)$28,594  $(1) $28,593  $9,173  $(750) $8,423  Net Unrealized Gains/(Losses), Net of Tax Included in Accumulated Other Comprehensive Income/(Loss)$20,895 $(2,273)$18,622 $26,350 $(71)$26,279 
The amortized cost and fair value of available-for-sale debt securities at June 30, 2020March 31, 2021 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.
June 30, 2020March 31, 2021
(dollars in thousands)(dollars in thousands)Amortized
Cost		Fair Value(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 subdivisionsObligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisionsObligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions
Due in one year or lessDue in one year or less$106,927  $107,417  Due in one year or less$40,399 $40,813 
Due after one year through five yearsDue after one year through five years105,757  111,561  Due after one year through five years92,940 97,643 
Due after five years through ten yearsDue after five years through ten years55,138  58,778  Due after five years through ten years89,580 91,236 
Due after ten yearsDue after ten years31,024  33,429  Due after ten years21,106 23,109 
Available-for-Sale Debt Securities With MaturitiesAvailable-for-Sale Debt Securities With Maturities298,846  311,185  Available-for-Sale Debt Securities With Maturities244,025 252,801 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies172,938  181,162  Collateralized mortgage obligations of U.S. government corporations and agencies213,394 217,916 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies18,891  19,768  Residential mortgage-backed securities of U.S. government corporations and agencies64,496 63,911 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies269,673  284,550  Commercial mortgage-backed securities of U.S. government corporations and agencies266,292 277,253 
Corporate SecuritiesCorporate Securities5,026  5,038  Corporate Securities2,001 2,002 
Total Available-for-Sale Debt SecuritiesTotal Available-for-Sale Debt Securities$765,374  $801,703  Total Available-for-Sale Debt Securities$790,208 $813,883 
Debt securities with carrying values of $340.6$320 million at June 30, 2020March 31, 2021 and $286.0$308 million at December 31, 20192020 were pledged for various regulatory and legal requirements.
Marketable Equity Securities
The following table presents realized and unrealized net gains and losses for our marketable equity securities for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2020201920202019
Marketable Equity Securities
Net gains and losses recognized during the period on equity securities$448  $52  $(1,137) $(266) 
Less: Net gains and losses recognized during the period on equity securities sold during the period142  —  142  —  
Unrealized Losses/Gains Recognized During the Reporting Period on Equity Securities Still Held at the Reporting Date$306  $52  $(1,279) $(266) 
Three Months Ended March 31,
(dollars in thousands)20212020
Marketable Equity Securities
Net market gains/(losses) recognized$116 $(1,585)
Less: Net gains recognized for equity securities sold0 0 
Unrealized (Losses)/Gains on Equity Securities Still Held$116 $(1,585)
Total unrealized gains and losses on marketable equity securities recognized during the current period are included in other noninterest income on the Consolidated Statements of Comprehensive (Loss) Income.
2418
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued


NOTE 6.5. LOANS AND LOANS HELD FOR SALE

Loans are presented net of unearned income of $16.7$14.0 million at June 30, 2020March 31, 2021 and $4.6$16.0 million at December 31, 20192020 and net of a discount related to purchase accounting fair value adjustments of $10.5$7.5 million at June 30, 2020March 31, 2021 and $12.3$8.6 million at December 31, 2019.2020. The following table presents loans as of the dates presented:
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
CommercialCommercialCommercial
Commercial real estateCommercial real estate$3,345,513  $3,416,518  Commercial real estate$3,284,555 $3,244,974 
Commercial and industrialCommercial and industrial2,140,355  1,720,833  Commercial and industrial1,931,711 1,954,453 
Commercial constructionCommercial construction459,264  375,445  Commercial construction460,417 474,280 
Total Commercial LoansTotal Commercial Loans5,945,132  5,512,796  Total Commercial Loans5,676,683 5,673,707 
ConsumerConsumerConsumer
Residential mortgage971,023  998,585  
Home Equity539,519  538,348  
Installment and other consumer79,816  79,033  
Consumer construction13,068  8,390  
Consumer real estateConsumer real estate1,425,839 1,471,238 
Other consumerOther consumer80,646 80,915 
Total Consumer LoansTotal Consumer Loans1,603,426  1,624,356  Total Consumer Loans1,506,485 1,552,153 
Total Portfolio LoansTotal Portfolio Loans7,548,558  7,137,152  Total Portfolio Loans7,183,168 7,225,860 
Loans held for saleLoans held for sale14,259  5,256  Loans held for sale12,794 18,528 
Total Loans(1)
Total Loans(1)
$7,562,817  $7,142,408  
Total Loans (1)
$7,195,962 $7,244,388 
(1) Excludes interest receivable of $25.4$23.4 million at June 30, 2020March 31, 2021 and $22.1$24.7 million at December 31, 2019.2020. Interest receivable is included in other assets in the consolidated balance sheets.

Commercial and industrial loans, or C&I, included $547.6$499.1 million of loans originated under the Paycheck Protection Program, or PPP, at June 30, 2020.March 31, 2021. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES Act was signed into law. The CARES Act included the PPP, a program designed to aid small and medium sized businesses through federally guaranteed loans distributed through banks. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted expenses in accordance with the requirements of the PPP. The loans are 100 percent guaranteed by the Small Business Administration, or SBA. These loans carry a fixed rate of 1.00 percent and a term of two years, or five years for loans approved by the Small Business Administration, or SBA, on or after June 5, 2020. Payments are deferred for at least six months of the loan. The SBA pays us a processing fee ranging from 1 percent to 5 percent based on the size of the loan. Interest is accrued as earned and loan origination fees and direct costs are deferred and accreted or amortized into interest income over the life of the loan using the level yield method. When a PPP loan is paid off or forgiven by the SBA, the remaining unaccreted or unamortized net origination fees or costs will be immediately recognized into income.
At March 31, 2021, our business banking segment was $1.1 billion compared to $1.2 billion at December 31, 2020. Business banking consists of commercial loans made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards that meet small business market customers’ needs. Business banking consisted of $504.2 million of commercial real estate loans, $232.1 million of C&I loans, $11.0 million of commercial construction loans, $321.8 million of consumer real estate loans that have a commercial purpose at March 31, 2021. At December 31, 2020 business banking consisted of $453.0 million of commercial real estate loans, $394.9 million of C&I loans, $8.2 million of commercial construction loans and $303.9 million of consumer real estate loans that have a commercial purpose. During the first quarter of 2021, $90.2 million of commercial loans and $23.2 million of consumer loans were reclassified into the business banking segment.
We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we mitigate this risk by reviewing the relevant economic indicators and internal risk rating trends and through stress testing of the loans in these segments. Total commercial loans represented 78.879.0 percent of total portfolio loans at June 30, 2020March 31, 2021 and 77.278.5 percent at December 31, 2019.2020. Within our commercial portfolio, the CRE and Commercial Constructioncommercial construction portfolios combined comprised $3.8$3.7 billion, or 64.066.0 percent, of total commercial loans at June 30, 2020March 31, 2021 and $3.8$3.7 billion, or 68.865.6 percent, of total commercial loans at December 31, 20192020 and 50.452.1 percent of total portfolio loans at June 30, 2020March 31, 2021 and 53.151.5 percent at December 31, 2019. Further segmentation of the CRE and commercial construction portfolios by collateral type reveals 0 concentration in excess of 14 percent of both total CRE and commercial construction loans at June 30, 2020 and 11 percent at December 31, 2019.2020.
We lend primarily in Pennsylvania and the contiguous states of Ohio, New York, West Virginia and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in this geography, resulting in a concentration. We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data and information supplied by our customers. We also use subscription services for additional geographic and industry specific information. Our CRE and commercial construction portfolios have exposure outside of this geography of 5.7 percent of the combined portfolios and 3.0 percent of total portfolio loans at June 30, 2020. This compares to 5.4 percent of the combined portfolios and 2.9 percent of total portfolio loans at December 31, 2019.
2519
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6.5. LOANS AND LOANS HELD FOR SALE - continued
concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data and information supplied by our customers. We also use subscription services for additional geographic and industry specific information. Our CRE and commercial construction portfolios have exposure outside of this geography of 5.7 percent of the combined portfolios and 3.0 percent of total portfolio loans at March 31, 2021. This compares to 5.9 percent of the combined portfolios and 3.0 percent of total portfolio loans at December 31, 2020.
We individually evaluate all substandard and nonaccrual commercial loans that have experienced a forbearance or change in terms agreement, and all substandard consumer and residential mortgage loans that entered into an agreement to modify their existing loan, to determine if they should be designated as troubled debt restructurings, or TDRs.
All TDRs will be reported as such for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is fully expected that the remaining principal and interest will be collected according to the restructured agreement. TDRs can be returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, is not in doubt and there is a period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring.
The following tables summarize restructured loans as of the dates presented:
June 30, 2020March 31, 2021
(dollars in thousands)(dollars in thousands)Performing
TDRs		Nonperforming
TDRs		Total
TDRs		(dollars in thousands)Performing
TDRs		Nonperforming
TDRs		Total
TDRs
Commercial real estateCommercial real estate$25  $27,100  $27,125  Commercial real estate$9 $15,754 $15,762 
Commercial and industrialCommercial and industrial4,388  2,068  6,456  Commercial and industrial7,576 11,425 19,001 
Commercial constructionCommercial construction3,997  —  3,997  Commercial construction3,245 0 3,245 
Business bankingBusiness banking1,488  349  1,837  Business banking1,471 397 1,868 
Consumer real estateConsumer real estate5,635  2,238  7,873  Consumer real estate5,611 2,407 8,018 
Other consumerOther consumer3  —  3  Other consumer5 0 5 
Total(1)
Total(1)
$15,536  $31,755  $47,291  
Total(1)
$17,916 $29,983 $47,899 
(1) Refer to Note 1, Basis of Presentation for details of reclassification of our portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
December 31, 2020
(dollars in thousands)Performing
TDRs		Nonperforming
TDRs		Total
TDRs
Commercial real estate$14 $16,654 $16,668 
Commercial and industrial7,090 9,885 16,975 
Commercial construction3,267 0 3,267 
Business banking1,503 430 1,933 
Consumer real estate5,581 2,319 7,900 
Other consumer5 0 5 
Total$17,460 $29,288 $46,748 
 December 31, 2019
(dollars in thousands)Performing
TDRs		Nonperforming
TDRs		Total
TDRs
Commercial real estate$22,233  $6,713  $28,946  
Commercial and industrial6,909  695  7,604  
Commercial construction1,425  —  1,425  
Residential mortgage2,013  822  2,835  
Home equity4,371  678  5,049  
Installment and other consumer9  4  13  
Total$36,960  $8,912  $45,872  
The significant increases in nonperforming TDRs at June 30, 2020 compared to December 31, 2019 was primarily related to a $20.5 million CRE relationship and a $4.3 million C&I relationship. The $20.5 million CRE relationship became a performing TDR in the third quarter of 2019 and then moved to nonperforming in the first quarter of 2020 when the borrower experienced financial deterioration that lead to cash flow issues. The relationship was individually assessed at June 30, 2020, and based upon updated appraisals, a $0.6 million ACL was added due to the relationship being under-collateralized as of June 30, 2020.
There were 4 TDRs totaling $0.1 million that returned to accruing status during the three and six months ended June 30, 2020. There were 3 TDRs totaling $0.1 million0 TDR's that returned to accruing status during the three months ended June 30, 2019March 31, 2021 and 4 TDRs totaling $1.8 million that returned to accruing status during the six months ended June 30, 2019.
The following tables present the restructured loans by portfolio segment and by type of concession for the three and six months ended June 30, 2020:March 31, 2020.
2620
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6.5. LOANS AND LOANS HELD FOR SALE - continued
Three Months Ended June 30, 2020Six Months Ended June 30, 2020
(dollars in thousands)Number of
Loans
Pre-Modification
Outstanding
Recorded
Investment(1)
Post-Modification
Outstanding
Recorded
Investment(1)
Total  Difference
in Recorded
Investment		Number of
Loans
Pre-Modification
Outstanding
Recorded
Investment(1)
Post-Modification
Outstanding
Recorded
Investment(1)
Total  Difference
in Recorded
Investment
Totals by Loan Segment
Commercial Real Estate
Principal deferral and maturity date extension— — — — 1 2,210 2,210 — 
Total Commercial Real Estate— — — — 1 2,210 2,210 — 
Commercial and Industrial
Maturity date extension and interest rate reduction1 75 75 — 1 75 75 — 
Principal deferral and maturity date extension— — — — 1 2,467 2,068 (399)
Payment deferral resulting in payment delay1 93 27 — (66)1 93 27 (66)
Total Commercial and Industrial2 168 102 (66)3 2,635 2,170 (465)
Commercial Construction
Maturity date extension2 701 701 — 3 2,592 2,572 (20)
Total Commercial Construction2 701 701 — 3 2,592 2,572 (20)
Residential Mortgage
Consumer bankruptcy(2)
1 160 160 — 1 160 160 — 
Maturity date extension and payment reduction2 150 150 — 3 177 177 — 
Total Residential Mortgage3 310 310 — 4 337 337 — 
Home Equity
Consumer bankruptcy(2)
4 191 191 — 9 567 564 (3)
Total Home Equity4 191 191 — 9 567 564 (3)
Totals by Concession Type
Principal deferral and maturity date extension— — — — 2 4,677 4,278 (399)
Maturity date extension and interest rate reduction1 75 75 — 1 75 75 — 
Payment deferral resulting in payment delay1 93 27 (66)1 93 27 (66)
Maturity date extension2 701 701 — 3 2,592 2,572 (20)
Consumer bankruptcy(2)
5 351 351 — 10 727 724 (3)
Maturity date extension and payment reduction2 150 150 — 3 177 177 — 
Total(3)
11 $1,370 $1,304 $(66)20 $8,341 $7,853 $(488)
(1) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.
(2) Consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(3) Refer to Note 1, Basis of Presentation for details of reclassification of our portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.




27
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. LOANS AND LOANS HELD FOR SALE - continued
The following tables present the restructured loans by portfolio segment and by type of concession for the three and six months ended June 30, 2019:periods presented:
Three Months Ended June 30, 2019Six Months Ended June 30, 2019
(dollars in thousands)Number of
Loans
Pre-Modification
Outstanding
Recorded
Investment(1)
Post-Modification
Outstanding
Recorded
Investment(1)
Total  Difference
in Recorded
Investment		Number of
Loans
Pre-Modification
Outstanding
Recorded
Investment(1)
Post-Modification
Outstanding
Recorded
Investment(1)
Total  Difference
in Recorded
Investment
Totals by Loan Segment
Commercial Real Estate
Maturity date extension1 1,322 1,311 (11)1 1,322 1,311 (11)
Maturity date extension and interest rate reduction1 151 148 (3)1 151 148 (3)
Principal forgiveness1 4,690 4,631 (59)1 4,690 4,631 (59)
Total Commercial Real Estate3 6,163 6,090 (73)3 6,163 6,090 (73)
Commercial and Industrial
Maturity date extension and interest rate reduction— — — — 1 4,751 4,529 (222)
Total Commercial and Industrial— — — — 1 4,751 4,529 (222)
Commercial Construction
Total Commercial Construction— — — — — — — — 
Residential Mortgage
Consumer bankruptcy(2)
2 116 115 (1)3 166 163 (3)
Total Residential Mortgage2 116 115 (1)3 166 163 (3)
Home Equity
Consumer bankruptcy(2)
6 107 105 (2)13 298 268 (30)
Interest rate reduction1 109 108 (1)2 190 189 (1)
Total Home Equity7 216 213 (3)15 488 457 (31)
Installment and Other Consumer
Consumer bankruptcy(2)
2 9 9 — 3 9 9 — 
Total Installment and Other Consumer$2 $9 $9 $— $3 $9 $9 $— 
Totals by Concession Type
Maturity date extension1 1,322 1,311 (11)1 1,322 1,311 (11)
Maturity date extension and interest rate reduction1 151 148 (3)2 4,902 4,677 (225)
Principal forgiveness1 4,690 4,631 (59)1 4,690 4,631 (59)
Consumer bankruptcy(2)
10 232 229 (3)19 473 440 (33)
Interest rate reduction1 109 108 (1)2 190 189 (1)
Total(3)
14 $6,504 $6,427 $(77)25 $11,577 $11,248 $(329)
Three Months Ended March 31, 2021
Number
of
Contracts		Type of Modification
Total
Pre-Modification Outstanding Recorded Investment(2)
Total
Post-Modification Outstanding Recorded Investment(2)
(dollars in thousands)
Bankruptcy(1)
ForbearanceExtend
Maturity		Modify
Rate		Modify
Payments
Commercial real estate0 $0 $0 $0 $0 $0 $0 $0 
Commercial industrial2 0 0 821 0 5,475 6,304 6,296 
Commercial construction0 0 0 0 0 0 0 0 
Business banking0 0 0 0 0 0 0 0 
Consumer real estate11 340 80 0 0 148 609 568 
Other consumer1 1 0 0 0 0 1 1 
Total(2)
14 $341 $80 $821 $0 $5,623 $6,914 $6,865 
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.

(1) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.
(2) Consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(3) Refer to Note 1, Basis of Presentation for details of reclassification of our portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

28
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. LOANS AND LOANS HELD FOR SALE - continued
Three Months Ended March 31, 2020
Number
of
Contracts		Type of Modification
Total
Pre-Modification Outstanding Recorded Investment(2)
Total
Post-Modification Outstanding Recorded Investment(2)
(dollars in thousands)
Bankruptcy(1)
ForbearanceExtend
Maturity		Modify
Rate		Modify
Payments
Commercial real estate0 $0 $0 $0 $0 $0 $0 $0 
Commercial industrial0 0 0 0 0 0 0 0 
Commercial construction1 0 0 1,891 0 0 1,891 1,806 
Business banking0 0 0 0 0 0 0 0 
Consumer real estate5 78 0 0 0 27 105 91 
Other consumer0 0 0 0 0 0 0 0 
Total(2)
6 $78 $0 $1,891 $0 $27 $1,996 $1,897 
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.
In response to the coronavirus, or COVID-19, pandemic and its economic impact on our customers, we implemented a short-term modification program that complies with the CARES Act to provide temporary payment relief to those borrowers directly impacted by COVID-19the pandemic who were not more than 30 days past due as of December 31, 2019. This program allows for a deferral of payments for 90 days and up to a maximum of 180 days for our commercial customers. The customer remains responsible for deferred payments along with any additional interest accrued during the deferral period. For our consumer customers interest does not accrue during the deferral period and the maturity date is extended by the length of the deferral period. Under the applicable guidance, none of these loans were considered restructured as of June 30, 2020. As of June 30, 2020 weMarch 31, 2021. We had 2,36040 commercial loans that were modified totaling $1.4 billion.$61.8 million at March 31, 2021 compared to 52 commercial loans that were modified totaling $195.6 million at December 31, 2020.
As of June 30, 2020,March 31, 2021, we had 2220 commitments to lend an additional $3.1$0.8 million on TDRs. Defaulted TDRs are defined as loans having a payment default of 90 days or more after the restructuring takes place. There was 1 TDRwere 0 TDRs that defaulted during the three months ended June 30, 2020 totaling $0.1 million andMarch 31, 2021. There were 11 TDRs totaling $21.1 million that defaulted during the sixthree months ended June 30,March 31, 2020 totaling $21.1 million that were restructured within the last 12 months prior to defaulting. The large increase in defaulted TDRs is related to one CRE customer with 5 notes totaling $20.5 million discussed above. There were 0 TDRs that defaulted during the three and six months ended June 30, 2019 that were restructured within the last 12 months prior to defaulting.

21
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued
The following table is a summary of nonperforming assets as of the dates presented:
Nonperforming AssetsNonperforming Assets
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Nonperforming AssetsNonperforming AssetsNonperforming Assets
Nonaccrual loansNonaccrual loans$58,358  $45,145  Nonaccrual loans$102,430 $117,485 
Nonaccrual TDRsNonaccrual TDRs31,755  8,912  Nonaccrual TDRs29,983 29,289 
Total Nonaccrual Loans(1)Total Nonaccrual Loans(1)90,113  54,057  Total Nonaccrual Loans(1)132,413 146,774 
OREOOREO2,740  3,525  OREO1,620 2,155 
Total Nonperforming AssetsTotal Nonperforming Assets$92,853  $57,582  Total Nonperforming Assets$134,033 $148,929 
(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.
(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.

The significant increasesdecrease in nonperforming loans of $11.6 million at March 31, 2021 compared to December 31, 2020 was primarily related to the additionpayoff of a $20.5$4.6 million CREcommercial real estate relationship the $10.9 million lending relationship related to the customer fraud and a $4.3$3.9 million charge off of an $11.1 million C&I relationship. The $20.5 million CRE relationship became a performing TDRthat was previously held in the third quarter of 2019 and then moved to nonperforming in the first quarter of 2020 when the borrower experienced financial deterioration that led to cash flow issues. The relationship was individually assessed at June 30, 2020, and based upon updated appraisals, a $0.6 million ACL was added due to the relationship being under-collateralized as of June 30, 2020. The $10.9 million lending relationship was moved to nonperforming in the second quarter of 2020.specific reserve.


2922
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 7.6. 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) Construction, 2) Commercial Real Estate, or CRE, 3)2) Commercial and Industrial, or 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 the risk of these loans is generally confined to the constructionconstruction/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 home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money mortgages. 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.
Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines and credit cards.lines. 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 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.
3023
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7.6. ALLOWANCE FOR CREDIT LOSSES – continued
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.
3124
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7.6. ALLOWANCE FOR CREDIT LOSSES – continued
The following tabletables presents loan balances by year of origination and internally assigned risk rating for our portfolio segments as of June 30, 2020:the dates presented:
March 31, 2021
Risk RatingRisk Rating
(dollars in thousands)(dollars in thousands)202020192018201720162015 and PriorRevolvingRevolving-TermTotal(dollars in thousands)202120202019201820172016 and PriorRevolvingRevolving-TermTotal
Commercial Real Estate
Commercial real estateCommercial real estate
PassPass$231,670  $468,786  $443,243  $327,871  $401,126  $769,224  $48,527  —  $2,690,447  Pass$96,988 $319,206 $444,668 $376,347 $258,362 $850,342 $44,872 0 $2,390,785 
Special Mention—  8,741  187  13,182  8,172  50,717  2,350  —  83,349  
Special mentionSpecial mention0 450 35,420 8,342 22,541 113,614 0 0 180,367 
SubstandardSubstandard—  —  938  9,098  22,059  49,912  2,890  —  84,897  Substandard0 0 17,259 15,772 19,894 146,624 1,482 0 201,030 
DoubtfulDoubtful—  —  —  —  471  2,859  80  —  3,410  Doubtful0 0 645 0 0 7,499 0 0 8,144 
Total Commercial Real Estate231,670  477,527  444,368  350,151  431,828  872,712  53,847  —  2,862,103  
Total commercial real estateTotal commercial real estate96,988 319,656 497,992 400,461 300,796 1,118,080 46,354 0 2,780,327 
Commercial and Industrial
Commercial and industrialCommercial and industrial
PassPass350,890  224,067  162,559  88,479  56,286  301,155  383,176  44  1,566,656  Pass252,427 478,363 168,546 110,278 55,096 179,887 361,828 0 1,606,425 
Special Mention39  14,104  3,722  917  6,977  10,302  42,199  —  78,260  
Special mentionSpecial mention0 3,090 28,623 3,562 180 1,289 17,718 0 54,461 
SubstandardSubstandard75  5,417  2,799  14,979  75  11,354  3,061  —  37,760  Substandard5,476 0 6,165 4,415 5,778 12,715 4,153 0 38,701 
DoubtfulDoubtful—  —  —  —  —  —  —  —  —  Doubtful0 0 0 0 0 0 0 0 0 
Total Commercial and Industrial351,004  243,588  169,080  104,375  63,338  322,811  428,436  44  1,682,676  
Total commercial and industrialTotal commercial and industrial257,902 481,453 203,334 118,255 61,054 193,891 383,699 0 1,699,588 
Commercial Construction
Commercial constructionCommercial construction
PassPass67,685  206,187  107,927  17,499  17,335  10,533  11,844  —  439,010  Pass24,730 127,643 195,245 53,248 2,059 10,856 13,232 0 427,012 
Special Mention—  —  3,581  —  —  5,076  91  —  8,748  
Special mentionSpecial mention0 3,490 2,862 0 0 8,478 0 0 14,830 
SubstandardSubstandard—  —  —  1,742  —  3,598  —  —  5,340  Substandard0 0 4,148 0 501 2,967 0 0 7,616 
DoubtfulDoubtful—  —  —  —  —  —  —  —  —  Doubtful0 0 0 0 0 0 0 0 0 
Total Commercial Construction67,685  206,187  111,508  19,241  17,335  19,207  11,935  —  453,098  
Total commercial constructionTotal commercial construction24,730 131,133 202,255 53,248 2,560 22,301 13,232 0 449,459 
Business Banking
Business bankingBusiness banking
PassPass289,837  171,903  142,912  99,586  88,874  310,932  110,498  1,247  1,215,789  Pass34,568 121,017 167,764 134,358 89,027 362,534 110,572 265 1,020,105 
Special Mention—  100  1,341  1,742  1,144  7,071  733  69  12,200  
Special mentionSpecial mention0 502 1,972 1,379 1,621 7,759 287 122 13,642 
SubstandardSubstandard—  627  3,115  4,616  4,036  27,566  680  206  40,846  Substandard0 72 1,267 3,777 2,990 25,409 1,141 674 35,330 
DoubtfulDoubtful—  —  —  —  —  —  —  —  —  Doubtful0 0 0 0 0 0 0 0 0 
Total Business Banking289,837  172,630  147,368  105,944  94,054  345,569  111,911  1,522  1,268,835  
Total business bankingTotal business banking34,568 121,591 171,003 139,513 93,638 395,703 112,001 1,061 1,069,078 
Consumer Real Estate
Consumer real estateConsumer real estate
PassPass59,273  143,091  81,972  79,203  87,809  309,636  421,987  7,123  1,190,094  Pass20,000 116,640 110,942 58,166 55,435 267,411 436,449 23,550 1,088,594 
Special Mention—  —  —  —  798  300  —  —  1,098  
Special mentionSpecial mention0 0 0 0 0 2,246 0 0 2,246 
SubstandardSubstandard—  188  299  812  973  8,447  202  —  10,921  Substandard0 0 186 2,089 1,506 7,896 503 1,080 13,260 
DoubtfulDoubtful—  —  —  —  —  —  —  —  —  Doubtful0 0 0 0 0 0 0 0 0 
Total Consumer Real Estate59,273  143,279  82,271  80,015  89,580  318,383  422,189  7,123  1,202,113  
Total consumer real estateTotal consumer real estate20,000 116,640 111,128 60,255 56,942 277,553 436,952 24,630 1,104,099 
Other consumerOther consumerOther consumer
PassPass4,720  16,987  9,223  5,323  4,256  1,561  30,377  268  72,715  Pass872 14,119 11,576 5,723 2,673 2,283 35,151 955 73,354 
Special Mention—  —  —  —  —  —  —  —  —  
Special mentionSpecial mention0 0 0 0 0 0 0 0 0 
SubstandardSubstandard—  559  145  117  691  4,839  408  259  7,018  Substandard0 0 109 125 104 4,968 374 1,579 7,260 
DoubtfulDoubtful—  —  —  —  —  —  —  —  —  Doubtful0 0 0 0 0 4 0 0 4 
Total Other Consumer4,720  17,546  9,368  5,440  4,947  6,400  30,785  527  79,733  
Total other consumerTotal other consumer872 14,119 11,686 5,848 2,778 7,255 35,525 2,534 80,618 
Total Loan Balance$1,004,189  $1,260,757  $963,963  $665,166  $701,082  $1,885,082  $1,059,103  $9,216  $7,548,558  
PassPass429,585 1,176,989 1,098,741 738,120 462,653 1,673,313 1,002,104 24,770 6,606,275 
Special mentionSpecial mention0 7,532 68,876 13,283 24,342 133,387 18,005 122 265,547 
SubstandardSubstandard5,476 72 29,134 26,177 30,773 200,579 7,653 3,332 303,198 
DoubtfulDoubtful0 0 645 0 0 7,503 0 0 8,148 
TotalTotal$435,060 $1,184,593 $1,197,397 $777,580 $517,769 $2,014,783 $1,027,762 $28,225 $7,183,168 

25
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2020
Risk Rating
(dollars in thousands)202020192018201720162015 and PriorRevolvingRevolving-TermTotal
Commercial real estate
Pass$334,086 $422,800 $394,963 $277,724 $307,321 $615,217 $46,330 $0 $2,398,441 
Special mention0 35,499 10,200 22,502 55,174 75,022 0 0 198,397 
Substandard0 17,259 12,781 19,914 50,700 83,792 1,500 0 185,946 
Doubtful0 645 0 0 1,989 6,529 0 0 9,163 
Total commercial real estate334,086 476,203 417,944 320,140 415,184 780,560 47,830 0 2,791,947 
Commercial and industrial
Pass454,131 199,453 140,049 68,607 27,645 206,782 383,082 0 1,479,749 
Special mention3,697 8,211 2,628 697 768 1,046 23,527 0 40,574 
Substandard0 7,793 2,613 8,544 75 13,781 2,022 0 34,828 
Doubtful0 0 0 4,401 0 0 0 0 4,401 
Total commercial and industrial457,828 215,457 145,290 82,249 28,488 221,609 408,631 0 1,559,552 
Commercial construction
Pass131,235 224,794 59,649 2,420 6,346 4,555 12,778 0 441,777 
Special mention1,578 2,533 3,886 0 0 8,593 0 0 16,590 
Substandard0 3,580 0 501 0 3,629 0 0 7,710 
Doubtful0 0 0 0 0 0 0 0 0 
Total commercial construction132,813 230,907 63,535 2,921 6,346 16,777 12,778 0 466,077 
Business banking
Pass296,254 154,335 123,207 86,552 77,238 266,042 103,571 291 1,107,490 
Special mention0 1,060 1,147 1,602 1,084 6,866 637 123 12,519 
Substandard103 1,078 3,896 3,209 3,880 25,871 1,341 680 40,058 
Doubtful0 0 0 0 0 0 0 0 0 
Total business banking296,357 156,473 128,250 91,363 82,202 298,779 105,549 1,094 1,160,067 
Consumer real estate
Pass120,736 122,171 67,700 63,653 73,805 243,939 438,888 22,667 1,153,559 
Special mention0 0 1,489 0 0 150 132 0 1,771 
Substandard0 373 742 1,480 2,449 6,958 0 0 12,002 
Doubtful0 0 0 0 0 0 0 0 0 
Total consumer real estate120,736 122,544 69,931 65,133 76,254 251,047 439,020 22,667 1,167,332 
Other consumer
Pass18,849 13,162 6,784 3,395 2,082 687 26,647 2,767 74,373 
Special mention0 0 0 0 0 0 0 0 0 
Substandard15 0 0 0 0 3,367 744 2,386 6,512 
Doubtful0 0 0 0 0 0 0 0 0 
Total other consumer18,864 13,162 6,784 3,395 2,082 4,054 27,391 5,153 80,885 
Pass1,355,291 1,136,715 792,352 502,350 494,436 1,337,221 1,011,297 25,726 6,655,389 
Special Mention5,274 47,302 19,350 24,802 57,026 91,677 24,296 123 269,851 
Substandard118 30,083 20,032 33,648 57,105 137,398 5,607 3,066 287,056 
Doubtful0 645 0 4,401 1,989 6,529 0 0 13,564 
Total$1,360,684 $1,214,746 $831,734 $565,201 $610,556 $1,572,826 $1,041,199 $28,914 $7,225,860 
We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis. Loans are considered nonperforming when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists. The risk of loss is generally highest for nonperforming loans.
3226
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7.6. ALLOWANCE FOR CREDIT LOSSES – continued
The following tabletables presents loan balances by year of origination and performing and nonperforming status for our portfolio segments as of June 30,March 31, 2021 and December 31, 2020:
March 31, 2021
(dollars in thousands)(dollars in thousands)202020192018201720162015 and PriorRevolvingRevolving-TermTotal(dollars in thousands)202120202019201820172016 and PriorRevolvingRevolving-TermTotal
Commercial Real Estate
Commercial real estateCommercial real estate
PerformingPerforming$231,670  $477,527  $444,368  $350,151  $411,792  $839,942  $50,877  $—  $2,806,327  Performing$96,988 $319,656 $481,588 $400,461 $294,122 $1,046,085 $46,354 $0 $2,685,253 
NonperformingNonperforming—  —  —  —  20,036  32,770  2,970  —  55,776  Nonperforming0 0 16,404 0 6,674 71,995 0 0 95,074 
Total Commercial Real Estate231,670  477,527  444,368  350,151  431,828  872,712  53,847  —  2,862,103  
Total commercial real estateTotal commercial real estate96,988 319,656 497,992 400,461 300,796 1,118,080 46,354 0 2,780,327 
Commercial and Industrial
Commercial and industrialCommercial and industrial
PerformingPerforming252,427 481,453 203,334 117,623 55,366 193,614 383,355 0 1,687,172 
Nonperforming(1)
Nonperforming(1)
5,476 0 0 631 5,689 276 344 0 12,416 
Total commercial and industrialTotal commercial and industrial257,902 481,453 203,334 118,255 61,054 193,891 383,699 0 1,699,588 
Commercial constructionCommercial construction
PerformingPerforming351,004  243,588  168,814  104,375  63,338  322,811  426,076  44  1,680,050  Performing24,730 131,133 202,255 53,248 2,560 21,917 13,232 0 449,074 
NonperformingNonperforming—  —  266  —  —  —  2,360  —  2,626  Nonperforming0 0 0 0 0 384 0 0 384 
Total Commercial and Industrial351,004  243,588  169,080  104,375  63,338  322,811  428,436  44  1,682,676  
Commercial Construction
Performing67,685  206,187  111,508  18,200  17,335  18,744  11,935  —  451,594  
Nonperforming—  —  —  1,041  —  463  —  —  1,504  
Total Commercial Construction67,685  206,187  111,508  19,241  17,335  19,207  11,935  —  453,098  
Total commercial constructionTotal commercial construction24,730 131,133 202,255 53,248 2,560 22,301 13,232 0 449,459 
Business BankingBusiness BankingBusiness Banking
PerformingPerforming289,837  172,290  145,563  104,549  92,708  334,316  111,696  1,401  1,252,360  Performing34,568 121,591 170,640 137,748 92,837 384,332 111,932 1,004 1,054,651 
NonperformingNonperforming—  340  1,805  1,395  1,346  11,253  215  121  16,475  Nonperforming0 0 362 1,765 801 11,371 69 57 14,426 
Total Business Banking289,837  172,630  147,368  105,944  94,054  345,569  111,911  1,522  1,268,835  
Total business bankingTotal business banking34,568 121,591 171,003 139,513 93,638 395,703 112,001 1,061 1,069,078 
Consumer Real Estate
Consumer real estateConsumer real estate
PerformingPerforming59,273  143,174  81,327  78,888  88,576  309,984  421,895  7,123  1,190,240  Performing20,000 116,640 110,249 59,931 56,397 272,547 436,628 23,759 1,096,150 
NonperformingNonperforming—  105  944  1,127  1,004  8,399  294  —  11,873  Nonperforming0 0 880 324 545 5,006 324 871 7,949 
Total Consumer Real Estate59,273  143,279  82,271  80,015  89,580  318,383  422,189  7,123  1,202,113  
Total consumer real estateTotal consumer real estate20,000 116,640 111,128 60,255 56,942 277,553 436,952 24,630 1,104,099 
Other Consumer
Other consumerOther consumer
PerformingPerforming4,720  17,069  9,368  5,338  4,664  5,630  30,594  491  77,874  Performing872 14,119 11,485 5,848 2,697 5,689 35,346 2,397 78,455 
NonperformingNonperforming—  477  —  102  283  770  191  36  1,859  Nonperforming0 0 201 0 81 1,566 179 137 2,163 
Total Other Consumer4,720  17,546  9,368  5,440  4,947  6,400  30,785  527  79,733  
Total other consumerTotal other consumer872 14,119 11,686 5,848 2,778 7,255 35,525 2,534 80,618 
PerformingPerforming1,004,189  1,259,835  960,948  661,501  678,413  1,831,427  1,053,073  9,059  7,458,445  Performing429,585 1,184,593 1,179,550 774,859 503,978 1,924,183 1,026,847 27,160 7,050,755 
NonperformingNonperforming—  922  3,015  3,665  22,668  53,655  6,030  157  90,113  Nonperforming5,476 0 17,847 2,720 13,790 90,599 915 1,065 132,413 
Total Loan Balance$1,004,189  $1,260,757  $963,963  $665,166  $701,082  $1,885,082  $1,059,103  $9,216  $7,548,558  
TotalTotal$435,060 $1,184,593 $1,197,397 $777,580 $517,769 $2,014,783 $1,027,762 $28,225 $7,183,168 
(1) In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.
(1) In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.
27
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2020
(dollars in thousands)202020192018201720162015 and PriorRevolvingRevolving-TermTotal
Commercial real estate
Performing$334,086 $459,799 $417,944 $313,465 $394,972 $722,782 $47,830 $0 $2,690,879 
Nonperforming0 16,404 0 6,675 20,212 57,778 0 0 101,070 
Total commercial real estate334,086 476,203 417,944 320,140 415,184 780,560 47,830 0 2,791,947 
Commercial and industrial
Performing457,828 214,144 143,706 69,411 28,426 220,701 408,350 0 1,542,566 
Nonperforming0 1,313 1,584 12,838 62 908 281 0 16,985 
Total commercial and industrial457,828 215,457 145,290 82,249 28,488 221,609 408,631 0 1,559,552 
Commercial construction
Performing132,813 230,907 63,535 2,921 6,346 16,393 12,778 0 465,692 
Nonperforming0 0 0 0 0 384 0 0 384 
Total commercial construction132,813 230,907 63,535 2,921 6,346 16,777 12,778 0 466,077 
Business Banking
Performing296,327 156,164 126,432 90,414 80,106 286,970 105,494 1,037 1,142,944 
Nonperforming30 309 1,818 949 2,096 11,809 55 57 17,123 
Total business banking296,357 156,473 128,250 91,363 82,202 298,779 105,549 1,094 1,160,067 
Consumer real estate
Performing120,736 122,315 69,225 63,647 74,690 245,331 438,702 21,572 1,156,216 
Nonperforming0 229 706 1,486 1,564 5,716 318 1,096 11,116 
Total consumer real estate120,736 122,544 69,931 65,133 76,254 251,047 439,020 22,667 1,167,332 
Other consumer
Performing18,864 13,162 6,784 3,395 2,082 3,958 27,391 5,153 80,789 
Nonperforming0 0 0 0 0 96 0 0 96 
Total other consumer18,864 13,162 6,784 3,395 2,082 4,054 27,391 5,153 80,885 
Performing1,360,654 1,196,491 827,625 543,253 586,622 1,496,135 1,040,544 27,762 7,079,086 
Nonperforming30 18,254 4,108 21,948 23,934 76,691 654 1,153 146,774 
Total$1,360,684 $1,214,746 $831,734 $565,201 $610,556 $1,572,826 $1,041,199 $28,914 $7,225,860 
The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented:
June 30, 2020(2)
March 31, 2021
(dollars in thousands)(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due
90 Days Past Due(1)
Non - performingTotal Past
Due Loans		Total Loans(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		Non - performingTotal Past
Due Loans		Total Loans
Commercial real estateCommercial real estate$2,806,327  $—  $—  $—  $55,776  $55,776  $2,862,103  Commercial real estate$2,685,253 $0 $0 $95,074 $95,074 $2,780,327 
Commercial and industrial(1)Commercial and industrial(1)1,678,314  —  230  1,506  2,626  4,362  1,682,676  Commercial and industrial(1)1,687,172 0 0 12,416 12,416 1,699,588 
Commercial constructionCommercial construction451,594  —  —  —  1,504  1,504  453,098  Commercial construction449,074 0 0 384 384 449,459 
Business bankingBusiness banking1,248,611  839  2,910  —  16,475  20,224  1,268,835  Business banking1,053,430 1,191 30 14,426 15,647 1,069,078 
Consumer real estateConsumer real estate1,184,530  1,429  3,709  572  11,873  17,583  1,202,113  Consumer real estate1,094,601 1,444 104 7,949 9,498 1,104,099 
Other consumerOther consumer77,420  201  131  122  1,859  2,313  79,733  Other consumer78,314 102 39 2,163 2,304 80,618 
Total(2)Total(2)$7,446,796  $2,469  $6,980  $2,200  $90,113  $101,762  $7,548,558  Total(2)$7,047,844 $2,737 $174 $132,413 $135,324 $7,183,168 
(1)Represents acquiredIn addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that were recorded at fair value at the acquisition date and remain performing at June 30, 2020.is nonperforming resulting in total nonperforming loans of $135.2 million.
(2) We had 2,36040 loans that were modified totaling $1.4 billion$61.8 million under the CARES Act at June 30, 2020.March 31, 2021. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.
3328
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7.6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2019
(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due
90 Days Past Due(1)
Non - performingTotal Past
Due Loans		Total Loans
Commercial real estate$3,025,505  $7,749  $71  $911  $25,356  $34,087  $3,059,592  
Commercial and industrial1,466,460  126  1,589  1,443  10,911  14,069  1,480,529  
Commercial construction367,204  956  1,163  —  737  2,856  370,060  
Business banking830,735  5,093  1,099  —  9,863  16,055  846,790  
Consumer real estate1,283,591  2,620  1,758  1,175  6,063  11,616  1,295,207  
Other consumer81,866  1,448  305  228  1,127  3,108  84,974  
Total$7,055,361  $17,992  $5,985  $3,757  $54,057  $81,791  $7,137,152  
(1)Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2019.
December 31, 2020
(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due
90 Days Past Due (2)
Non - performingTotal Past
Due Loans		Total Loans
Commercial real estate$2,690,877 $0 $0 $0 $101,070 $101,070 $2,791,947 
Commercial and industrial1,542,567 0 0 0 16,985 16,985 1,559,552 
Commercial construction462,094 19 3,580 0 384 3,983 466,077 
Business banking1,140,581 1,614 379 371 17,122 19,486 1,160,067 
Consumer real estate1,153,028 1,087 1,968 132 11,117 14,304 1,167,332 
Other consumer80,583 168 37 0 96 302 80,885 
Total(1)
$7,069,730 $2,888 $5,965 $503 $146,774 $156,130 $7,225,860 
(1) We had 52 loans that were modified totaling $195.6 million under the CARES Act at December 31, 2020. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.
(2) Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2020.
The following table presents loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:
June 30, 2020March 31, 2021
June 30, 2020For the three months endedFor the six months endedMarch 31, 2021For the three months ended
(dollars in thousands)(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related AllowancePast Due 90+ Days Still Accruing
Interest Income Recognized on Nonaccrual(1)
Interest Income Recognized on Nonaccrual(1)
(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related AllowancePast Due 90+ Days Still Accruing
Interest Income Recognized on Nonaccrual(1)
Commercial real estateCommercial real estate$25,356  $55,776  $14,889  $—  $3  $12  Commercial real estate$101,070 $95,074 $52,460 $0 $61 
Commercial and industrial(2)Commercial and industrial(2)10,911  2,626  —  1,506  9  23  Commercial and industrial(2)16,985 12,416 11,425 0 43 
Commercial constructionCommercial construction737  1,504  1,218  —  —  —  Commercial construction384 384 0 0 0 
Business bankingBusiness banking9,863  16,475  3,002  —  57  104  Business banking17,122 14,426 397 0 137 
Consumer real estateConsumer real estate6,063  11,873  398  572  75  170  Consumer real estate11,117 7,949 345 0 110 
Other consumerOther consumer1,127  1,859  —  122  1  3  Other consumer96 2,163 0 0 1 
TotalTotal$54,057  $90,113  $19,507  $2,200  $145  $312  Total$146,774 $132,413 $64,628 $0 $352 
(1) Represents only cash payments received and applied to interest on nonaccrual loans.
The following table presents collateral-dependent(2)In addition to nonperforming loans by class of loan:$132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.
June 30, 2020December 31, 2020
Type of CollateralDecember 31, 2020For the twelve months ended
(dollars in thousands)(dollars in thousands)Real EstateBlanket LienInvestment/CashOther(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related AllowancePast Due 90+ Days Still Accruing
Interest Income Recognized on Nonaccrual(1)
Commercial real estateCommercial real estate$55,447  $40  $—  $—  Commercial real estate$25,356 $101,070 $60,401 $0 $22 
Commercial and industrialCommercial and industrial2,762  3,694  —  —  Commercial and industrial10,911 16,985 6,436 0 101 
Commercial constructionCommercial construction5,215  —  —  —  Commercial construction737 384 285 0 0 
Business bankingBusiness banking2,906  896  —  689  Business banking9,863 17,122 3,890 371 275 
Consumer real estateConsumer real estate398  —  —  —  Consumer real estate6,063 11,117 398 132 423 
Other consumerOther consumer1,127 96 0 0 4 
TotalTotal$66,728  $4,630  $—  $689  Total$54,057 $146,774 $71,410 $503 $826 
(1) Represents only cash payments received and applied to interest on nonaccrual loans.

3429
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7.6. ALLOWANCE FOR CREDIT LOSSES – continued
The following table presentstables present collateral-dependent loans by class of loan as of the dates presented:
March 31, 2021
Type of Collateral
(dollars in thousands)Real EstateBusiness
Assets		Investment/CashOther
Commercial real estate$86,683 $0 $5,350 $0 
Commercial and industrial335 11,968 0 0 
Commercial construction3,245 0 0 0 
Business banking1,856 12 0 0 
Consumer real estate345 0 0 0 
Total$92,464 $11,980 $5,350 $0 
December 31, 2020
Type of Collateral
(dollars in thousands)Real EstateBusiness
Assets		Investment/CashOther
Commercial real estate$100,450 $0 $0 $0 
Commercial and industrial1,040 15,080 0 0 
Commercial construction3,552 0 0 0 
Business banking3,085 1,619 0 689 
Consumer real estate398 0 0 0 
Total$108,525 $16,699 $0 $689 
The following tables present activity in the ACL for the three and six months ended June 30, 2020:periods presented:
Three Months Ended June 30, 2020Three Months Ended March 31, 2021
(dollars in thousands)(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction		Business BankingConsumer
Real Estate		Other
Consumer		Total
Loans		(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction		Business BankingConsumer
Real Estate		Other
Consumer		Total
Loans
Allowance for credit losses on loans:Allowance for credit losses on loans:Allowance for credit losses on loans:
Balance at beginning of periodBalance at beginning of period$42,611  $19,870  $6,606  $13,706  $11,200  $2,857  $96,850  Balance at beginning of period$65,656 $16,100 $7,239 $15,917 $10,014 $2,686 $117,612 
Provision for credit losses on loans(1)Provision for credit losses on loans(1)20,681  60,906  2,249  918  400  677  85,831  Provision for credit losses on loans(1)1,996 2,728 (911)514 (844)(182)3,301 
Charge-offsCharge-offs(5,600) (61,616) —  (260) (37) (790) (68,303) Charge-offs(810)(4,302)0 (917)(271)(232)(6,532)
RecoveriesRecoveries38  4  19  40  22  108  231  Recoveries0 137 1 166 82 334 720 
Net (Charge-offs)/RecoveriesNet (Charge-offs)/Recoveries(5,562) (61,612) 19  (220) (15) (682) (68,072) Net (Charge-offs)/Recoveries(810)(4,165)1 (751)(189)102 (5,812)
Balance at End of PeriodBalance at End of Period$57,730  $19,164  $8,874  $14,404  $11,585  $2,852  $114,609  Balance at End of Period$66,842 $14,663 $6,329 $15,680 $8,981 $2,606 $115,101 
(1) Excludes unfunded commitments
(1) Excludes unfunded commitments

Six Months Ended June 30, 2020Three Months Ended March 31, 2020
(dollars in thousands)(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction
Business Banking(1)
Consumer
Real Estate		Other
Consumer		Total
Loans		(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction		Business BankingConsumer
Real Estate		Other
Consumer		Total
Loans
Allowance for credit losses on loans:Allowance for credit losses on loans:Allowance for credit losses on loans:
Balance at beginning of periodBalance at beginning of period$30,577  $15,681  $7,900  $—  $6,337  $1,729  $62,224  Balance at beginning of period$30,577 $15,681 $7,900 $0 $6,337 $1,729 $62,224 
Impact of CECL adoptionImpact of CECL adoption4,810  7,853  (3,376) 12,898  4,525  642  27,352  Impact of CECL adoption4,810 7,853 (3,376)12,898 4,525 642 27,352 
Provision for credit losses on loans(1)Provision for credit losses on loans(1)28,345  67,104  4,329  2,126  829  1,529  104,262  Provision for credit losses on loans(1)7,639 6,196 2,309 1,194 472 620 18,430 
Charge-offsCharge-offs(6,042) (71,496) —  (721) (218) (1,272) (79,749) Charge-offs(442)(9,879)(229)(460)(172)(248)(11,430)
RecoveriesRecoveries40  22  21  101  112  224  520  Recoveries27 19 2 74 38 114 274 
Net (Charge-offs)/RecoveriesNet (Charge-offs)/Recoveries(6,002) (71,474) 21  (620) (106) (1,048) (79,229) Net (Charge-offs)/Recoveries(415)(9,860)(227)(386)(134)(134)(11,156)
Balance at End of PeriodBalance at End of Period$57,730  $19,164  $8,874  $14,404  $11,585  $2,852  $114,609  Balance at End of Period$42,611 $19,870 $6,606 $13,706 $11,200 $2,857 $96,850 
(1) In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Our new segmentation breaks out business banking loans from our other loan segments: CRE, C&I, commercial construction, consumer real estate and other consumer. The business banking allowance balance at the beginning of period is included in the other segments and reclassified to business banking through the impact of CECL adoption line.Excludes unfunded commitments

30
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
The adoption of ASU 2016-13 resulted in an increase to our ACL of $27.4 million on January 1, 2020. The increase included $8.2 million for S&T legacy loans and $9.3 million for acquired loans from the DNB merger. We also recorded a day one adjustment of $9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020. We obtained information on the relationship subsequent to filing our December 31, 2019 10-K, but before the end of the first quarter of 2020. The updated information supported a loss existed at January 1, 2020.
DuringThe provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management's assessment of expected losses in the loan portfolio at the balance sheet date. The provision for credit losses decreased $16.9 million to $3.1 million for the three months ended June 30, 2020, we had a charge-off
March 31, 2021 compared to $20.0 million for the same period in 2020. The decrease in the provision for credit losses of $58.7$16.9 million relatedwas primarily due to a previously disclosed customer fraud resulting from a check kiting scheme. The fraud was perpetrated by a single business customer and a criminal investigation is ongoing. The check kiting scheme resultedsignificant increase in a deposit account overdraft, which became a loan to us that was charged off through the ACL. The customer also had a lending relationship that was originally $15.1 million, including a $14.3 million CRE loan and a $0.8 million line of credit. We recognized a $4.2 million charge-off related to this lending relationshipprovision needed during the three months ended June 30,March 31, 2020 and the remaining outstanding balance of $10.9 million is a nonperforming loan at June 30, 2020.
We added $14.4 million and $29.3 milliondue to the ACL related to qualitative factorsnegative impact of the COVID-19 pandemic and our adoption of CECL on January 1, 2020. The provision for credit losses for the three and six months ended June 30, 2020. Included in these amounts were $14.8March 31, 2020 included $14.3 million related to the economic forecast and other qualitative reserves established for the uncertainty of the pandemic. Our total qualitative reserve decreased $2.7 million for the three months ended and $26.0March 31, 2021 compared to the same period in 2020 mainly due to a decrease of $3.1 million for the sixth months ended for the economic forecast and an allocation for our hotel portfolio due to the COVID-19 pandemic.forecast. Our economic forecast covers a period of two years and is driven in partprimarily by national unemployment data. ChangesThe forecasted national unemployment rate improved at March 31, 2021 compared to the same time in our current conditions qualitative factors resulted2020.
Net loan charge-offs were $5.8 million, or 0.33 percent annualized as a percentage of average loans at March 31, 2021 compared to $11.2 million, or 0.63 percent of average loans during the same period in a decrease of $0.4 million and an increase of $3.32020. Nonperforming loans increased $61.4 million to $135.2 million at March 31, 2021 compared to $73.8 million at March 31, 2020. The significant increase in nonperforming loans primarily related to the ACL foraddition of $53.6 million of hotel loans which moved to nonperforming during the three and six months ended June 30, 2020.fourth quarter of 2020 as a result of continued deterioration due to the pandemic.
The C&I portfolio included $547.6$499.1 million of loans originated under the PPP at June 30, 2020.March 31, 2021. The loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL to these loans at June 30, 2020.
Prior to the adoption of ASU 326 on January 1, 2020, we calculated our allowance for loan losses using an incurred loan loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.
35
Table of ContentsMarch 31, 2021.

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7. ALLOWANCE FOR CREDIT LOSSES – continued
The following table presents the recorded investment in commercial loan classes by internally assigned risk ratings as of December 31, 2019:
 December 31, 2019
(dollars in thousands)Commercial
Real Estate		% of
Total		Commercial
and Industrial		% of
Total		Commercial
Construction		% of
Total		Total% of
Total
Pass$3,270,437  95.7 %$1,636,314  93.4 %$347,324  92.5 %$5,254,076  95.3 %
Special mention57,285  1.7 %36,484  1.7 %10,109  2.7 %103,878  1.9 %
Substandard86,772  2.5 %47,980  4.9 %17,899  4.8 %152,651  2.8 %
Doubtful2,023  — %55  — %133  — %2,191  — %
Total$3,416,518  100.0 %$1,720,833  100.0 %$375,445  100.0 %$5,512,796  100.0 %
The following table presents the recorded investment in consumer loan classes by performing and nonperforming status as of December 31, 2019:
December 31, 2019
(dollars in thousands)Residential
Mortgage		% of
Total		Home
Equity		% of
Total		Installment
and Other
Consumer		% of
Total		Consumer
Construction		% of
Total		Total% of
Total
Performing$991,066  99.2 %$535,709  99.5 %$78,993  99.9 %$8,390  100.0 %$1,614,158  99.4 %
Nonperforming7,519  0.8 %2,639  0.5 %40  0.1 %—  — %10,198  0.6 %
Total$998,585  100.0 %$538,348  100.0 %$79,033  100.0 %$8,390  100.0 %$1,624,356  100.0 %
The following table presents investments in loans considered to be impaired and related information on those impaired loans as of December 31, 2019:
 December 31, 2019
(dollars in thousands)Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With a related allowance recorded:
Commercial real estate$13,011  $14,322  $2,023  
Commercial and industrial10,001  10,001  55  
Commercial construction489  489  113  
Consumer real estate—  —  —  
Other consumer9  9  9  
Total with a Related Allowance Recorded23,510  24,821  2,200  
Without a related allowance recorded:
Commercial real estate34,909  40,201  —  
Commercial and industrial7,605  10,358  —  
Commercial construction1,425  2,935  —  
Consumer real estate7,884  8,445  —  
Other consumer4  11  —  
Total without a Related Allowance Recorded51,827  61,950  —  
Total:
Commercial real estate47,920  54,523  2,023  
Commercial and industrial17,606  20,359  55  
Commercial construction1,914  3,424  113  
Consumer real estate7,884  8,445  —  
Other consumer13  20  9  
Total$75,337  $86,771  $2,200  
36
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7. ALLOWANCE FOR CREDIT LOSSES – continued
The following table presents average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2019:
 Three months endedSix months ended
 June 30, 2019June 30, 2019
(dollars in thousands)Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With a related allowance recorded:
Commercial real estate$7,703  $—  $7,704  $—  
Commercial and industrial758  13  772  26  
Commercial construction489  —  489  —  
Consumer real estate666  —  666  —  
Other consumer16  —  18  1  
Total with a Related Allowance Recorded9,632  13  9,649  27  
Without a related allowance recorded:
Commercial real estate21,802  77  22,093  124  
Commercial and industrial7,568  131  5,329  189  
Commercial construction2,319  48  2,319  83  
Consumer real estate7,952  93  7,979  188  
Other consumer3  —  4  —  
Total without a Related Allowance Recorded39,644  349  37,724  584  
Total:
Commercial real estate29,505  77  29,797  124  
Commercial and industrial8,326  144  6,101  215  
Commercial construction2,808  48  2,808  83  
Consumer real estate8,618  93  8,645  188  
Other consumer19  —  22  1  
Total$49,276  $362  $47,373  $611  
The following table details activity in the allowance for loan losses for the three and six months ended June 30, 2019:
 Three Months Ended June 30, 2019
(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction		Consumer
Real Estate		Other
Consumer		Total
Loans
Balance at beginning of period$34,903  $11,996  $6,757  $6,178  $1,575  $61,409  
Charge-offs(528) (1,435) —  (247) (457) (2,667) 
Recoveries6  91  2  344  89  532  
Net (Charge-offs)/Recoveries(522) (1,344) 2  97  (368) (2,135) 
Provision for credit losses(1,545) 2,575  495  296  384  2,205  
Balance at End of Period$32,836  $13,227  $7,254  $6,571  $1,591  $61,479  
 Six Months Ended June 30, 2019
(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction		Consumer
Real Estate		Other
Consumer		Total
Loans
Balance at beginning of period$33,707  $11,596  $7,983  $6,187  $1,523  $60,996  
Charge-offs(529) (6,912) —  (410) (840) (8,691) 
Recoveries128  508  3  492  189  1,320  
Net (Charge-offs)/Recoveries(401) (6,404) 3  82  (651) (7,371) 
Provision for credit losses(470) 8,035  (732) 302  719  7,854  
Balance at End of Period$32,836  $13,227  $7,254  $6,571  $1,591  $61,479  
37
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 7. ALLOWANCE FOR CREDIT LOSSES – continued
The following tables present the allowance for loan losses and recorded investments in loans by category as of December 31 2019:
 December 31, 2019
 Allowance for Loan LossesPortfolio Loans
(dollars in thousands)Individually
Evaluated for
Impairment		Collectively
Evaluated for
Impairment		TotalIndividually
Evaluated for
Impairment		Collectively
Evaluated for
Impairment		Total
Commercial real estate$2,023  $28,554  $30,577  $47,920  $3,368,598  $3,416,518  
Commercial and industrial55  15,626  15,681  17,606  1,703,227  1,720,833  
Commercial construction113  7,787  7,900  1,914  373,531  375,445  
Consumer real estate—  6,337  6,337  7,884  1,537,439  1,545,323  
Other consumer9  1,720  1,729  13  79,020  79,033  
Total$2,200  $60,024  $62,224  $75,337  $7,061,815  $7,137,152  
38
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued


NOTE 8.7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Interest Rate Swaps
In accordance with applicable accounting guidance for derivatives and hedging, all derivatives are recognized as either assets or liabilities on the balance sheet at fair value. 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 with us receiving a variable rate. These agreements could have floors or caps on the contracted interest rates.
Pursuant to our agreements with various financial institutions, we may receive collateral or may be required to post collateral based upon mark-to-market positions. Beyond unsecured threshold levels, collateral in the form of cash or securities may be made available to counterparties of interest rate swap transactions. Based upon our current positions and related future collateral requirements relating to them, we believe any effect on our cash flow or liquidity position to be immaterial.
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 by our Senior Loan Committee. Interest rate swaps 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 Comprehensive (Loss) Income.
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 mortgage banking in the Consolidated Statements of Comprehensive (Loss) Income.
3932
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 8.7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued
    The following table indicates the amounts representing the value of derivative assets and derivative liabilities as of the dates presented:
Derivatives
(included in Other Assets)		Derivatives
(included in Other Liabilities)		Derivatives
(included in Other Assets)		Derivatives
(included in Other Liabilities)
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Derivatives not Designated as Hedging Instruments:Derivatives not Designated as Hedging Instruments:Derivatives not Designated as Hedging Instruments:
Interest Rate Swap Contracts - Commercial LoansInterest Rate Swap Contracts - Commercial LoansInterest Rate Swap Contracts - Commercial Loans
Fair valueFair value$94,371  $25,647  $94,286  $25,615  Fair value$40,415 $78,319 $40,818 $79,033 
Notional amountNotional amount930,074  740,762  930,074  740,762  Notional amount983,243 983,638 983,243 983,638 
Collateral postedCollateral posted—  —  91,730  26,127  Collateral posted0 0 43,340 77,930 
Interest Rate Lock Commitments - Mortgage LoansInterest Rate Lock Commitments - Mortgage LoansInterest Rate Lock Commitments - Mortgage Loans
Fair valueFair value2,583  321  —  —  Fair value1,509 2,900 0 0 
Notional amountNotional amount59,677  9,829  —  —  Notional amount44,519 51,053 0 0 
Forward Sale Contracts - Mortgage LoansForward Sale Contracts - Mortgage LoansForward Sale Contracts - Mortgage Loans
Fair valueFair value—  1  594  —  Fair value226 0 0 385 
Notional amountNotional amount$—  $12,750  $62,617  $—  Notional amount$36,835 $0 $0 $47,062 
Presenting offsetting derivatives that are subject to legally enforceable netting arrangements with the same party is permitted. For example, we may have a derivative asset and a derivative liability with the same counterparty to a swap transaction and we are permitted to offset the asset position and the liability position resulting in a net presentation.
The following table indicates the gross amounts of commercial loan swap derivative assets and derivative liabilities, the amounts offset and the carrying values in the Consolidated Balance Sheets as of the dates presented:
Derivatives
(included in Other Assets)		Derivatives
(included in Other Liabilities)		Derivatives
(included in Other Assets)		Derivatives
(included in Other Liabilities)
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Derivatives not Designated as Hedging Instruments:Derivatives not Designated as Hedging Instruments:Derivatives not Designated as Hedging Instruments:
Gross amounts recognizedGross amounts recognized$98,649  $26,146  $98,564  $26,114  Gross amounts recognized$44,022 $82,655 $43,865 $82,626 
Gross amounts offsetGross amounts offset(4,278) (499) (4,278) (499) Gross amounts offset(3,607)(4,336)(3,047)(3,593)
Net Amounts Presented in the Consolidated Balance SheetsNet Amounts Presented in the Consolidated Balance Sheets94,371  25,647  94,286  25,615  Net Amounts Presented in the Consolidated Balance Sheets40,415 78,319 40,818 79,033 
Gross amounts not offset(1)
Gross amounts not offset(1)
—  —  (91,730) (26,127) 
Gross amounts not offset(1)
0 0 (43,340)(77,930)
Net AmountNet Amount$94,371  $25,647  $2,556  $(512) Net Amount$40,415 $78,319 $(2,522)$1,103 
(1) Amounts represent collateral posted for the periods presented.
The following table indicates the gain or loss recognized in income on derivatives for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)2020201920202019(dollars in thousands)20212020
Derivatives not Designated as Hedging InstrumentsDerivatives not Designated as Hedging InstrumentsDerivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loansInterest rate swap contracts—commercial loans$(62) $26  $52  $(96) Interest rate swap contracts—commercial loans$310 $114 
Interest rate lock commitments—mortgage loansInterest rate lock commitments—mortgage loans186  310  2,792  398  Interest rate lock commitments—mortgage loans(1,759)2,606 
Forward sale contracts—mortgage loansForward sale contracts—mortgage loans698  (193) (595) (160) Forward sale contracts—mortgage loans979 (1,293)
Total Derivatives Gain/(Loss)$822  $143  $2,249  $142  
Total Derivatives (Loss)/GainTotal Derivatives (Loss)/Gain$(470)$1,427 
4033
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 9. BORROWINGS
Short-term borrowings are for terms under or equal to one year and are comprised of securities sold under repurchase agreements, or REPOs and FHLB advances. All REPOs are overnight short-term investments and are not insured by the Federal Deposit Insurance Corporation, or FDIC. Securities pledged as collateral under these REPO financing arrangements cannot be sold or repledged by the secured party and, therefore, the REPOs are accounted for as secured borrowings. Mortgage-backed securities with amortized cost of $92.3 million and carrying value of $97.0 million at June 30, 2020 and amortized cost of $22.7 million and carrying value of $23.0 million at December 31, 2019, were pledged as collateral for these secured transactions. The pledged securities are held in safekeeping at the Federal Reserve. Due to the overnight short-term nature of REPOs, potential risk due to a decline in the value of the pledged collateral is low. Collateral pledging requirements with REPOs are monitored daily. FHLB advances are for various terms and are secured by a blanket lien on residential mortgages and other real estate secured loans.
Long-term borrowings are for original terms greater than one year and are comprised of FHLB advances, finance leases and junior subordinated debt securities. Long-term FHLB advances are secured by the same loans as short-term FHLB advances. We had total long-term borrowings outstanding of $2.9 million at a fixed and $45.1 million at a variable rate at June 30, 2020, excluding our finance leases.
Information pertaining to borrowings is summarized in the table below as of the dates presented:
 June 30, 2020December 31, 2019
(dollars in thousands)BalanceWeighted
Average Rate		BalanceWeighted
Average Rate
Short-term Borrowings
Securities sold under repurchase agreements$92,159  0.25 %$19,888  0.74 %
Short-term borrowings84,541  0.38 %281,319  1.84 %
Total Short-term Borrowings176,700  0.31 %301,207  1.76 %
Long-term Borrowings
Long-term borrowings49,489  2.48 %50,868  2.60 %
Junior subordinated debt securities64,053  3.31 %64,277  3.59 %
Total Long-term Borrowings113,542  2.95 %115,145  3.15 %
Total Borrowings$290,242  1.34 %$416,352  2.14 %
We had total borrowings at the FHLB of Pittsburgh of $132.5 million at June 30, 2020 and $532.9 million at December 31, 2019. The $132.5 million at June 30, 2020 consisted of $84.5 million in short-term borrowings and $48.0 million in long-term borrowings. Our maximum borrowing capacity with the FHLB of Pittsburgh was $3.1 billion at June 30, 2020. We utilized $383.9 million of our borrowing capacity at June 30, 2020 consisting of $132.5 million for borrowings and $251.4 million for letters of credit to collateralize public funds. Our remaining borrowing availability at June 30, 2020 is $2.7 billion.
We have completed 3 private placements of trust preferred securities to financial institutions. As a result, we own 100 percent of the common equity of STBA Capital Trust I, DNB Capital Trust I and DNB Capital Trust II, collectively 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 Trusts are variable interest entities, and the third-party investors are the primary beneficiaries; therefore, the trusts are not consolidated into our financial statements. The Trusts pays dividends on the securities at the same rate as the interest paid by us on the junior subordinated debt held by the Trusts. DNB Capital Trust I and DNB Capital Trust II were acquired with the DNB merger.

41
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 10.8. 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 financial statements. Our exposure to credit loss, in the event the customer does not satisfy the terms of the agreement, equals the contractual amount of the obligation less the value of any collateral. We apply the same credit policies in making commitments and standby letters of credit that are used for the underwriting of loans to customers. Commitments generally have fixed expiration dates, annual renewals or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.
The following table sets forth our commitments and letters of credit as of the dates presented:
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Commitments to extend creditCommitments to extend credit$2,227,102  $1,910,805  Commitments to extend credit$2,261,223 $2,185,752 
Standby letters of creditStandby letters of credit82,906  80,040  Standby letters of credit88,418 89,095 
TotalTotal$2,310,008  $1,990,845  Total$2,349,641 $2,274,847 
Allowance for Credit Losses on Unfunded Loan Commitments
We maintain an allowance for credit losses on unfunded commercial 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 allowance for credit losses 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 on our Consolidated Statements of Comprehensive (Loss) Income. The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.
The following table presents activity in the allowance for credit losses on unfunded loan commitments foras of the three and six months ended June 30, 2020 was as follows:dates presented:
(dollars in thousands)Three Months Ended
June 30, 2020
Balance at March 31, 2020$6,077 
Provision for credit losses927 
Total$7,004 
(dollars in thousands)Six Months Ended
June 30, 2020
Balance at December 31, 2019$3,112 
Impact of adopting ASU 2016-131,349 
January 1, 20204,461 
Provision for credit losses2,543 
Total$7,004 
(dollars in thousands)Three Months Ended March 31, 2021Three Months Ended March 31, 2020
Balance at beginning of period$4,467 $3,112 
Impact of adopting ASU 2016-13 at January 1, 20200 1,349 
Balance after adoption of ASU 2016-134,467 4,461 
(Recovery) provision for credit losses(164)1,616 
Total$4,303 $6,077 
The increasedecrease in allowance for credit losses on unfunded loan commitments for both the three and six months ended June 30, 2020March 31, 2021 was due to higher expected credit losses due toa decrease in the COVID-19 pandemic.loss rates for the construction portfolio.
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.
42
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 11. REVENUE FROM 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 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, checksale fees and transfer fees. Our performance obligations are generally satisfied at a point in time, while fee revenue is recognized when the services are provided or the transaction is settled.
The information presented in the following table presents the point of revenue recognition for revenue from contracts with customers. Other revenue streams such as: interest income, net securities gains and losses, insurance, mortgage banking and other revenues that are accounted for under other generally accepted accounting principles are excluded.
(dollars in thousands)Three Months Ended June 30,Six Months Ended June 30,
Revenue StreamsPoint of Revenue Recognition2020201920202019
Service charges on deposit accountsOver a period of time$440  $451  $924  $908  
At a point in time1,902  2,761  4,976  5,457  
$2,342  $3,212  $5,900  $6,365  
Debit and credit cardOver a period of time$184  $177  $378  $362  
At a point in time3,428  3,324  6,715  6,114  
$3,612  $3,501  $7,093  $6,476  
Wealth managementOver a period of time$652  $409  $997  $822  
At a point in time1,934  1,653  3,952  3,287  
$2,586  $2,062  $4,949  $4,109  
Other fee revenueAt a point in time$874  $1,145  $1,793  $2,064  
4334
Table of Contents
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 12.9. OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the change in components of other comprehensive income (loss) for the periods presented, net of tax effects.
 Three Months Ended June 30, 2020Three Months Ended June 30, 2019
(dollars in thousands)Pre-Tax
Amount		Tax
(Expense)
Benefit		Net of Tax
Amount		Pre-Tax
Amount		Tax Benefit (Expense)Net of Tax
Amount
Change in net unrealized gains/(losses) on debt securities available-for-sale
$4,201  $(894) $3,307  $8,968  $(1,912) $7,056  
Reclassification adjustment for net (gains)/losses on debt securities available-for-sale included in net income (1)
(142) 30  (112) —  —  —  
Adjustment to funded status of employee benefit plans464  (99) 365  452  (96) 356  
Other Comprehensive Income (Loss)$4,523  $(963) $3,560  $9,420  $(2,008) $7,412  
 Six Months Ended June 30, 2020Six Months Ended June 30, 2019
(dollars in thousands)Pre-Tax
Amount		Tax
(Expense)
Benefit		Net of Tax
Amount		Pre-Tax
Amount		Tax
(Expense)
Benefit		Net of Tax
Amount
Change in net unrealized gains/(losses) on available-for-sale debt securities
$25,765  $(5,482) $20,283  $16,366  $(3,490) $12,876  
Reclassification adjustment for net (gains)/losses on debt securities available-for-sale included in net income (1)
(142) 30  (112) —  —  —  
Adjustment to funded status of employee benefit plans929  (198) 731  905  (193) 712  
Other Comprehensive Income/(Loss)$26,552  $(5,650) $20,902  $17,271  $(3,683) $13,588  
Three Months Ended March 31, 2021Three Months Ended March 31, 2020
(dollars in thousands)Pre-Tax
Amount		Tax
(Expense)
Benefit		Net of Tax
Amount		Pre-Tax
Amount		Tax Benefit (Expense)Net of Tax
Amount
Change in net unrealized gains/(losses) on debt securities available-for-sale$(9,712)$2,072 $(7,640)$21,568 $(4,592)$16,976 
Adjustment to funded status of employee benefit plans (1)
(343)73 (270)465 (99)366 
Other Comprehensive (Loss) Income$(10,055)$2,145 $(7,910)$22,033 $(4,691)$17,342 
(1) Pension settlement accounting was triggered during the three months ended March 31, 2021 resulting in a charge of $0.7 million immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.
(1) Reclassification adjustments are comprised of realized security gains or losses. The realized gains or losses have been reclassified out of accumulated other comprehensive income/(loss) and have affected certain lines in the Consolidated Statements of Comprehensive (Loss) Income as follows: the pre-tax amount is included in net gain on sale of securities, the tax expense amount is included in the provision for income taxes and the net of tax amount is included in net income.

4435
Table of Contents
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued


NOTE 13.10. EMPLOYEE BENEFITS

Our qualified and nonqualified defined benefit 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, 0 service costs are included in net periodic pension expense.
The defined benefit plan of DNB was merged into S&T's defined benefit plan at November 30, 2019 and the components of net periodic pension cost at June 30, 2020 include the impact of the addition of the DNB defined benefit plan.
The investment policy for S&T's defined benefit plan is 90 percent fixed income and 10 percent equity and cash. The expected long-term rate of return on plan assets is 3.452.42 percent compared to 4.803.45 percent in prior periods.
We remeasured our pension obligation and recognized a pension settlement charge of $0.7 million for the three months ended March 31, 2021. A settlement charge is incurred when the aggregate amount of lump-sum distributions during the year is greater than the sum of the interest cost component of the annual net periodic pension cost.
The following table summarizes the components of net periodic pension cost for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)2020201920202019(dollars in thousands)20212020
Components of Net Periodic Pension CostComponents of Net Periodic Pension CostComponents of Net Periodic Pension Cost
Interest cost on projected benefit obligationInterest cost on projected benefit obligation$890  $989  $1,781  $1,978  Interest cost on projected benefit obligation$703 $891 
Expected return on plan assetsExpected return on plan assets(971) (1,181) (1,943) (2,361) Expected return on plan assets(716)(972)
Net amortizationNet amortization385  395  769  789  Net amortization248 384 
Settlement ChargeSettlement Charge749 0 
Net Periodic Pension ExpenseNet Periodic Pension Expense$304  $203  $607  $406  Net Periodic Pension Expense$984 $303 
The components of net periodic pension expense are included in salaries and employee benefits on the Consolidated Statements of Comprehensive (Loss) Income.
45
Table of Contents
S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued



NOTE 14. QUALIFIED AFFORDABLE HOUSING

As part of our responsibilities under the Community Reinvestment Act and due to their favorable federal income tax benefits, we invest in Low Income Housing partnerships, or LIHPs. As a limited partner in these operating partnerships, we receive tax credits and tax deductions for losses incurred by the underlying properties. We use the cost method to account for these partnerships. These investments are recorded in other assets on our balance sheet. Our maximum exposure to loss associated with these investments consists of the investments' fair value plus any unfunded commitments as well as the denial of the tax credits if the project is deemed non-compliant. We do not have any loss reserves recorded related to these investments because we believe the likelihood of any loss to be remote. Our investments in LIHPs represent unconsolidated variable interest entities, or VIEs, and the assets and liabilities of the partnerships are not recorded on our balance sheet. We have determined that we are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact their economic performance.
Our total investment in qualified affordable housing projects was $7.4 million at June 30, 2020 and $4.8 million at December 31, 2019. Amortization expense, included in other noninterest expense in the Consolidated Statements of Comprehensive (Loss) Income, was $0.5 million and $1.1 million for the three and six months ended June 30, 2020 and $0.7 million and $1.4 million for the three and six months ended June 30, 2019. The amortization expense was offset by tax credits of $0.6 million and $1.1 million for the three and six months ended June 30, 2020 and $0.7 million and $1.5 million for the three and six months ended June 30, 2019 as a reduction to our federal tax provision.
On September 11, 2019, we entered into a new qualified affordable housing project and committed to an investment of $10.2 million. As of June 30, 2020, we have invested $5.1 million in this new project. NaN amortization expense or tax credits will be recognized for this new project until complete, which we expect to be later in 2020.


46
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 15.11. SHARE REPURCHASE PLAN

On September 16, 2019,March 15, 2021, our Board of Directors authorized aan extension of its $50 million share repurchase plan.plan, which was set to expire March 31, 2021. This authorization extended the expiration date of the repurchase authorization, which is effectiveplan through March 31, 2021,2022. The plan permits S&T to repurchase from time to time up to the previously authorized $50 million in aggregate value of shares of S&T's common stock, with $37.4 million of capacity remaining at March 31, 2021, through a combination of open market and privately negotiated repurchases. The specific timing, price and quantity of repurchases will be at the discretion of S&T and will depend on a variety of factors, including general market conditions, the trading price of common stock, legal and contractual requirements, applicable securities laws and S&T's financial performance. The repurchase plan does not obligate us to repurchase any particular number of shares. We expect to fund any repurchases from cash on hand and internally generated funds. Any share repurchases will not begin until permissible under applicable laws. During the three months ended June 30, 2020,March 31, 2021, we had 0 repurchases. Repurchase activity was suspended in March of 2020 due to the impact of the COVID-19 pandemic. During the six monthsyear ended June 30,December 31, 2020, we repurchased 411,430 common shares at a total cost of $12.6 million, or an average of $30.52 per share. Repurchase activity was suspended in March of 2020 due to the impact of the COVID-19 pandemic.

4736
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, represents an overview of our consolidated results of operations and financial condition and highlights material changes in our financial condition and results of operations at and for the three and six month periods ended June 30, 2020March 31, 2021 and 2019.2020. Our MD&A should be read in conjunction with our Consolidated Financial Statements and Notes. The results of operations reported in the accompanying Consolidated Financial Statements are not necessarily indicative of results to be expected in future periods.
Important Note Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains or incorporates statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result”, “expect”, “anticipate”, “estimate”, “forecast”, “project”, “intend”, “ believe”, “assume”, “strategy”, “trend”, “plan”, “outlook”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “believe”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses; cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; requirements; unanticipated changes in our liquidity position; changes in accounting policies, practices, or guidance, for example, our adoption of CECL; legislation affecting the financial services industry as a whole, and S&T, in particular; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions,including DNB, cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider;provider; our ability to attract and retain talented executives and employees; our ability to successfully manage our CEO transition; general economic or business conditions, including the strength of regional economic conditions in our market area; the duration and severity of the coronavirus (“COVID-19”) pandemic, both in our principal area of operations and nationally, including the ultimate impact of the pandemic on the economy generally and on our operations; our participation in the Paycheck Protection Program; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses.
Many of these factors, as well as other factors, are described in our Annual Report on Form 10-K for the year ended December 31, 2019,2020, including Part I, Item 1A-"Risk Factors" and any of our subsequent filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
4837
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
Our critical accounting policies involving significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of June 30, 2020March 31, 2021 have remained unchanged from the disclosures presented in our Annual Report on Form 10-K for the year ended December 31, 20192020 under Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” except for we have updated our allowance for credit losses policy in response to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
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. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. 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 risk characteristics with other loans.
The ACL for homogeneous loans is calculated using a life-time loss rate methodology with both a quantitative and a qualitative analysis that is applied on a quarterly basis. The ACL model is comprised of six distinct portfolio segments: 1) Construction, 2) Commercial Real Estate, or CRE, 3) Commercial and Industrial, or C&I, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer. 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 segments and type of collateral, lien position, and FICO score, for the consumer segments. Historical credit loss experience is the basis for the estimation of expected credit losses. We apply historical loss rates to pools of loans with similar risk characteristics. After consideration of the historic loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Our reasonable and supportable forecast adjustment is based on the unemployment forecast and management judgment. For periods beyond which we are able to develop reasonable and supportable forecasts, we revert to the historical loss rate. 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 for collateral dependent loans, the existence of and changes in concentrations and other external factors. These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve. A similar process is employed to calculate a reserve assigned to off-balance sheet commitments, specifically unfunded loan commitments and letters of credit, and any needed reserve is recorded in other liabilities.
The 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 $0.5 million that meet the following criteria: 1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) any commercial troubled debt restructuring (TDR), or any loan reasonably expected to become a TDR whether on accrual or nonaccrual status and 4) when it is determined by management that a loan does not share similar risk characteristics with other loans. Specific reserves are established based on the following three acceptable methods for measuring the ACL: 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 recorded investment in the loan balance.
Although we believe our process for determining the ACL appropriately considers all the factors that would likely result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual losses are higher than management estimates, additional provision for credit losses could be required and could adversely affect our earnings or financial position in future periods.
49
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

.
Overview
We are a bank holding company that is headquartered in Indiana, Pennsylvania with assets of $9.5$9.3 billion at June 30, 2020.March 31, 2021. We operate in five markets including Western Pennsylvania, Eastern Pennsylvania, Northeast Ohio, Central Ohio and Upstate New York.
We provide a full range of financial services with retail and commercial banking products, cash management services, trust and brokerage services. Our common stock trades on the NASDAQ Global Select Market under the symbol “STBA”.
We earn revenue primarily from interest on loans and securities and fees charged for financial services provided to our customers. We incur expenses for the cost of deposits and other funding sources, provision for credit losses and other operating costs such as salaries and employee benefits, data processing, occupancy and tax expense.
Our mission is to become the financial services provider of choice within the markets that we serve which will enable us to be a high performing regional community bank. We strive to do this by delivering exceptional service and value, one customer at a time.value. Our strategic plan follows a disciplined approach focused on organic growth, which includes both growth within our current footprint and through market expansion. We employ a geographic market-based growth platform in order to drive organic growth. Each of our five markets is led by a Market President who is responsible for developing strategic initiatives specific to each market. We acknowledge that each of our five markets are in different stages of development and that our market basedmarket-based strategy will allow us to customize our approach to each market given its developmental stage and unique characteristics. We also actively evaluate acquisition opportunities that align with our strategic objectives as another source of growth. Our strategic plan includes a collaborative model that combines expertise from all areas of our business and focuses on satisfying each customer’s individual financial objectives. We continuously work to maintain and improve the efficiency of our different lines of business.
We merged with DNB Financial Corporation (DNB) on November 30, 2019. The merger expanded S&T’s footprint in Eastern Pennsylvania gaining a new presence in the counties of Chester, Delaware and Philadelphia. The merger was valued at $201.0 million, or $37.72 per share, and added approximately $899.3 million of portfolio loans and $990.6 million of deposits at December 31, 2019.

Three and Six Months Ended June 30, 2020COVID-19 Update

DuringThe extent to which the three months ended June 30, 2020,COVID-19 pandemic may adversely impact our business depends on future developments, which remain highly uncertain and unpredictable. The pandemic has had, and we experienced a pre-tax loss of $58.7 million related to a customer fraud resulting from a check kiting scheme. This matter was disclosed in our Form 8-K filed on May 26, 2020. The fraud was perpetrated by a single business customer and a criminal investigation is ongoing. This fraud loss reduced net income by $46.3 million, or $1.19 per diluted share, resulting in a net loss for the three months ended June 30, 2020 of $33.1 million. Weexpect that it will continue to pursue all available sources of recovery to mitigatehave, negative impacts on S&T’s commercial and consumer loan customers and the loss. An internal revieweconomy as a whole. The severity and length of the matter has been completed and various process and monitoring enhancements have been substantially implemented. The customer also had a lending relationship that was originally $15.1 million, including a $14.3 million commercial real estate, or CRE, loan and a $0.8 million line of credit. We recognized a $4.2 million charge-off related to this lending relationship during the three months ended June 30, 2020pandemic’s impact on S&T and the remaining balance of $10.9 million is a nonperforming loan at June 30, 2020.U.S. and global economies continue to be unknown.
As we navigate through the uncertainty resulting from the COVID-19 pandemic, our first priority isremains the safety of both our employees and customers. Our financial performance has beencontinues to be negatively impacted in many ways due to the COVID-19 pandemic. We are closely monitoring our asset quality with a focus on the portfolios that have been significantly impacted by the COVID-19 pandemic.pandemic, including our hotel portfolio. We have increaseddid experience improvement in our allowance for credit losses, or ACL, to be responsive to this additional risk within our loan portfolio.asset quality during the three months ended March 31, 2021, but remain cautious given the current environment. Our balance sheet is asset sensitive so we have experienced a negative impact toresulting in our net interest income and net interest margin, or NIM, being negatively impacted in this low interest rate environment. Our noninterestnet interest income hasis also been negativelybeing impacted by declining loan balances as new loan originations have decreased in the current environment. Partially offsetting this impact was the Paycheck Protection Program, or PPP. During the first quarter of 2021, PPP forgiveness was $156.5 million and we had an average balance of PPP loans of $454.8 million which positively impacted net interest income by $5.8 million.

Earnings Summary
We recognized record net income of $31.9 million, or $0.81 per diluted share for the three months ended March 31, 2021 compared to $13.2 million, or $0.34 per diluted share in the same period of 2020. The increase in net income for the three months ended March 31, 2021 of $18.7 million was primarily due to changesa decrease of $16.9 million in our customers' behavior during these times which has been somewhat mitigated by strong mortgage banking income dueprovision for credit losses primarily related to significant refinance activity. We are taking a prudent approach to capital management given the economic uncertainty. Our internally-run capital stress test results demonstrate that we have adequate capital cushions. We are well capitalized and have sufficient excess capital to manage the uncertainty resulting from the COVID-19 pandemic.
In$16.3 million increase in our ACL in response to the current economic environment as a result of the COVID-19 pandemic we completedin the prior year. Also impacting the increase was a $4.8 million increase in noninterest income and a decrease in noninterest expense of $0.8 million offset by an interim quantitative goodwill impairment analysis asincrease in income tax expense of June 30,$4.5 million.
Net interest income increased $0.7 million to $70.7 million for the three months ended March 31, 2021 compared to $70.0 million for the same period in 2020. Based upon our impairment analysis, we determined that our goodwill of $373.3Average interest-earning assets increased $244.3 million was not impaired at June 30,to $8.3 billion and average interest-bearing liabilities decreased $419.0 million to $5.4 billion during the three months ended March 31, 2021 compared to the same periods in 2020. We expect to evaluate goodwillAverage interest-bearing deposits with banks increased $202.6 million for impairment quarterly given the current environment.




three months ended
5038
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COVID-19 Update

S&T is monitoring the impact of the COVID-19 pandemic and has taken steps to mitigate the potential risks and impact on S&T and to promote the health and safety of our employees, and the customers and communities that we serve. We have taken preventive health measures for our employees through rigorous sanitation, social distancing, wearing masks, remote work where feasible and providing access to financial wellness programs. We reopened our branches with extensive safety measures and are encouraging our customers to use online and mobile banking solutions. We have also extended our solution center hours to allow for customer consultation without entering a branch. Our Business Continuity teams were activated and have guided our efforts to respond to the rapidly developing situation.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES Act was signed into law. It contained substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic. The CARES Act included the Paycheck Protection Program, or PPP, a $349 billion program designed to aid small and medium sized businesses through federally guaranteed loans distributed through banks. The Paycheck Protection Program and Health Care Enhancement Act, or PPP/HCEA Act, was signed into law on April 24, 2020. The PPP/HCEA Act authorized an additional $310 billion of funding under the CARES Act for PPP loans among other provisions. On July 4, 2020, legislation was passed to extend the application period for the PPP program through August 8, 2020. These loans are intended to cover eight weeks of payroll and other permitted expenses to help those businesses remain viable.
As of June 30, 2020, we originated $547.6 million of PPP loans. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted expenses in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00 percent and a term of two years, or five years for loans approved by the Small Business Administration, or SBA, on or after June 5, 2020. Payments are deferred for at least six months of the loan. The loans are 100 percent guaranteed by the SBA.
The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable. The COVID-19 pandemic has had, and we expect that it will continue to have, negative impacts on S&T’s commercial and consumer loan customers and the economy as a whole. The pandemic caused, among other things, an increase in the provision for credit losses, a higher ACL as a percentage of total portfolio loans as of June 30, 202031, 2021 compared to March 31, 2020 and exclusive of thedue to a significant increase in portfolio loans due todeposits as a result of government stimulus programs, the PPP portfolio, a decrease in portfolio loans compared to both March 31, 2020 and December 31, 2019. The severity and length of the COVID-19 pandemic’s impact on S&T and the U.S. and global economies continue to be unknown.
In order to assist our customers through this difficult period, we have provided the following assistance, which may have an adverse impact on our results in the short term, but which we believe will provide better outcomes in the long term for our customers and for S&T:

•We have provided needs-based payment deferrals and modifications to interest only periods to 1,289 commercial loans totaling $1.3 billion at June 30, 2020.
•We have providedcustomers' liquidity preferences. Average loan payment deferrals, with no negative credit bureau reporting, to 1,071 mortgage and consumer loans totaling $123.0balances increased $58.8 million at June 30, 2020.
•We have paused foreclosures/repossessions for mortgages and consumer loans.
Earnings Summary
We recognized net losses of ($33.1) million, or ($0.85) per share and ($19.8) million, or ($0.51) per share for the three and six months ended June 30, 2020. These losses are primarily the result of the $58.7 million pre-tax fraud loss recognized in the second quarter of 2020 which reduced net income by $46.3 million, or $1.19 per diluted share. The net losses for the three and six months ended June 30, 2020 represent $59.2 million and $68.9 million decreases in net income compared to the same periods in 2019.
The decrease in net income for the three months ended June 30, 2020 of $59.2 millionMarch 31, 2021 compared to the same period in 2019 was comprised of an increase of $84.6 million in the provision for credit losses and an increase in other noninterest expenses of $3.1 million offset by increases of $9.3 million in net interest income and $2.3 million noninterest income and a decrease of $16.9 million in the provision for income taxes.2020 due to PPP loans. The decrease in net income for the six months ended June 30, 2020 of $68.9 millionaverage interest-bearing liabilities compared to the same period in 20192020 was compriseddue to decreases in average borrowings of an increase of $99.0$255.4 million and $163.6 million in the provision for credit losses, an increase in other noninterest expense of $10.6 million offset by increases of $19.0 million in net interest income and $3.4 million in noninterest income and a decrease of $18.3 million in the provision for income taxes.
Net interest income increased $9.3 million and $19.0 million to $70.1 million and $140.2 millionaverage interest-bearing deposits for the three and six months ended June 30, 2020 compared to $60.8 million and $121.2 million for the same periods in 2019. The increases were primarily due to higher average interest-earning assets offset by lower short-term interest ratesMarch 31, 2021 compared to the same periodsperiod in
51
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2019. Average interest-earning assets increased $1.9 billion and $1.6 billion for the three and six months ended June 30, 2020 compared to the same periods in 2019. Average loan balances increased $1.7 billion and $1.5 billion compared to the same periods in 2019 due to the DNB merger, PPP loans and organic loan growth. Average interest-bearing liabilities increased $1.2 billion and $1.1 billion for the three and six months ended June 30, 2020 compared to the same periods in 2019 due to the DNB merger and organic deposit growth. 2020. Net interest margin, on a fully taxable-equivalent, or FTE, basis (non-GAAP), decreased 37 and 286 basis points to 3.31 percent and 3.423.47 percent for the three and six months ended June 30, 2010March 31, 2021 compared to 3.68 percent and 3.703.53 percent for the same periodsperiod in 20192020 due to the decline in short-term interest rates during 2020.2021. PPP loans positively impacted the net interest margin on an FTE basis by 10 basis points for the three months ended March 31, 2021. Net interest margin is reconciled to net interest income adjusted to an FTE basis below in the "Net Interest Income" section of this MD&A.
The provision for credit losses, which includes a provision for losses on unfunded commitments, increased $84.6 million and $99.0decreased $16.9 million to $86.8 million and $106.8$3.1 million for the three and six months ended June 30, 2020March 31, 2021 compared to $2.2 million and $7.9$20.0 million in the same periods of 2019.Theperiod in 2020. The significant increasedecrease in the provision for credit losses during the three and six months ended June 30, 2020March 31, 2021 was mainly due to the customer fraud that resulted$16.3 million increase in a $58.7 million charge-off as well asour ACL in response to the impact ofpandemic in the COVID-19 pandemic.prior year. For the three and six months ended June 30, 2020,March 31, 2021, we had net charge-offs of $68.1 million and $79.2$5.8 million compared to net charge-offs of $2.1 million and $7.4$11.2 million for the same periodsperiod in 2019.2020. Annualized net loan charge-offs to average loans were 3.58 percent and 2.15was 0.33 percent for the three and six months ended June 30, 2020 comparedMarch 31, 2021compared to 0.14 percent and 0.250.63 percent for the same periodsperiod in 2019.2020.
Total noninterestNoninterest income increased $2.3 million and $3.3$4.8 million to $15.2 million and $27.6$17.2 million for the three and six months ended June 30, 2020March 31, 2021 compared to $12.9 million and $24.3$12.4 million for the same periodsperiod in 2019. Total noninterest income includes the impact of the DNB merger in the three and six months ended June 30, 2020 since the merger closed on November 30, 2019.2020. The increase in noninterest income primarily related to an increase of $2.0 million and $2.7$3.1 million in mortgage banking fees for the three and six months ended June 30, 2020 due to higher gains on loans sold and an increase in the volume of loans originated for sale in the secondary market due to a decline in mortgage ratesservicing rights valuation compared to the same periods in 2019.2020. Also impacting the increase for six months ended June 30, 2020 was higher commercial loan swapother income of $1.7$3.4 million as we have seen a high demand for this product. Offsetting these increases was a $2.2 million decrease in other income primarily attributable to the decline in stock market performance resulting in a change in the valuation related to a deferred compensation plan of $1.0 million, which has a corresponding offset in salaries and employee benefits expense resulting in no impact to net income and a decrease in the change in the value of the equity securities portfolio of $1.0 million compared to the same periods in 2019.
Noninterest expense increased $3.1 million and $10.6 million to $43.5 million and $89.9 million in three and six months ended June 30, 2020 compared to $40.4 million and $79.3 million in the same periods in 2019. Total noninterest expense includes the impact of the DNB merger in the three and six months ended June 30, 2020 since the merger closed on November 30, 2019. The increase in noninterest expense for the three months ended June 30, 2020March 31, 2021 related to changes in the valuation of our deferred compensation plan and equity securities portfolio compared to the same period in 20192020. Offsetting this increase was primarily due to higher operating expenses after the merger with DNB. The increasea decline in noninterest expense for the six months ended June 30, 2020 was due to higher operating expensescommercial loan swap income of $2.4 million due to the merger,change in the rate environment impacting customer activity compared to the same period in 2020.
Noninterest expense decreased $0.8 million to $45.6 million for the three months ended March 31, 2021 compared to $46.4 million for the same period in 2020. The decrease was mainly due to $2.3 million of merger-related expenses recognized in the three months ended March 31, 2020 compared to no merger-related expenses in 2021. This decrease was offset by increases of $1.7$2.0 million in merger related expensessalaries and $2.8employee benefits and $0.5 million in other noninterestprofessional services and legal expenses including $1.2 million related to historic tax credits.for the three months ended March 31, 2021.
The provision for income taxes decreased $16.9increased $4.5 million to an $11.8$7.3 million tax benefit for the three months ended June 30, 2020 and decreased $18.3 million to a $9.0 million tax benefit for the six months ended June 30, 2020March 31, 2021 compared to the same periodsperiod in 2019.2020. The decreaseincrease in income tax expense was primarily due to the $23.2 million increase in pretax income of $76.0 million for the three months and $87.2 million for six months ended June 30, 2020 is primarily dueMarch 31, 2021 compared to the $58.7 million loss resulting from the customer fraud recognized during the quarter ended June 30,same period in 2020. Our effective tax rate changed to 26.3 percent and 31.3was 18.6 percent for the three and six months ended June 30, 2020March 31, 2021 compared to 16.3 percent and 15.917.3 percent for the same periodsperiod in 2019.2020. The change in our effective tax rate for the three months ended March 31, 2021 was primarily due to the increase in pretax loss for three and six months ended June 30, 2020.income.
Explanation of Use of Non-GAAP Financial Measures
In addition to the results of operations presented in accordance with generally accepted accounting principles, or GAAP, in the United States, management uses, and this quarterly report references, net interest income and net interest margin on a fully taxable equivalent, or FTE, basis, which are non-GAAP financial measures. Management believes net interest income and net interest margin on an FTE basis provide information useful to investors in understanding our underlying business, operational performance and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Although management believes that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered alternatives to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies.
52
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We believe the presentation of net interest income and net interest margin on an FTE basis ensures the comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Interest income (GAAP) per the Consolidated Statements of Comprehensive (Loss) Income is reconciled to net interest income adjusted on an FTE basis and net interest margin adjusted on an FTE basis in the "Results of Operations - Three and Six Months Ended June 30, 2020March 31, 2021 Compared to Three and Six Months Ended June 30, 2019March 31, 2020 - Net Interest Income" section of this MD&A.
39
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2020March 31, 2021 Compared to
Three and Six Months Ended June 30, 2019March 31, 2020
Net Interest Income
Our principal source of revenue is net interest income. Net interest income represents the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is affected by changes in the average balance of interest-earning assets and interest-bearing liabilities and changes in interest rates and spreads. The level and mix of interest-earning assets and interest-bearing liabilities is managed by our Asset and Liability Committee, or ALCO, in order to mitigate interest rate and liquidity risks of the balance sheet. A variety of ALCO strategies were implemented, within prescribed ALCO risk parameters, to produce what we believe is an acceptable level of net interest income.
The interest income on interest-earning assets and the net interest margin are presented on an FTE basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and securities using the federal statutory tax rate of 21 percent for each period and the dividend-received deduction for equity securities. We believe this to be the preferred industry measurement of net interest income that provides a relevant comparison between taxable and non-taxable sources of interest income.
The following table reconciles interest income per the Consolidated Statements of Comprehensive (Loss) Income to net interest income and rates on an FTE basis for the periods presented:
Three Months Ended June 30,Six Months Ended June 30, 2020Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)2020201920202019(dollars in thousands)20212020
Total interest incomeTotal interest income$80,479  $79,624  $168,069  $158,214  Total interest income$74,781 $87,589 
Total interest expenseTotal interest expense10,331  18,797  27,885  37,031  Total interest expense4,122 17,553 
Net Interest Income per Consolidated Statements of Comprehensive (Loss) Income70,148  60,827  140,184  121,183  
Net Interest Income per Consolidated Statements of Comprehensive IncomeNet Interest Income per Consolidated Statements of Comprehensive Income70,659 70,036 
Adjustment to FTE basisAdjustment to FTE basis847  958  1,697  1,919  Adjustment to FTE basis663 849 
Net Interest Income on an FTE Basis (Non-GAAP)Net Interest Income on an FTE Basis (Non-GAAP)$70,995  $61,785  $141,881  $123,102  Net Interest Income on an FTE Basis (Non-GAAP)$71,322 $70,885 
Net interest marginNet interest margin3.27 %3.63 %3.37 %3.64 %Net interest margin3.44 %3.48 %
Adjustment to FTE basisAdjustment to FTE basis0.04 %0.05 %0.05 %0.06 %Adjustment to FTE basis0.03 %0.05 %
Net Interest Margin on an FTE Basis (Non-GAAP)Net Interest Margin on an FTE Basis (Non-GAAP)3.31 %3.68 %3.42 %3.70 %Net Interest Margin on an FTE Basis (Non-GAAP)3.47 %3.53 %
Income amounts are annualized for rate calculations.

5340
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Average Balance Sheet and Net Interest Income Analysis (FTE)

The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets and the average balances, interest and rates paid on interest-bearing liabilities for the periods presented:
 
Three Months Ended June 30, 2020Three Months Ended June 30, 2019Three Months Ended March 31, 2021Three Months Ended March 31, 2020
(dollars in thousands)(dollars in thousands)Average BalanceInterestRateAverage BalanceInterestRate(dollars in thousands)Average BalanceInterestRateAverage BalanceInterestRate
ASSETSASSETSASSETS
Interest-bearing deposits with banksInterest-bearing deposits with banks$163,019  $33  0.08 %$49,949  $274  2.19 %Interest-bearing deposits with banks$302,219 $65 0.09 %$99,646 $355 1.42 %
Securities, at fair value(3)(2)
Securities, at fair value(3)(2)
785,229  5,024  2.56 %673,117  4,482  2.66 %
Securities, at fair value(3)(2)
782,118 4,566 2.34 %786,858 4,995 2.54 %
Loans held for saleLoans held for sale9,931  77  3.08 %1,452  16  4.44 %Loans held for sale6,360 45 2.83 %1,867 18 3.76 %
Commercial real estateCommercial real estate3,389,616  35,617  4.23 %2,895,146  36,158  5.01 %Commercial real estate3,253,641 30,136 3.76 %3,408,684 40,093 4.73 %
Commercial and industrialCommercial and industrial2,200,148  19,733  3.61 %1,559,222  20,087  5.17 %Commercial and industrial1,957,459 20,817 4.31 %1,751,678 19,738 4.53 %
Commercial constructionCommercial construction430,912  4,020  3.75 %242,192  3,242  5.37 %Commercial construction485,269 4,034 3.37 %386,363 4,495 4.68 %
Total Commercial LoansTotal Commercial Loans6,020,676  59,370  3.97 %4,696,560  59,487  5.08 %Total Commercial Loans5,696,369 54,987 3.91 %5,546,725 64,326 4.66 %
Residential mortgageResidential mortgage976,916  10,241  4.20 %734,372  8,253  4.50 %Residential mortgage897,427 9,416 4.22 %990,866 10,328 4.18 %
Home equityHome equity543,770  4,993  3.69 %463,480  6,267  5.42 %Home equity532,708 4,791 3.65 %540,193 6,501 4.84 %
Installment and other consumerInstallment and other consumer79,944  1,259  6.34 %71,319  1,286  7.23 %Installment and other consumer79,907 1,247 6.33 %79,680 1,388 7.01 %
Consumer constructionConsumer construction12,758  145  4.58 %11,014  149  5.41 %Consumer construction15,908 188 4.79 %10,508 120 4.61 %
Total Consumer LoansTotal Consumer Loans1,613,388  16,638  4.14 %1,280,185  15,955  4.99 %Total Consumer Loans1,525,950 15,642 4.14 %1,621,247 18,337 4.54 %
Total Portfolio LoansTotal Portfolio Loans7,634,064  76,008  4.00 %5,976,745  75,442  5.06 %Total Portfolio Loans7,222,319 70,630 3.96 %7,167,972 82,663 4.64 %
Total Loans(2)(3)
Total Loans(2)(3)
7,643,995  76,085  4.00 %5,978,197  75,458  5.06 %
Total Loans(2)(3)
7,228,679 70,675 3.96 %7,169,839 82,681 4.64 %
Federal Home Loan Bank and other restricted stockFederal Home Loan Bank and other restricted stock19,709  184  3.75 %21,141  368  6.97 %Federal Home Loan Bank and other restricted stock11,242 139 4.94 %23,601 407 6.90 %
Total Interest-earning AssetsTotal Interest-earning Assets8,611,952  81,326  3.80 %6,722,404  80,582  4.81 %Total Interest-earning Assets8,324,259 75,445 3.67 %8,079,944 88,438 4.40 %
Noninterest-earning assetsNoninterest-earning assets817,767  523,636  Noninterest-earning assets756,273 687,382 
Total AssetsTotal Assets$9,429,719  $7,246,040  Total Assets$9,080,532 $8,767,326 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demandInterest-bearing demand$1,033,905  $610  0.24 %$550,200  $631  0.46 %Interest-bearing demand$895,891 $222 0.10 %$942,030 $1,382 0.59 %
Money marketMoney market2,076,483  2,578  0.50 %1,695,349  8,169  1.93 %Money market1,968,779 943 0.19 %1,993,764 6,318 1.27 %
SavingsSavings887,357  162  0.07 %760,743  484  0.26 %Savings995,228 152 0.06 %830,985 477 0.23 %
Certificates of depositCertificates of deposit1,560,885  5,877  1.51 %1,389,968  6,771  1.95 %Certificates of deposit1,344,604 2,165 0.65 %1,601,324 7,161 1.80 %
Total Interest-bearing DepositsTotal Interest-bearing Deposits5,558,630  9,227  0.67 %4,396,260  16,055  1.46 %Total Interest-bearing Deposits5,204,503 3,481 0.27 %5,368,103 15,338 1.15 %
Securities sold under repurchase agreementsSecurities sold under repurchase agreements85,302  53  0.25 %16,337  28  0.69 %Securities sold under repurchase agreements64,653 25 0.15 %30,790 42 0.56 %
Short-term borrowingsShort-term borrowings178,273  167  0.38 %242,759  1,642  2.71 %Short-term borrowings25,556 12 0.19 %286,365 1,145 1.61 %
Long-term borrowingsLong-term borrowings49,774  314  2.53 %70,049  500  2.86 %Long-term borrowings23,471 116 2.00 %51,845 325 2.52 %
Junior subordinated debt securitiesJunior subordinated debt securities64,044  570  3.58 %45,619  572  5.03 %Junior subordinated debt securities64,088 488 3.09 %64,195 703 4.40 %
Total BorrowingsTotal Borrowings377,393  1,104  1.18 %374,764  2,742  2.94 %Total Borrowings177,768 641 1.46 %433,195 2,215 2.06 %
Total Interest-bearing LiabilitiesTotal Interest-bearing Liabilities5,936,023  10,331  0.70 %4,771,024  18,797  1.58 %Total Interest-bearing Liabilities5,382,271 4,123 0.31 %5,801,298 17,553 1.22 %
Noninterest-bearing liabilitiesNoninterest-bearing liabilities2,302,676  1,523,676  Noninterest-bearing liabilities2,538,149 1,776,453 
Shareholders’ equityShareholders’ equity1,191,020  951,340  Shareholders’ equity1,160,113 1,189,575 
Total Liabilities and Shareholders’ EquityTotal Liabilities and Shareholders’ Equity$9,429,719  $7,246,040  Total Liabilities and Shareholders’ Equity$9,080,532 $8,767,326 
Net Interest Income (3)(2)
Net Interest Income (3)(2)
$70,995  $61,785  
Net Interest Income (3)(2)
$71,322 $70,885 
Net Interest Margin (3)(2)
Net Interest Margin (3)(2)
3.31 %3.68 %
Net Interest Margin (3)(2)
3.47 %3.53 %
(1) Nonaccruing loans are included in the daily average loan amounts outstanding.
(2) Tax-exempt income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent for 20202021 and 2019.2020.
(3) (2) Taxable investment income is adjusted for the dividend-received deduction for equity securities.
(3) Nonaccruing loans are included in the daily average loan amounts outstanding.
54
41
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Six Months Ended June 30, 2020Six Months Ended June 30, 2019
(dollars in thousands)Average BalanceInterestRateAverage BalanceInterestRate
ASSETS
Interest-bearing deposits with banks$131,332  $388  0.59 %$51,758  $626  2.42 %
Securities, at fair value(2)(3)
786,043  10,020  2.55 %676,797  9,039  2.67 %
Loans held for sale5,899  94  3.19 %1,175  25  4.29 %
Commercial real estate3,399,150  75,710  4.48 %2,900,181  72,122  5.01 %
Commercial and industrial1,975,913  39,471  4.02 %1,534,080  39,420  5.18 %
Commercial construction408,638  8,515  4.19 %246,073  6,554  5.37 %
Total Commercial Loans5,783,701  123,696  4.30 %4,680,334  118,096  5.09 %
Residential mortgage983,891  20,569  4.19 %728,495  16,123  4.44 %
Home equity541,981  11,493  4.26 %465,598  12,536  5.43 %
Installment and other consumer79,812  2,648  6.67 %70,215  2,508  7.20 %
Consumer construction11,633  266  4.59 %10,244  293  5.77 %
Total Consumer Loans1,617,317  34,976  4.34 %1,274,552  31,460  4.96 %
Total Portfolio Loans7,401,018  158,672  4.31 %5,954,886  149,556  5.06 %
Total Loans(1)(2)
7,406,917  158,766  4.31 %5,956,061  149,581  5.06 %
Federal Home Loan Bank and other restricted stock21,655  592  5.47 %22,797  887  7.79 %
Total Interest-earning Assets8,345,947  169,766  4.09 %6,707,413  160,133  4.81 %
Noninterest-earning assets752,576  521,082  
Total Assets$9,098,523  $7,228,495  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand$987,968  $1,991  0.41 %$547,960  $1,183  0.44 %
Money market2,035,124  8,896  0.88 %1,632,234  15,461  1.91 %
Savings859,171  639  0.15 %765,638  957  0.25 %
Certificates of deposit1,581,104  13,039  1.66 %1,412,117  13,435  1.92 %
Total Interest-bearing Deposits5,463,367  24,565  0.90 %4,357,949  31,036  1.44 %
Securities sold under repurchase agreements58,046  96  0.33 %19,735  57  0.59 %
Short-term borrowings232,319  1,312  1.14 %280,862  3,787  2.72 %
Long-term borrowings50,809  639  2.53 %70,122  993  2.85 %
Junior subordinated debt securities64,120  1,273  3.99 %45,619  1,158  5.12 %
Total Borrowings405,294  3,320  1.65 %416,338  5,995  2.90 %
Total Interest-bearing Liabilities5,868,661  27,885  0.96 %4,774,287  37,031  1.56 %
Noninterest-bearing liabilities2,039,565  1,505,964  
Shareholders’ equity1,190,297  948,244  
Total Liabilities and Shareholders’ Equity$9,098,523  $7,228,495  
Net Interest Income (2)(3)
$141,881  $123,102  
Net Interest Margin (2)(3)
3.42 %3.70 %
(1) Nonaccruing loans are included in the daily average loan amounts outstanding.
(2) Tax-exempt income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent for 2020 and 2019.
(3) Taxable investment income is adjusted for the dividend-received deduction for equity securities.
Net interest income on an FTE basis (non-GAAP) increased $9.2 million and $18.8$0.4 million for the three and six months ended June 30, 2020March 31, 2021 compared to the same periodsperiod in 2019.2020. Net interest income was favorably impacted by purchase accounting fair value adjustments of $1.6 million and $2.7Paycheck Protection Program, or PPP loans which increased interest income by $5.8 million for the three and six months ended June 30,March 31, 2021 compared to the same period in 2020. The net interest margin on an FTE basis (non-GAAP) decreased 37 and 28 basis points for the three and six months ended June 30, 2020 compared to the same periods in 2019. This is mostly due to decreases in short-term interest rates of approximately 225 basis points between June 30, 2019 and June 30, 2020. Purchase accounting fair value adjustments favorably impacted the net interest margin rate on an FTE basis by 7 and 6 basis points for the three and six months ended June 30,March 31, 2021 compared to the same period in 2020. PPP loans negativelypositively impacted the net interest margin on an FTE basis by 5 and 310 basis points for the three and six months ended June 30, 2020.
55
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2021.
Interest income on an FTE basis (non-GAAP) increased $0.7decreased $13.0 million, or 0.914.7 percent, for the three months ended June 30, 2020 and increased $9.6 million, or 6.0 percent, for the six months ended June 30, 2020,March 31, 2021 compared to the same periodsperiod in 2019.2020. The increases weredecrease in interest income was primarily due to increases in average interest-earning assets of $1.9 billion and $1.6 billion for the three and six months ended June 30, 2020 offset by lower short-term interest rates compared to the same periodsperiod in 2019.2020. Average loan balances increased $1.7 billion and $1.5 billion$58.8 million compared to the same periodsperiod in 2019 due2020. PPP loans contributed $454.8 million to the DNB merger and organicaverage increase in loans which was offset by lower loan growth which included $449.3 million ofactivity related to the loan growth from PPP loans.COVID-19 pandemic. The average rate earned on loans decreased 106 for the three months and 7568 basis points for the sixth months compared to the same periodsperiod in 20192020 primarily due to lower short-term interest rates. Average interest-bearing deposits with banks increased $113.1 million and $79.6$202.6 million and the average rate earned decreased 211 and 183133 basis points compared to the same periodsperiod in 2019. Average investment securities increased $112.1 million2020. Higher average interest-bearing deposits with banks was due to a significant increase in deposits as a result of government stimulus programs, PPP and $109.2 million and the average rate earned decreased 10 and 12 basis points compared to the same periods in 2019.our customers' liquidity preferences. Overall, the FTE rate on interest-earning assets (non-GAAP) decreased 101 and 7273 basis points for the three and six months ended June 30, 2020 compared to the same periodsperiod in 2019.2020.
Interest expense decreased $8.5 million and $9.1$13.4 million for the three and six months ended June 30, 2020March 31, 2021 compared to the same periodsperiod in 2019.2020. The decreases weredecrease was primarily due to lower short-term interest rates compared to the same periodsperiod in 2019.2020. Average interest-bearing deposits increased $1.2 billion and $1.1 billiondecreased $163.6 million for the three and six months ended June 30, 2020March 31, 2021 compared to the same periodsperiod in 2019 due to the DNB merger and organic deposit growth. We experienced deposit growth in the three months ended June 30, 2020 due to customer PPP and stimulus payments along with customers conservatively holding cash deposits in these uncertain times.2020. The average rate paid decreased 79 and 5488 basis points compared to the same periodsperiod in 20192020 primarily due to lower short-term interest rates. The interest-bearing deposits decrease is favorably offset by a $715.6 million increase in demand deposits. We experienced demand deposit growth due to customer PPP loans and stimulus payments along with customers' liquidity preferences. Brokered deposits decreased $306.9 million compared to the same period in 2020 due to excess liquidity. Average total borrowings increased $2.6 million and decreased $11.0$255.4 million and the average rate paid decreased 176 and 12560 basis points compared to the same periodsperiod in 2019.2020. Borrowings decreased compared to the same period in 2020 due to excess liquidity. Overall, the cost of interest-bearing liabilities decreased 88 and 6091 basis points for the three and six months ended June 30, 2020,March 31, 2021 compared to the same periodsperiod in 2019.2020.




5642
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth for the periods presented a summary of the changes in interest earned and interest paid resulting from changes in volume and changes in rates:
Three Months Ended June 30, 2020 Compared to June 30, 2019Six Months Ended June 30, 2020 Compared to June 30, 2019Three Months Ended March 31, 2021 Compared to March 31, 2020
(dollars in thousands)(dollars in thousands)
Volume (4)
Rate (4)
Total
Volume (4)
Rate (4)
Total(dollars in thousands)
Volume (4)
Rate (4)
Total
Interest earned on:Interest earned on:Interest earned on:
Interest-bearing deposits with banksInterest-bearing deposits with banks$620  $(860) $(240) $962  $(1,199) $(237) Interest-bearing deposits with banks$722 $(1,012)$(290)
Securities, at fair value(3)(2)
Securities, at fair value(3)(2)
747  (205) 542  1,459  (479) 980  
Securities, at fair value(3)(2)
(30)(400)(430)
Loans held for saleLoans held for sale94  (34) 60  101  (33) 68  Loans held for sale42 (15)27 
Commercial real estateCommercial real estate6,176  (6,717) (541) 12,408  (8,821) 3,587  Commercial real estate(1,824)(8,133)(9,957)
Commercial and industrialCommercial and industrial8,257  (8,611) (354) 11,354  (11,303) 51  Commercial and industrial2,319 (1,239)1,079 
Commercial constructionCommercial construction2,527  (1,749) 778  4,330  (2,369) 1,961  Commercial construction1,151 (1,612)(461)
Total Commercial LoansTotal Commercial Loans16,960  (17,077) (117) 28,092  (22,493) 5,599  Total Commercial Loans1,646 (10,984)(9,339)
Residential mortgageResidential mortgage2,726  (739) 1,987  5,652  (1,206) 4,446  Residential mortgage(974)62 (912)
Home equityHome equity1,086  (2,360) (1,274) 2,057  (3,099) (1,042) Home equity(90)(1,619)(1,709)
Installment and other consumerInstallment and other consumer155  (182) (27) 343  (203) 140  Installment and other consumer4 (145)(141)
Consumer constructionConsumer construction24  (27) (3) 40  (67) (27) Consumer construction62 6 67 
Total Consumer LoansTotal Consumer Loans3,991  (3,308) 683  8,092  (4,575) 3,517  Total Consumer Loans(998)(1,697)(2,695)
Total Portfolio LoansTotal Portfolio Loans20,951  (20,385) 566  36,184  (27,068) 9,116  Total Portfolio Loans648 (12,681)(12,033)
Total Loans (2)(3)
Total Loans (2)(3)
21,045  (20,419) 626  36,285  (27,101) 9,184  
Total Loans (2)(3)
690 (12,696)(12,006)
Federal Home Loan Bank and other restricted stockFederal Home Loan Bank and other restricted stock(25) (158) (183) (44) (251) (295) Federal Home Loan Bank and other restricted stock(213)(55)(268)
Change in Interest Earned on Interest-earning AssetsChange in Interest Earned on Interest-earning Assets22,387  (21,642) 745  38,662  (29,030) 9,632  Change in Interest Earned on Interest-earning Assets$1,168 $(14,162)$(12,994)
Interest paid on:Interest paid on:Interest paid on:
Interest-bearing demandInterest-bearing demand$554  ($575) ($21) $950  ($142) $808  Interest-bearing demand$(68)$(1,092)$(1,160)
Money marketMoney market1,836  (7,428) (5,592) 3,816  (10,381) (6,565) Money market(79)(5,296)(5,375)
SavingsSavings81  (403) (322) 117  (435) (318) Savings94 (419)(325)
Certificates of depositCertificates of deposit833  (1,726) (893) 1,608  (2,004) (396) Certificates of deposit(1,148)(3,848)(4,996)
Total Interest-bearing DepositsTotal Interest-bearing Deposits3,304  (10,132) (6,828) 6,491  (12,962) (6,471) Total Interest-bearing Deposits(1,201)(10,656)(11,856)
Securities sold under repurchase agreementsSecurities sold under repurchase agreements118  (93) 25  112  (73) 39  Securities sold under repurchase agreements47 (65)(18)
Short-term borrowingsShort-term borrowings(436) (1,039) (1,475) (655) (1,821) (2,476) Short-term borrowings(1,042)(90)(1,133)
Long-term borrowingsLong-term borrowings(145) (41) (186) (273) (80) (353) Long-term borrowings(178)(31)(209)
Junior subordinated debt securitiesJunior subordinated debt securities231  (234) (3) 470  (355) 115  Junior subordinated debt securities(1)(214)(215)
Total BorrowingsTotal Borrowings(232) (1,407) (1,639) (346) (2,329) (2,675) Total Borrowings(1,174)(400)(1,574)
Change in Interest Paid on Interest-bearing LiabilitiesChange in Interest Paid on Interest-bearing Liabilities3,072  (11,539) (8,467) 6,145  (15,291) (9,146) Change in Interest Paid on Interest-bearing Liabilities$(2,375)$(11,056)$(13,431)
Change in Net Interest IncomeChange in Net Interest Income$19,315  $(10,103) $9,212  $32,517  $(13,739) $18,778  Change in Net Interest Income$3,543 $(3,107)$437 
(1) Nonaccruing loans are included in the daily average loan amounts outstanding.
(2) Tax-exempt income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent for 20202021 and 2019.2020.
(3)(2) Taxable investment income is adjusted for the dividend-received deduction for equity securities.
(3) Nonaccruing loans are included in the daily average loan amounts outstanding.
(4) Changes to rate/volume are allocated to both rate and volume on a proportionate dollar basis.

Provision for Credit Losses

The provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management's assessment of expected losses in the loan portfolio at the balance sheet date. The provision for credit losses increased $84.6 million and $99.0decreased $16.9 million to $86.8 million and $106.8$3.1 million for the three and six months ended June 30, 2020
March 31, 2021 compared to $2.2 million and $7.9$20.0 million for the same periodsperiod in 2019.2020.
The decrease in the provision for credit losses of $16.9 million was primarily due to a significant increase in provision needed during the three months ended March 31, 2020 due to the negative impact of the COVID-19 pandemic and our adoption of CECL on January 1, 2020. The provision for credit losses included $0.9 million and $2.5 million for the reserve for unfunded commitments for the three and six months ended June 30, 2020.
During the three months ended June 30,March 31, 2020 we recognized a charge-off of $58.7included $14.3 million related to a customer fraud resulting from a check kiting scheme. The fraud was perpetrated by a single business customerthe economic forecast and a criminal investigation is ongoing. We continue to pursue all available sources of recovery to mitigateother qualitative reserves established for the loss. The customer also had a lending relationship of $15.1 million, including a $14.3 million CRE loan and a $0.8 million line of credit. $10.9 millionuncertainty of the loans were moved to nonperforming after recognizing a $4.2pandemic. Our total qualitative reserve decreased $2.7 million charge-off duringfor the three months ended June 30, 2020.March 31, 2021 compared to the same period in 2020 mainly due to a decrease of $3.1 million for the economic forecast. Our economic forecast covers a period of two years and is
5743
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The significant increase in the provision for credit losses during the three and six months ended June 30, 2020 was mainly due to the customer fraud that resulted in a $58.7 million charge-off as well as the impact of the COVID-19 pandemic. We added $14.4 million and $29.3 million to the ACL related to qualitative factors for the three and six months ended June 30, 2020. Included in these amounts were $14.8 million for the three months ended and $26.0 million for the sixth months ended for the economic forecast and an allocation for our hotel portfolio due to the COVID-19 pandemic. Our forecast covers a period of two years and is driven primarily by national unemployment data. Changes in our current conditions qualitative factors resulted in a decrease of $0.4 million and an increase of $3.3 millionThe forecasted national unemployment rate improved at March 31, 2021 compared to the ACL for the three and six months ended June 30,same time in 2020.
For the three and six months ended June 30, 2020, we had net charges-offsNet loan charge-offs were $5.8 million, or 0.33 percent annualized as a percentage of $68.1 million and $79.2 millionaverage loans at March 31, 2021 compared to $2.1$11.2 million, and $7.7 million foror 0.63 percent of average loans during the same periodsperiod in 2019. In addition to the $58.7 million charge-off from the customer fraud and the $4.2 million loan charge-off for the lending relationship with this customer during the three months ended June 30, 2020, the most significant charge-off for the sixth months ended June 30, 2020 was a $9.9 million C&I relationship that was charged off. We obtained information on the relationship subsequent to filing our Annual Report on Form 10-K for the year ended December 31, 2019, but before the end of the first quarter of 2020; therefore, we recorded a $9.9 million specific reserve in the day one CECL adjustment. The updated information supported a loss existed at January 1, 2020.
Nonperforming loans increased $45.1$61.4 million to $90.1$135.2 million at June 30, 2020March 31, 2021 compared to $45.0$73.8 million at June 30, 2019.March 31, 2020. The significant increasesincrease in nonperforming loans primarily related to the addition of a $20.5$53.6 million CRE relationship, the $10.9 million related to the customer fraud and a $4.3 million C&I relationship. The $20.5 million CRE relationship became a performing TDR in the third quarter of 2019 and thenhotel loans which moved to nonperforming induring the firstfourth quarter of 2020 when the borrower experienced financialas a result of continued deterioration that led to cash flow issues. The relationship was individually assessed at June 30, 2020, and based upon updated appraisals, a $0.6 million ACL was added due to the relationship being under-collateralized as of June 30, 2020.pandemic.

Noninterest Income
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)20202019$ Change% Change20202019$ Change% Change(dollars in thousands)20212020$ Change% Change
Net gain on sale of securitiesNet gain on sale of securities$142  $—  $142  —  $142  $—  $142  —  Net gain on sale of securities$— $— $— — 
Mortgage bankingMortgage banking4,310 1,236 3,074 248.7 %
Debit and credit cardDebit and credit card3,612  3,501  111  3.2 %7,093  6,476  617  9.5 %Debit and credit card4,162 3,482 680 19.5 %
Mortgage banking2,623  637  1,986  311.7 %3,859  1,131  2,728  241.2 %
Service charges on deposit accountsService charges on deposit accounts3,474 4,008 (534)(13.3)%
Wealth managementWealth management2,586  2,062  524  25.4 %4,949  4,109  840  20.4 %Wealth management2,944 2,362 582 24.6 %
Service charges on deposit accounts2,342  3,212  (870) (27.1)%5,900  6,365  (465) (7.3)%
Commercial loan swap incomeCommercial loan swap income945  1,102  (157) (14.2)%3,429  1,683  1,746  103.7 %Commercial loan swap income95 2,484 (2,389)(96.2)%
OtherOther2,974  2,387  587  24.6 %2,255  4,499  (2,244) (49.9)%Other2,252 (1,169)3,421 (292.6)%
Total Noninterest IncomeTotal Noninterest Income$15,224  $12,901  $2,323  18.0 %$27,627  $24,263  $3,364  13.9 %Total Noninterest Income$17,236 $12,403 $4,833 39.0 %

Noninterest income increased $2.3$4.8 million to $15.2$17.2 million for the three months ended June 30, 2020March 31, 2021 compared to the same period in 2020. The increase in noninterest income primarily related to an increase of $3.1 million in mortgage banking fees due to higher gains on loans sold and increased $3.4 million to $27.6 million foran increase in the six months ended June 30, 2020mortgage servicing rights valuation compared to the same periods in 2019. Total noninterest income includes the impact of the DNB merger in the three and six months ended June 30, 2020 which closed on November 30, 2019. Mortgage banking income increased $2.0 million and $2.7 million for the three and six months ended June 30, 2020 due to an increase in the volume of loans originated for sale in the secondary market resulting from a decline in mortgage interest rates from the comparable period. Wealth2020.Wealth management income increased $0.5 million and $0.8 million for the three and six months ended June 30, 2020 due to the merger. Other income increased $0.6 million fordue to higher assets under management from market appreciation and an increase in customer activity. Debit and credit card income increased $0.7 million due to increased activity and the three months and decreased $2.2improving economic environment. Other income increased $3.4 million for the sixth months ended related to changes in the valuation of our deferred compensation plan, which has a corresponding offset in salaries and employee benefits expense resulting in no impact to net income, and the change in value in the equity securities portfolio compared to the prior periods.same period in 2020. Offsetting these increases was a $2.4 million decrease in commercial loan swap income. Commercial loan swap income decreased $0.2 million for the three months and increased $1.7 million for the six months ended June 30,activity was significant in first quarter of 2020, but activity has declined due to higher customer demand for this product in the current interest rate environment.pandemic. Service charges on deposit accounts decreased $0.9$0.5 million and $0.5also due to reduced activity related to the pandemic.
Noninterest Expense
Three Months Ended March 31,
(dollars in thousands)20212020$ Change% Change
Salaries and employee benefits (1)
$23,327 $21,335 $1,992 9.3 %
Data processing and information technology (1)
4,225 3,868 357 9.2 %
Occupancy (1)
3,827 3,765 62 1.6 %
Furniture, equipment and software (1)
2,640 2,519 121 4.8 %
Professional services and legal (1)
1,531 1,048 483 46.1 %
Other taxes1,436 1,600 (164)(10.3)%
Marketing (1)
1,322 1,111 211 19.0 %
FDIC insurance1,046 770 276 35.8 %
Merger related expenses— 2,342 (2,342)(100.0)%
Other (1)
6,226 8,033 (1,807)(22.5)%
Total Noninterest Expense$45,580 $46,391 $(810)(1.7)%
(1)Excludes Merger related expenses for 2020 amounts only.

Noninterest expense decreased $0.8 million to $45.6 million for the three and six months ended June 30,March 31, 2021 compared to the same period in 2020 mainly due to lower transaction volumesmerger related toexpenses in 2020. Total merger related expenses of $2.3 million for the COVID-19 pandemic.three months ended March 31, 2020 included $1.4 million of salaries and employee benefits, $0.4 million for data processing, $0.2
5844
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Noninterest Expense
 Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)20202019$ Change% Change20202019$ Change% Change
Salaries and employee benefits(1)
$21,419  $20,290  $1,129  5.6 %$42,754  $41,199  $1,555  3.8 %
Data processing and information technology(1)
3,585  3,414  171  5.0 %7,453  6,646  807  12.1 %
Net occupancy(1)
3,437  2,949  488  16.6 %7,202  5,986  1,216  20.3 %
Furniture, equipment and software(1)
3,006  2,301  705  30.6 %5,525  4,531  994  21.9 %
Professional services and legal(1)
1,932  1,145  787  68.7 %2,980  2,329  651  27.9 %
Other taxes1,604  1,456  148  10.2 %3,205  2,641  564  21.3 %
FDIC insurance1,048  695  353  50.8 %1,818  1,211  607  50.1 %
Marketing(1)
979  1,310  (331) (25.3)%2,090  2,452  (362) (14.8)%
Merger related expenses—  618  (618) NM2,342  618  1,724  279.0 %
Other(1)
6,468  6,174  294  4.8 %14,501  11,658  2,843  24.4 %
Total Noninterest Expense$43,478  $40,352  $3,126  7.7 %$89,869  $79,271  $10,598  13.4 %
(1)Excludes Merger related expenses for 2020 amounts only.
NM - not meaningful

Noninterest expense increased $3.1 million to $43.5 million for the three months ended June 30, 2020 and $10.6 million to $89.9 million for the six months ended June 30, 2020 compared to the same periods in 2019. Total noninterest expense includes the impact of the DNB merger in the three and six months ended June 30, 2020 which closed on November 30, 2019. Increases in net occupancy expense, furniture, equipment and software, FDIC insurance and other taxes for both the three and six month periods related to the DNB merger. Total merger related expenses of $2.3 million for the six months ended June 30, 2020 included $1.4 million of salaries and employee benefits, $0.4 million for data processing, $0.2 million for professional services and $0.3 million in various other expenses. Other noninterest expense increased during the six-month perioddecreased due to the merger and to historic tax credits for $1.2 million. Salaries$1.1million in the three months ended March 31, 2020 and lower travel, lodging and training expenses resulting from the pandemic during the three months ended March 31, 2021 compared to the same period in 2020. Partially offsetting these decreases was a $2.0 million increase in salaries and employee benefits increased $1.1 million formainly due to a change in the three months andvaluation related to a deferred compensation plan of $1.6 million, for the six months primarilywhich has a corresponding offset in other noninterest income resulting in no impact to net income, higher pension expense due to additional employees.an increase in retirees electing lump-sum distributions causing settlement accounting and higher medical expenses. Professional services and legal expenses increased $0.8$0.5 million for the three months and $0.7 million for the six months mainly due to higher consulting and legal expense. Data processing and information technology increased $0.2 million for the three months and $0.8 million for the six months due to the annual increase with our third-party data processor and the merger.
Provision for Income Taxes

The provision for income taxes decreased $16.9increased $4.5 million to an $11.8$7.3 million tax benefit for the three months ended June 30, 2020 and decreased $18.3 million to a $9.0 million tax benefit for the six months ended June 30, 2020March 31, 2021 compared to $2.8 million in the same periodsperiod in 2019. The decrease2020 as a result of the increase in pretax income of $76.0 million$23.2 million. Our effective tax rate was 18.6 percent for the three months and $87.2 millionended March 31, 2021 compared to 17.3 percent for sixthe same period in 2020. The change in our effective tax rate for the three months ended June 30, 2020March 31, 2021 was primarily due to the $58.7 million loss resulting from the customer fraud recognized during the three months ended June 30, 2020.
For the quarter ended June 30, 2020, we utilized the actual effective tax rate to calculate the June 30, 2020 tax provision. The actual effective tax rate is applied when the application of the estimated annual effective tax rate, or EAETR, is impractical because it is not possible to forecast a reliable EAETR for the reporting period. The actual effective tax rate approach treats the year-to-date period as if it is the annual period and determines the income tax expense or benefit on that basis. The use of the actual effective tax rate is more appropriate than the EAETR, at this time, because small changesincrease in estimated ordinary pretax income result in significant changes in the EAETR. Our effective tax rate changed to 26.3 percent and 31.3 percent for the three and six months ended June 30, 2020 compared to 16.3 percent and 15.9 percent for the same periods in 2019.income.
Financial Condition as of June 30, 2020March 31, 2021
Total assets increased $709.6$361.1 million to $9.5$9.3 billion at June 30, 2020March 31, 2021 compared $8.8to $9.0 billion at December 31, 2019.2020. Cash and due from banks increased $441.8 million to $671.4 million at March 31, 2021 compared to December 31, 2020 due to a significant increase in deposits as a result of government stimulus programs, PPP and our customers' liquidity preferences. Total portfolio loans increased $411.4decreased $42.7 million to $7.5$7.2 billion at June 30, 2020March 31, 2021 compared to $7.1 billion at December 31, 2019.2020. The increasedecrease in portfolio loans primarily related to growtha decrease in the consumer loan portfolio of $45.7 million, with decreases in residential mortgage of $37.2 million, home equity of $4.8 million, consumer construction of $3.4 million and other consumer of $0.3 million. The commercial loan portfolio of $432.3increased $3.0 million with increases of $419.5$39.6 million in CRE offset by decreases of $22.7 million in C&I which included $547.6 million of loans from the PPP, and $83.8$13.9 million in commercial construction offset by a decrease of $71.0 million in the CRE portfolio compared to December 31, 2019.construction. Excluding the PPP loans, portfolio loans decreased $136.2$76.9 million compared to December 31, 20192020 due to decreased activity related to the COVID-19 pandemic. Consumer loans decreased $20.9 million compared to December 31, 2019 primarily in the residential mortgage portfolio of
59
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
$27.6 million offset by increases of $4.7 million in consumer construction loans, $1.2 million in home equity loans and $0.8 million in installment and other consumer loans.
Securities increased $20.1$43.6 million to $804.4$817.3 million at June 30, 2020March 31, 2021 from $784.3$773.7 million at December 31, 2019.2020. The increase in securities is primarily due to increasesan increase in the unrealized gains of $25.6 million at June 30, 2020 partially offset by pay downs on mortgage-backed securities.overall investing activities due to excess liquidity. The bond portfolio had ana net unrealized gain of $36.3$23.7 million at June 30, 2020March 31, 2021 compared to $10.7$33.4 million at December 31, 20192020 due to a decrease inrising interest rates.rates during the first quarter of 2021.
Our deposits increased $831.3$455.5 million with total deposits of $7.9 billion at June 30, 2020March 31, 2021 compared to $7.0$7.4 billion at December 31, 2019.2020. Customer deposits increased $855.2$508.8 million from December 31, 2019.2020. The increase in customer deposits is primarily related to stimulus programs, PPP and stimulus programs along with customers conservatively holding cash deposits during these uncertain times. Customer noninterest-bearing demand deposits increased $552.9 million, money market deposits increased $171.8 million, interest-bearing demand increased $93.1 million and savings increased $85.3 million offset by a decrease in certificates of deposit of $47.9 million.our customers' liquidity preferences. Total brokered deposits decreased $23.9$53.3 million from December 31, 20192020 due to thea reduced need for wholesale funding due to strong customer deposit growth. Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.
Total borrowings decreased $126.1$73.1 million with total borrowings of $290.2to $154.8 million at June 30, 2020March 31, 2021 compared to $416.3$227.9 million at December 31, 20192020 due to an increase inincreased customer deposits. The decrease in borrowings primarily relatesrelated to thea decline in short-term borrowings of $196.8$75.0 million offsetcompared to December 31, 2020.
Total shareholders’ equity increased by an increase in securities sold under repurchase agreements of $72.3$13.6 million to $92.2$1,168.3 million at June 30, 2020March 31, 2021 compared to $19.9$1,154.7 million at December 31, 2019 due to demand for the product by our REPO customers.
Total shareholders’ equity decreased by $56.2 million to $1.1 billion at June 30, 2020 compared to $1.2 billion at December 31, 2019.2020. The decreaseincrease was primarily due to the previously disclosed fraud loss, net income of tax, of $46.4$31.9 million that resulted in a net loss of $19.8 million, the cumulative-effect adjustment related to the adoption of ASU 2016-13, Credit Losses, of $22.6 million, share repurchases of $12.6 million,offset partially by dividends of $22.0
$11.0 million offset byand a $20.9 million increasedecrease in other comprehensive income.income of $7.9 million. The increase$7.9 million decrease in other comprehensive income was due to a $20.2$7.6 million increasedecrease in unrealized gains on our available-for-sale investment securities net of tax, and a $0.7$0.3 million change in the funded status of our employee benefit plans, offset by a $0.1 million reclassification adjustment for net gains on debt securities available-for-sale.of taxes.
45
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Securities Activity
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019$ Change(dollars in thousands)March 31, 2021December 31, 2020$ Change
U.S. treasury securities$10,355  $10,040  $315  
U.S. Treasury securitiesU.S. Treasury securities$63,268 $10,282 $52,986 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies163,703  157,697  6,006  Obligations of U.S. government corporations and agencies82,028 82,904 (876)
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies181,162  189,348  (8,186) Collateralized mortgage obligations of U.S. government corporations and agencies217,916 209,296 8,620 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies19,768  22,418  (2,650) Residential mortgage-backed securities of U.S. government corporations and agencies63,911 67,778 (3,867)
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies284,550  275,870  8,680  Commercial mortgage-backed securities of U.S. government corporations and agencies277,253 273,681 3,572 
Corporate obligationsCorporate obligations5,038  7,627  (2,589) Corporate obligations2,002 2,025 (23)
Obligations of states and political subdivisionsObligations of states and political subdivisions137,127  116,133  20,994  Obligations of states and political subdivisions107,505 124,427 (16,922)
Available-for-Sale Debt SecuritiesAvailable-for-Sale Debt Securities801,703  779,133  22,570  Available-for-Sale Debt Securities813,883 770,393 43,490 
Marketable equity securitiesMarketable equity securities2,663  5,150  (2,487) Marketable equity securities3,416 3,300 116 
Total SecuritiesTotal Securities$804,366  $784,283  $20,083  Total Securities$817,299 $773,693 $43,606 
We invest in various securities in order to maintain a source of liquidity, to satisfy various pledging requirements, to increase net interest income and as a tool of ALCO to reposition the balance sheet for interest rate risk purposes. Securities are subject to market risks that could negatively affect the level of liquidity available to us. Security purchases are subject to an investment policy approved annually by our Board of Directors and administered through ALCO and our treasury function. Securities increased $20.1$43.6 million to $804.4$817.3 million at June 30, 2020March 31, 2021 from $784.3$773.7 million at December 31, 2019.2020. The increase in securities is primarily due to an increase in market value comparedoverall investing activities due to December 31, 2019.excess liquidity.
At June 30, 2020March 31, 2021 our bond portfolio was in a net unrealized gain position of $36.3$23.7 million compared to a net unrealized gain position of $10.7$33.4 million at December 31, 2019.2020. At June 30, 2020March 31, 2021 total gross unrealized gains in the bond portfolio were $36.3 million compared to December 31, 2019, when total gross unrealized gains were $11.7$26.6 million offset by gross unrealized losses of $1.0$2.9 million compared to December 31, 2020, when total gross unrealized gains were $33.5 million offset by gross unrealized losses of $0.1 million. The decrease in the net unrealized gain position was primarily due to an increase in interest rates from December 31, 2020 to March 31, 2021. Management evaluates the securities portfolio to determine if an ACL is needed each quarter. We did not record an ACL related to the securities portfolio at June 30, 2020.
60
Table of ContentsMarch 31, 2021.

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Loan Composition
June 30, 2020December 31, 2019March 31, 2021December 31, 2020
(dollars in thousands)(dollars in thousands)Amount% of LoansAmount% of Loans(dollars in thousands)Amount% of LoansAmount% of Loans
CommercialCommercialCommercial
Commercial real estateCommercial real estate$3,345,513  44.3 %$3,416,518  47.9 %Commercial real estate$3,284,555 45.7 %$3,244,974 44.9 %
Commercial and industrialCommercial and industrial2,140,355  28.4  1,720,833  24.1  Commercial and industrial1,931,711 26.9 %1,954,453 27.0 %
Construction459,264  6.1  375,445  5.2  
Commercial constructionCommercial construction460,417 6.4 %474,280 6.6 %
Total Commercial LoansTotal Commercial Loans5,945,132  78.8 %5,512,796  77.2 %Total Commercial Loans5,676,683 79.0 %5,673,707 78.5 %
ConsumerConsumerConsumer
Residential mortgage971,023  12.9 %998,585  14.0 %
Home equity539,519  7.1  538,348  7.6  
Installment and other consumer79,816  1.0  79,033  1.1  
Construction13,068  0.2  8,390  0.1  
Consumer real estateConsumer real estate1,425,839 19.8 %1,471,238 20.4 %
Other consumerOther consumer80,646 1.1 %80,915 1.1 %
Total Consumer LoansTotal Consumer Loans1,603,426  21.2 %1,624,356  22.8 %Total Consumer Loans1,506,485 21.0 %1,552,153 21.5 %
Total Portfolio LoansTotal Portfolio Loans7,548,558  100.0 %7,137,152  100.0 %Total Portfolio Loans7,183,168 100.0 %7,225,860 100.0 %
Loans held for saleLoans held for sale14,259  5,256  Loans held for sale12,794 18,528 
Total LoansTotal Loans$7,562,817  $7,142,408  Total Loans$7,195,962 $7,244,388 
The loan portfolio represents the most significant source of interest income for us. The risk that borrowers will be unable to pay such obligations is inherent in the loan portfolio. Other conditions such as downturns in the borrower’s industry or the overall economic climate can significantly impact the borrower’s ability to pay.
46
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Total portfolio loans decreased $42.7 million to $7.2 billion at March 31, 2021 compared to December 31, 2020. The decrease in portfolio loans is primarily related to a decline in the consumer loan portfolio of $45.7 million compared to December 31, 2020 with decreases of $45.4 million in consumer real estate and $0.3 million in other consumer. Consumer loans represent 21.0 percent of our total portfolio loans at March 31, 2021 and 21.5 percent at December 31, 2020.
Commercial loans, including CRE, C&I and commercial construction, comprised 78.879.0 percent of total portfolio loans at June 30, 2020March 31, 2021 and 77.278.5 percent at December 31, 2019. Total portfolio loans increased $411.4 million to $7.5 billion at June 30, 2020 compared to $7.1 billion at December 31, 2019.2020. The increase of $432.3$3.0 million in commercial loans related to $419.5$39.6 million of growth in CRE, offset by decreases of $22.7 million in C&I, which included $547.6 million of loans from the PPP, and $83.8$13.9 million in commercial construction loans offset by a decrease of $71.0 million in CRE compared to December 31, 2019. Excluding the PPP loans, portfolio loans decreased $136.2 million compared to December 31, 2019 due to decreased activity related to the COVID-19 pandemic.2020.
As of June 30, 2020,March 31, 2021, we originated $547.6had $499.1 million of PPP loans.loans included in C&I. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted expenses in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00 percent and a term of two years, if not forgiven, in whole or in part.five years for loans approved by the SBA on or after June 5, 2020. Payments are deferred for the first six months of the loan. The loans are 100 percent guaranteed by the SBA. The SBA pays us a processing fee ranging from 1 percent to 5 percent based on the size of the loan.
Consumer loans represent 21.2 percent of our total portfolio loans at June 30, 2020 and 22.8 percent at December 31, 2019. Consumer loans decreased $20.9 million compared to December 31, 2019 with the decrease of $27.6 million in residential mortgages offset by increases in all other categories. Consumer construction increased $4.7 million, home equity increased $1.2 million and installment and other consumer increased $0.8 million.
Allowance for Credit Losses
We maintain an ACL at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of a loanan 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) Construction,Commercial Real Estate, or CRE, 2) CRE,Commercial and Industrial, or C&I, 3) C&I,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 healthcare. 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.
61
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 the risk of these loans is generally confined to the constructionconstruction/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 home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money mortgages. 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.
Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines and credit cards.lines. The primary source of repayment for these loans
47
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
The following table presents activity in the ACL for the periods presented:
Three Months Ended June 30, 2020Three Months Ended March 31, 2021
(dollars in thousands)(dollars in thousands)
Commercial
Real Estate(2)
Commercial and
Industrial		Commercial
Construction
Business Banking(1)
Consumer
Real Estate		Other
Consumer		Total
Loans		(dollars in thousands)Commercial
Real Estate		Commercial and
Industrial		Commercial
Construction		Business BankingConsumer
Real Estate		Other
Consumer		Total
Loans
Allowance for credit losses on loans:Allowance for credit losses on loans:Allowance for credit losses on loans:
Balance at beginning of periodBalance at beginning of period$42,611  $19,870  $6,606  $13,706  $11,200  $2,857  $96,850  Balance at beginning of period$65,656 $16,100 $7,239 $15,917 $10,014 $2,686 $117,612 
Provision for credit losses on loans(1)Provision for credit losses on loans(1)20,681  60,906  2,249  918  400  677  85,831  Provision for credit losses on loans(1)1,996 2,728 (911)514 (844)(182)3,301 
Charge-offsCharge-offs(5,600) (61,616) —  (260) (37) (790) (68,303) Charge-offs(810)(4,302)— (917)(271)(232)(6,532)
RecoveriesRecoveries38  4  19  40  22  108  231  Recoveries— 137 1 166 82 334 720 
Net (Charge-offs)/RecoveriesNet (Charge-offs)/Recoveries(5,562) (61,612) 19  (220) (15) (682) (68,072) Net (Charge-offs)/Recoveries(810)(4,165)1 (751)(189)102 (5,812)
Balance at End of PeriodBalance at End of Period$57,730  $19,164  $8,874  $14,404  $11,585  $2,852  $114,609  Balance at End of Period$66,842 $14,663 $6,329 $15,680 $8,981 $2,606 $115,101 
(1) Excludes provision on unfunded commitments
(1) Excludes provision on unfunded commitments
June 30, 2020December 31, 2019March 31, 2021December 31, 2020
Ratio of net charge-offs to average loans outstandingRatio of net charge-offs to average loans outstanding3.58 %* 0.12 %Ratio of net charge-offs to average loans outstanding0.33 %*0.61 %
Allowance for credit losses as a percentage of total loans1.52 %0.87 %
Allowance for loan losses as a percentage of total loans - excluding PPP loans1.64 %0.87 %
Allowance for credit losses as a percentage of total portfolio loansAllowance for credit losses as a percentage of total portfolio loans1.60 %1.63 %
Allowance for loan losses as a percentage of total portfolio loans - excluding PPP loansAllowance for loan losses as a percentage of total portfolio loans - excluding PPP loans1.72 %1.74 %
Allowance for credit losses to nonperforming loansAllowance for credit losses to nonperforming loans127 %115 %Allowance for credit losses to nonperforming loans85 %80 %
* Annualized
(1) In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Our new segmentation breaks out business banking loans from our other loan segments: CRE, C&I, commercial construction, consumer real estate and other consumer. The business banking allowance balance at the beginning of period is included in the other segments and reclassified to business banking through the impact of CECL adoption line.
(2)During the three months ended June 30, 2020, we experienced a pre-tax loss of $58.7 million related to a customer fraud resulting from a check kiting scheme.

62
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Six Months Ended June 30, 2020
(dollars in thousands)
Commercial
Real Estate(2)
Commercial and
Industrial		Commercial
Construction
Business Banking(1)
Consumer
Real Estate		Other
Consumer		Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period$30,577  $15,681  $7,900  $—  $6,337  $1,729  $62,224  
Impact of CECL adoption4,810  7,853  (3,376) 12,898  4,525  642  27,352  
Provision for credit losses on loans28,345  67,104  4,329  2,126  829  1,529  104,262  
Charge-offs(6,042) (71,496) —  (721) (218) (1,272) (79,749) 
Recoveries40  22  21  101  112  224  520  
Net (Charge-offs)/Recoveries(6,002) (71,474) 21  (620) (106) (1,048) (79,229) 
Balance at End of Period$57,730  $19,164  $8,874  $14,404  $11,585  $2,852  $114,609  
June 30, 2020December 31, 2019
Ratio of net charge-offs to average loans outstanding2.15 %* 0.22 %
* Annualized
(1) In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Our new segmentation breaks out business banking loans from our other loan segments: CRE, C&I, commercial construction, consumer real estate and other consumer. The business banking allowance balance at the beginning of period is included in the other segments and reclassified to business banking through the impact of CECL adoption line.
(2)During the three months ended June 30, 2020, we experienced a pre-tax loss of $58.7 million related to a customer fraud resulting from a check kiting scheme.
The adoption of ASU 2016-13 resulted in an increaseACL decreased $2.5 million to our ACL of $27.4$115.1 million on January 1,at March 31, 2021 compared to $117.6 million at December 31, 2020. The increase included $8.2decrease in ACL was mainly due to a reduction in specific reserves on loans individually assessed and lower qualitative reserve due to an improved economic forecast. Specific reserves on loans individually assessed decreased $5.4 million for S&T legacy loans and $9.3 million for acquired loans from the DNB merger. We also recordedDecember 31, 2020 primarily due to a day one adjustment of $9.9 million primarily related tocharge-off on a C&I relationship that was charged offpreviously held in the first quarter of 2020. We obtained information on the relationship subsequent to filing our Annual Report on Form 10-K for the year ended December 31, 2019, but before the end of the first quarter of 2020. The updated information supported that a loss existed at January 1, 2020.
The significant increase in the provision for credit losses of $84.6 million and $99.0 million during the three and six months ended June 30, 2020 was mainly due to the customer fraud that resulted in a $58.7 million charge-off as well as the impact of the COVID-19 pandemic. Net loan charge-offs were $68.1 million, or 0.89 percent of average loans, and $79.2 million, or 1.04 percent of average loans, for the three and six months ended June 30, 2020. In addition to the $58.7 million charge-off from the customer fraud, the customer also had a lending relationship that was moved to nonperforming status for $10.9 million which was net of a $4.2 million loan charge-off during the three months ended June 30, 2020. Other than the customer fraud, the most significant charge-off for the six months ended June 30, 2020 was a $9.9 million C&I relationship. We obtained information on the relationship subsequent to filing our December 31, 2019 10-K, but before the end of the first quarter of 2020; therefore, we recorded a day one CECL adjustment through a $9.9 million specific reserve. The updated information supported a loss existed at January 1, 2020.
Commercial substandard loans increased $16.1qualitative reserve decreased $1.8 million to $168.8 million at June 30, 2020 compared to $152.7 million at December 31, 2019 and special mention loans increased $78.7 million to $182.6 million at June 30, 2020 compared to $103.9 million at December 31, 2019from the prior quarter primarily due to downgrades as a $2.5 million reduction in the economic forecast component which was the result of updated financial information.
an improved national unemployment forecast. The adoption of the CECL accounting standard as of January 1, 2020 and the uncertainty around the COVID-19 pandemic both contributed to the higher ACL of 1.52 percent of total portfolio loans as of June 30, 2020 compared to 0.87 percent at December 31, 2019. When excluding PPP loans, the ACL as a percentage of total portfolio loans decreased 3 basis points to 1.60 percent at March 31, 2021 compared to 1.63 percent at December 31, 2020. The ACL excluding PPP loans as a percentage of total portfolio loans was 1.641.72 percent as of June 30,March 31, 2021 compared to 1.74 percent at December 31, 2020.
TDRsNet loan charge-offs were $5.8 million, or 0.33 percent annualized as a percentage of average loans for the three months ended March 31, 2021. The most significant charge-off was a $3.9 million C&I relationship which was previously held in specific reserve. The relationship was restructured during the first quarter of 2021 and charged down to the fair value of the collateral.
Substandard loans increased $1.4$16.1 million to $47.3$303.2 million at June 30, 2020March 31, 2021 compared to $45.9$287.1 million at December 31, 2019.2020 and special mention loans decreased $4.4 million to $265.5 million at March 31, 2021 compared to $269.9 million at December 31, 2020. The increase in commercial substandard and corresponding decrease in special mention loans was primarily due to the downgrade of a $12.1 million CRE relationship from special mention to substandard due to declining revenue that led to cash flow shortfalls. The relationship matured during the first quarter and received a short term COVID deferral as the borrower and bank work towards a long term solution.
Troubled debt restructurings, or TDRs increased $1.2 million to $47.9 million at March 31, 2021 compared to $46.7 million at December 31, 2020. Total TDRs of $47.3$47.9 million at June 30, 2020March 31, 2021 included $15.5$17.9 million, or 32.837.4 percent, that were accruing and $31.8$30.0 million, or 67.262.6 percent, that were not accruing.
Our allowance for credit losses on unfunded commercial lending commitments and letters of credit provide for the risk of expected loss 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 on our Consolidated Statements of Comprehensive (Loss) Income. The allowance for unfunded loan commitments was $7.0$4.3 million at June 30, 2020March 31, 2021 compared to $3.1$4.5 million at December 31, 2019. The adoption of ASU 2016-13 resulted in an increase to our allowance for unfunded commitments of $1.4 million on January 1, 2020. We increased the allowance for unfunded loan commitments $0.9 million and $2.5 million during the three and six months ended June 30, 2020, mainly in response to the COVID-19 pandemic. The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.
6348
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nonperforming assets consist of nonaccrual loans, nonaccrual TDRs and OREO. The following table summarizes nonperforming assets for the dates presented:
(dollars in thousands)June 30, 2020December 31, 2019$ Change
Nonperforming Loans
Commercial real estate$34,282  $22,427  $11,855  
Commercial and industrial6,328  13,287  (6,959) 
Commercial construction1,504  737  767  
Residential mortgage13,351  6,697  6,654  
Home equity2,874  1,961  913  
Installment and other consumer19  36  (17) 
Total Nonperforming Loans58,357  45,145  13,212  
Nonperforming Troubled Debt Restructurings
Commercial real estate27,361  6,713  20,648  
Commercial and industrial2,156  695  1,461  
Commercial construction—  —  —  
Residential mortgage1,298  822  476  
Home equity941  678  263  
Installment and other consumer—  4  (4) 
Total Nonperforming Troubled Debt Restructurings31,755  8,912  22,843  
Total Nonperforming Loans90,113  54,057  36,056  
OREO2,740  3,525  (785) 
Total Nonperforming Assets$92,853  $57,582  $35,271  
Asset Quality Ratios:
Nonperforming loans as a percent of total loans1.19 %0.76 %
Nonperforming assets as a percent of total loans plus OREO1.23 %0.81 %

(dollars in thousands)March 31, 2021December 31, 2020$ Change
Nonperforming Loans
Commercial real estate$79,321 $84,416 $(5,095)
Commercial and industrial(1)
991 7,100 (6,109)
Commercial construction384 384 — 
Business banking14,029 16,692 (2,663)
Consumer real estate5,542 8,798 (3,256)
Other Consumer2,163 96 2,067 
Total Nonperforming Loans102,430 117,486 (15,056)
Nonperforming Troubled Debt Restructurings
Commercial real estate15,754 16,654 (900)
Commercial and industrial11,425 9,885 1,540 
Commercial construction— — — 
Business banking397 430 (33)
Consumer real estate2,407 2,319 88 
Other Consumer— — — 
Total Nonperforming Troubled Debt Restructurings29,983 29,288 695 
Total Nonperforming Loans132,413 146,774 (14,361)
OREO1,620 2,155 (535)
Total Nonperforming Assets$134,033 $148,929 $(14,896)
Asset Quality Ratios:
Nonperforming loans as a percent of total portfolio loans1.88 %2.03 %
Nonperforming assets as a percent of total portfolio loans plus OREO1.90 %2.06 %
(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.

Our policy is to place loans in all categories in nonaccrual status when collection of interest or principal is doubtful, or generally when interest or principal payments are 90 days or more past due.
the contractual due date. Nonperforming loans increased $36.0decreased $11.6 million to $90.1$135.2 million at June 30, 2020March 31, 2021 compared to $54.1$146.8 million at December 31, 2019.2020. The significant increasesdecrease in nonperforming loans primarily related to the additionpayoff of a $20.5$4.6 million CRE relationship the $10.9 million lending relationship related to the customer fraud and charge-off of a $4.3$3.9 million C&I relationship. The $20.5 million CRE relationship became a performing TDRwhich were previously held in the third quarter of 2019 and then moved to nonperforming in the first quarter of 2020 when the borrower experienced financial deterioration that led to cash flow issues. The relationship was individually assessed at June 30, 2020, and based upon updated appraisals, a $0.6 million ACL was added due to the relationship being under-collateralized as of June 30, 2020. The $10.9 million lending relationship was moved to nonperforming in the second quarter of 2020.specific reserve.

6449
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Deposits
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019$ Change(dollars in thousands)March 31, 2021December 31, 2020$ Change
Customer DepositsCustomer DepositsCustomer Deposits
Noninterest-bearing demandNoninterest-bearing demand$2,250,958  $1,698,082  $552,876  Noninterest-bearing demand$2,539,594 $2,261,994 $277,600 
Interest-bearing demandInterest-bearing demand855,193  762,111  93,082  Interest-bearing demand976,225 864,510 111,715 
Money marketMoney market2,021,552  1,849,684  171,868  Money market1,997,856 1,887,051 110,805 
SavingsSavings916,268  830,919  85,349  Savings1,036,927 969,508 67,419 
Certificates of depositCertificates of deposit1,487,367  1,535,305  (47,938) Certificates of deposit1,310,473 1,369,239 (58,766)
Total Customer DepositsTotal Customer Deposits7,531,338  6,676,101  855,237  Total Customer Deposits7,861,075 7,352,302 508,773 
Brokered DepositsBrokered DepositsBrokered Deposits
Interest-bearing demandInterest-bearing demand200,068  200,220  (152) Interest-bearing demand— — — 
Money marketMoney market100,036  100,127  (91) Money market5,001 50,012 (45,011)
Certificates of depositCertificates of deposit36,474  60,128  (23,654) Certificates of deposit9,952 18,224 (8,272)
Total Brokered DepositsTotal Brokered Deposits336,578  360,475  (23,897) Total Brokered Deposits14,953 68,236 (53,283)
Total DepositsTotal Deposits$7,867,916  $7,036,576  $831,340  Total Deposits$7,876,028 $7,420,538 $455,490 
Deposits are our primary source of funds. We believe that our deposit base is stable and that we have the ability to attract new deposits. Total deposits at June 30, 2020March 31, 2021 increased $831.3$455.5 million, or 6.1 percent, from December 31, 2020. Total customer deposits increased $508.8 million from December 31, 2019. Total customer deposits increased $855.2 million from December 31, 2019.2020. The increase in customer deposits is primarily related to government stimulus programs, PPP and stimulus programs along with customers conservatively holding cash deposits during these uncertain times. Customer noninterest-bearing demand deposits increased $552.9 million, money market deposits increased $171.8 million, interest-bearing demand deposits increased $93.1 million, and savings deposits increased $85.3 million. These increases were offset by a decline in certificate of deposits of $47.9 million which was mainly a result of repositioning by our customers.customer’s liquidity preferences. Total brokered deposits decreased $23.9$53.3 million from December 31, 20192020 due to a reduced need for this funding given the customer deposit growth. Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.
Borrowings
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019$ Change(dollars in thousands)March 31, 2021December 31, 2020$ Change
Securities sold under repurchase agreementsSecurities sold under repurchase agreements$92,159  $19,888  $72,271  Securities sold under repurchase agreements$67,417 $65,163 $2,254 
Short-term borrowingsShort-term borrowings84,541  281,319  (196,778) Short-term borrowings— 75,000 (75,000)
Long-term borrowingsLong-term borrowings49,489  50,868  (1,379) Long-term borrowings23,282 23,681 (399)
Junior subordinated debt securitiesJunior subordinated debt securities64,053  64,277  (224) Junior subordinated debt securities64,097 64,083 14 
Total BorrowingsTotal Borrowings$290,242  $416,352  $(126,110) Total Borrowings$154,796 $227,927 $(73,131)
Borrowings are an additional source of funding for us. Total borrowings decreased $126.1$73.1 million, or 30.332.1 percent, compared to December 31, 20192020 due to increased customer deposits. Total short-term borrowings decreased $196.8$75.0 million, or 69.9 percent, compared to December 31, 2019. Securities sold under repurchase agreements increased $72.3 million to $92.2 million at June 30, 2020 compared to December 31, 2019 due to demand from our REPO customers.2020.
6550
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information pertaining to short-term borrowings is summarized in the tables below for the sixthree months ended June 30, 2020March 31, 2021 and for the twelve months ended December 31, 2019.2020.
Securities Sold Under Repurchase AgreementsSecurities Sold Under Repurchase Agreements
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Balance at the period endBalance at the period end$92,159  $19,888  Balance at the period end$67,417 $65,163 
Average balance during the periodAverage balance during the period$58,046  $16,863  Average balance during the period$64,653 $57,673 
Average interest rate during the periodAverage interest rate during the period0.33 %0.65 %Average interest rate during the period0.15 %0.29 %
Maximum month-end balance during the periodMaximum month-end balance during the period$92,159  $23,427  Maximum month-end balance during the period$67,417 $92,159 
Average interest rate at the period endAverage interest rate at the period end0.25 %0.74 %Average interest rate at the period end0.10 %0.25 %
Short-Term BorrowingsShort-Term Borrowings
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Balance at the period endBalance at the period end$84,541  $281,319  Balance at the period end$— $75,000 
Average balance during the periodAverage balance during the period$232,319  $255,264  Average balance during the period$25,556 $155,753 
Average interest rate during the periodAverage interest rate during the period1.14 %2.51 %Average interest rate during the period0.19 %0.92 %
Maximum month-end balance during the periodMaximum month-end balance during the period$410,240  $425,000  Maximum month-end balance during the period$25,000 $410,240 
Average interest rate at the period endAverage interest rate at the period end0.38 %1.84 %Average interest rate at the period end- %0.19 %
Information pertaining to long-term borrowings is summarized in the tables below for the sixthree months ended June 30, 2020March 31, 2021 and for the twelve months ended December 31, 2019.2020.
Long-Term BorrowingsLong-Term Borrowings
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Balance at the period endBalance at the period end$49,489  $50,868  Balance at the period end$23,282 $23,681 
Average balance during the periodAverage balance during the period$50,809  $66,392  Average balance during the period$23,471 $47,953 
Average interest rate during the periodAverage interest rate during the period2.53 %2.76 %Average interest rate during the period2.00 %— %
Maximum month-end balance during the periodMaximum month-end balance during the period$50,635  $70,418  Maximum month-end balance during the period$23,549 $50,635 
Average interest rate at the period endAverage interest rate at the period end2.48 %2.61 %Average interest rate at the period end2.00 %2.03 %
Junior Subordinated Debt SecuritiesJunior Subordinated Debt Securities
(dollars in thousands)(dollars in thousands)June 30, 2020December 31, 2019(dollars in thousands)March 31, 2021December 31, 2020
Balance at the period endBalance at the period end$64,053  $64,277  Balance at the period end$64,097 $64,083 
Average balance during the periodAverage balance during the period$64,120  $47,934  Average balance during the period$64,088 $64,092 
Average interest rate during the periodAverage interest rate during the period3.99 %4.82 %Average interest rate during the period3.09 %3.57 %
Maximum month-end balance during the periodMaximum month-end balance during the period$64,648  $64,277  Maximum month-end balance during the period$64,097 $64,848 
Average interest rate at the period endAverage interest rate at the period end3.31 %4.42 %Average interest rate at the period end2.97 %3.01 %
6651
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
LiquidityLiquidity is defined as a financial institution’s ability to meet its cash and collateral obligations at a reasonable cost. This includes the ability to satisfy the financial needs of depositors who want to withdraw funds or of borrowers needing to access funds to meet their credit needs. In order to manage liquidity risk, our Board of Directors has delegated authority to ALCO for the formulation, implementation, and oversight of liquidity risk management for S&T. The ALCO’s goal is to maintain adequate levels of liquidity at a reasonable cost to meet funding needs in both a normal operating environment and for potential liquidity stress events. The ALCO monitors and manages liquidity through various ratios, reviewing cash flow projections, performing stress tests and having a detailed contingency funding plan. The ALCO policy guidelines define graduated risk tolerance levels. If our liquidity position moves to a level that has been defined as high risk, specific actions are required, such as increased monitoring or the development of an action plan to reduce the risk position.
Our primary funding and liquidity source is a stable customer deposit base. We believe S&T has the ability to retain existing and attract new deposits, mitigating any funding dependency on other more volatile sources. Refer to the "Financial Condition-Deposits" section of this MD&A, for additional discussion on deposits. Although deposits are the primary source of funds, we have identified various other funding sources that can be used as part of our normal funding program when either a structure or cost efficiency has been identified. Additional funding sources accessible to S&T include borrowing availability at the Federal Home Loan Bank, or FHLB, of Pittsburgh, federal funds lines with other financial institutions, the brokered deposit market and borrowing availability through the Federal Reserve Borrower-In-Custody program.
An important component of our ability to effectively respond to potential liquidity stress events is maintaining a cushion of highly liquid assets. Highly liquid assets are those that can be converted to cash quickly, with little or no loss in value, to meet financial obligations. ALCO policy guidelines define a ratio of highly liquid assets to total assets by graduated risk tolerance levels of minimal, moderate, and high. At June 30, 2020,March 31, 2021, we had $751.3 million$1.1 billion in highly liquid assets, which consisted of $275.9$601.0 million in interest-bearing deposits with banks, $461.1$494.1 million in unpledged securities and $14.3$12.8 million in loans held for sale. This resulted in a highly liquid assets to total assets ratio of 7.911.9 percent at June 30, 2020.March 31, 2021. Also, at June 30, 2020,March 31, 2021, we had a remaining borrowing availability of $2.7$2.5 billion with the FHLB of Pittsburgh. Refer to Note 9: Borrowings in the Notes to Consolidated Financial Statements and the "Financial Condition- Borrowings" section of this MD&A for more details.
The following table summarizes capital amounts and ratios for S&T and S&T Bank for the dates presented:presented:
(dollars in thousands)(dollars in thousands)Adequately
Capitalized		Well-
Capitalized		June 30, 2020December 31, 2019(dollars in thousands)Adequately
Capitalized		Well-
Capitalized		March 31, 2021December 31, 2020
AmountRatioAmountWell-
Capitalized		AmountRatioAmountRatio
S&T Bancorp, Inc.S&T Bancorp, Inc.S&T Bancorp, Inc.
Tier 1 leverageTier 1 leverage4.00 %5.00 %$805,665  8.89 %$854,146  10.29 %Tier 1 leverage4.00 %5.00 %$846,536 9.71 %$825,515 9.43 %
Common equity tier 1 to risk-weighted assetsCommon equity tier 1 to risk-weighted assets4.50 %6.50 %776,665  10.70 %825,146  11.43 %Common equity tier 1 to risk-weighted assets4.50 %6.50 %817,536 11.84 %796,515 11.33 %
Tier 1 capital to risk-weighted assetsTier 1 capital to risk-weighted assets6.00 %8.00 %805,665  11.10 %854,146  11.84 %Tier 1 capital to risk-weighted assets6.00 %8.00 %846,536 12.26 %825,515 11.74 %
Total capital to risk-weighted assetsTotal capital to risk-weighted assets8.00 %10.00 %924,487  12.74 %954,094  13.22 %Total capital to risk-weighted assets8.00 %10.00 %961,751 13.93 %944,686 13.44 %
S&T BankS&T BankS&T Bank
Tier 1 leverageTier 1 leverage4.00 %5.00 %$782,192  8.64 %$832,113  10.04 %Tier 1 leverage4.00 %5.00 %$830,633 9.54 %$810,636 9.27 %
Common equity tier 1 to risk-weighted assetsCommon equity tier 1 to risk-weighted assets4.50 %6.50 %782,192  10.80 %832,113  11.56 %Common equity tier 1 to risk-weighted assets4.50 %6.50 %830,633 12.04 %810,636 11.55 %
Tier 1 capital to risk-weighted assetsTier 1 capital to risk-weighted assets6.00 %8.00 %782,192  10.80 %832,113  11.56 %Tier 1 capital to risk-weighted assets6.00 %8.00 %830,633 12.04 %810,636 11.55 %
Total capital to risk-weighted assetsTotal capital to risk-weighted assets8.00 %10.00 %893,213  12.33 %922,310  12.81 %Total capital to risk-weighted assets8.00 %10.00 %939,998 13.63 %922,007 13.14 %
On March 27, 2020, the regulators issued interim final rule, or IFR, “Regulatory Capital Rule: Revised Transition of the Current Expected Credit Losses Methodology for Allowances” in response to the disrupted economic activity fromdue to the spread of COVID-19.COVID-19 pandemic. The IFR provides financial institutions that adoptadopted CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided by the initial two-year delay (“five year transition”). We adopted CECL effective January 1, 2020 and elected to implement the five year transition.
We have filed a shelf registration statement on Form S-3 under the Securities Act of 1933, as amended, with the SEC, which allows for the issuance of a variety of securities including debt and capital securities, preferred and common stock and warrants. We may use the proceeds from the sale of securities for general corporate purposes, which could include investments at the holding company level, investing in, or extending credit to subsidiaries, possible acquisitions and stock repurchases. As of June 30, 2020,March 31, 2021, we had not issued any securities pursuant to this shelf registration statement.
S&T is monitoring and will continue to monitor the impact of the COVID-19 pandemic and has taken and will continue to take steps to mitigate the potential risks and impact on our liquidity and capital resources. Due to the economic uncertainty, we are taking a prudent approach to capital management and have established access to the Federal Reserve’s PPP Lending Facility.

67
52
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Market risk is defined as the degree to which changes in interest rates, foreign exchange rates, commodity prices or equity prices can adversely affect a financial institution’s earnings or capital. For most financial institutions, including S&T, market risk primarily reflects exposures to changes in interest rates. Interest rate fluctuations affect earnings by changing net interest income and other interest-sensitive income and expense levels. Interest rate changes also affect capital by changing the net present value of a bank’s future cash flows, and the cash flows themselves, as rates change. Accepting this risk is a normal part of banking and can be an important source of profitability and enhancing shareholder value. However, excessive interest rate risk can threaten a bank’s earnings, capital, liquidity and solvency. Our sensitivity to changes in interest rate movements is continually monitored by the Asset and Liability Committee, or ALCO. The ALCO monitors and manages market risk through rate shock analyses, economic value of equity, or EVE, analyses and by performing stress tests and simulations in order to mitigate earnings and market value fluctuations due to changes in interest rates.
Rate shock analyses results are compared to a base case to provide an estimate of the impact that market rate changes may have on 12 and 24 months of pretax net interest income. The base case and rate shock analyses are performed on a static balance sheet. A static balance sheet is a no growth balance sheet in which all maturing and/or repricing cash flows are reinvested in the same product at the existing product spread. Rate shock analyses assume an immediate parallel shift in market interest rates and also include management assumptions regarding the impact of interest rate changes on non-maturity deposit products (noninterest-bearing demand, interest-bearing demand, money market and savings) and changes in the prepayment behavior of loans and securities with optionality. S&T policy guidelines limit the change in pretax net interest income over 12 and 24 month horizons using rate shocks in increments of +/- 100 basis points. Policy guidelines define the percentage change in pretax net interest income by graduated risk tolerance levels of minimal, moderate and high. We have temporarily suspended the analyses on downward rate shocks of 200 basis points or more because they do not provide meaningful insight into our interest rate risk position.
In order to monitor interest rate risk beyond the 24 month time horizon of rate shocks on pretax net interest income, we also perform EVE analyses. EVE represents the present value of all asset cash flows minus the present value of all liability cash flows. EVE change results are compared to a base case to determine the impact that market rate changes may have on our EVE. As with rate shock analyses on pretax net interest income, EVE analyses incorporate management assumptions regarding prepayment behavior of fixed rate loans and securities with optionality and the behavior and value of non-maturity deposit products. S&T policy guidelines limit the change in EVE using rate shocks in increments of +/- 100 basis points. Policy guidelines define the percentage change in EVE by graduated risk tolerance levels of minimal, moderate and high. We have also temporarily suspended the downward rate shocks of 200 basis points or more for EVE.
The table below reflects the rate shock analyses results for the 1 - 121-12 and 13 - 2413-24 month periods of pretax net interest income and EVE.
June 30, 2020December 31, 2019
1 - 12 Months13 - 24 Months% Change in EVE1 - 12 Months13 - 24 Months% Change in EVE
Change in Interest Rate (basis points)
% Change in Pretax
Net Interest Income		% Change in
 Pretax
Net Interest Income		% Change in Pretax
Net Interest Income		% Change in Pretax
Net Interest Income
 40014.6 %20.4 %21.6 %9.6 %14.4 %(1.8)%
 30010.8 %15.3 %23.0 %7.2 %10.8 %2.8 %
 2007.6 %10.8 %21.6 %5.0 %7.6 %5.5 %
 1004.5 %6.3 %15.2 %2.7 %4.2 %5.1 %
(100)(3.0)%(5.1)%(28.7)%(4.3)%(6.4)%(10.8)%
(200) NM NM NMNMNMNM
NM - not meaningful

March 31, 2021December 31, 2020
1 - 12 Months13 - 24 Months% Change in EVE1 - 12 Months13 - 24 Months% Change in EVE
Change in Interest Rate (basis points)% Change in Pretax
 Net Interest Income		% Change in
 Pretax
Net Interest Income		% Change in Pretax
 Net Interest Income		% Change in Pretax
Net Interest Income
40024.1 %33.6 %18.2 %15.8 %28.5 %28.5 %
30017.9 %25.1 %19.8 %11.7 %21.3 %29.0 %
20011.9 %17.1 %18.5 %7.7 %14.3 %25.6 %
1005.4 %8.2 %11.6 %4.4 %8.0 %17.7 %
(100)(3.7)%(7.6)%(23.9)%(2.8)%(5.7)%(28.2)%
The results from the rate shock analyses on net interest income are consistent with having an asset sensitive balance sheet. Having an asset sensitive balance sheet means more assets than liabilities will reprice during the measured time frames. The implications of an asset sensitive balance sheet will differ depending upon the change in market interest rates. For example, with an asset sensitive balance sheet in a declining interest rate environment, more assets than liabilities will decrease in rate. This situation could result in a decrease in net interest income and operating income. Conversely, with an asset sensitive balance sheet in a rising interest rate environment, more assets than liabilities will increase in rate. This situation could result in an increase in net interest income and operating income.
Our rate shock analyses show an improvement in the percentage change in pretax net interest income in the 1-12 month and 13-24 month rates up scenarios and a decline in the rates down scenarios when comparing June 30, 2020March 31, 2021 to December 31, 2019.2020. We have become more asset sensitive due to our increased balances at the Federal Reserve. Our EVE analyses show an improvementa decline in the percentage change in EVE in the rates up scenarios and a declinean improvement in the rates down scenario when comparing June 30, 2020March 31, 2021 to December 31, 2019.2020. The EVE decline is due to the impact of a steepened yield curve on the value of non-maturity deposits.
6853
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



In addition to rate shocks and EVE analyses, we perform a market risk stress test at least annually. The market risk stress test includes sensitivity analyses and simulations. Sensitivity analyses are performed to help us identify which model assumptions cause the greatest impact on pretax net interest income. Sensitivity analyses may include changing prepayment behavior of loans and securities with optionality and the impact of interest rate changes on non-maturity deposit products. Simulation analyses may include the potential impact of rate changes other than the policy guidelines, yield curve shape changes, significant balance mix changes and various growth scenarios.

69
54
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES



Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of S&T’s Interim Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO (its principal executive officer and principal financial officer, respectively), management has evaluated the effectiveness of the design and operation of S&T’s disclosure controls and procedures as of June 30, 2020.March 31, 2021. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods required by the Securities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to S&T’s management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Based on and as of the date of such evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls and procedures were effective in all material respects, as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2020,March 31, 2021, there were no changes made to S&T’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, S&T’s internal control over financial reporting.


PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
There have been no material changes to the risk factors that we have previously disclosed in Part I, Item 1A – “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019,2020, as filed with the SEC on March 2, 2020 other than the risks described below.
The duration and severity of the COVID-19 pandemic, in our principal area of operations, nationally and globally, has impacted and could adversely impact S&T’s business, results of operations and financial condition. While it is difficult to predict the further impact of the COVID-19 pandemic (or any other outbreak) on the economy and S&T, the future impacts may include, but are not limited to, the following:1, 2021.

•Our results of operations may be negatively impacted by general economic or business conditions and uncertainty, including the strength of economic conditions in our principal area of operations impacting the demand for our products and services.
55
•The low interest rate environment will continue to negatively impact our net interest income and net interest margin.
•Credit losses may be higher and our provision for credit losses may continue to increase, due to deterioration in the financial condition of S&T’s commercial and consumer loan customers.
•Declining asset and collateral values may necessitate increases in our provision for credit losses and net charge-offs.
•Expense management will be impacted by the uncertainty of the effects of the pandemic and S&T’s continued efforts to promote the health and safety of our employees, and the customers and communities we serve.
•We may have an interruption or cessation of an important service provided by a third-party provider.
•S&T’s liquidity and regulatory capital could be adversely impacted.
•Any new or revised regulations regarding capital and liquidity adopted in response to the COVID-19 pandemic may require us to maintain materially more capital or liquidity.
70
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

•Investors may have less confidence in the equity markets in general and in financial services industry in particular, which could have a negative impact on S&T’s stock price and resulting market valuation.
To the extent the COVID-19 pandemic continues to adversely affect the global economy it may also increase the likelihood and/or magnitude of other risks described in the Part I, Item IA. “Risk Factors” in S&T’s Annual Report on Form 10-K for the year ended December 31, 2019.
The impact that the COVID-19 pandemic will have on S&T’s credit losses is uncertain, and continued economic uncertainty and deterioration since January 1, 2020 in the forward looking economic forecasts used to estimate credit losses may adversely affect our ACL.
S&T calculates the ACL in accordance with CECL accounting standard adopted January 1, 2020. The CECL methodology reflects expected credit losses and requires consideration of a broad range of reasonable and supportable information to form credit loss estimates. The CECL accounting standard bases the measurement of expected credit losses on historical loss experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. S&T’s ability to assess expected credit losses may be impaired if the models and approaches we use become less predictive of future behaviors. In particular, the reliance on supportable economic forecasts in light of the COVID-19 pandemic has had and is expected to have an impact on the estimates of our ACL. These forecasts have deteriorated since January 1, 2020 and continued adverse economic forecasts and economic uncertainty could negatively affect our ACL.
Fraudulent activity associated with our products and services could adversely affect our results of operations, financial condition and stock price, negatively impact our brand and reputation, and result in regulatory intervention or sanctions.
As a financial institution we are exposed to operational risk in the form of fraudulent activity that may be committed by customers, other third parties, or employees, targeting us and our customers. The risk of fraud continues to increase for the financial services industry. In our Form 8-K filed May 26, 2020, we disclosed that we discovered customer fraud resulting from a check kiting scheme by a business customer of S&T. We recognized a pre-tax loss of $58.7 million during the second quarter of 2020 related to this customer fraud. As a result of our internal review of the fraud, we have made process and monitoring enhancements that are substantially implemented. While we believe we have operational risk controls in place to prevent or detect future instances of fraud or to mitigate the impact of any fraud, we cannot provide assurance that we can prevent or detect fraud or that we will not experience future fraud losses or incur costs or other damage related to such fraud, at levels that adversely affect our results of operation, financial condition, or stock price. Furthermore, fraudulent activity could negatively impact our brand and reputation, which could also adversely affect our results of operation, financial condition, or stock price. Fraudulent activity could also lead to regulatory intervention or regulatory sanctions.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities
The following table is a summary of our purchases of common stock during the secondfirst quarter of 2020:2021:
PeriodTotal number of shares purchasedAverage price paid per share
Total number of shares purchased as part of publicly announced plan(1)
Approximate dollar value of shares that may yet be purchased under the plan
$37,441,683 
04/01/202001/2021 - 04/30/202001/31/2021— $— — — 37,441,683 
05/02/01/20202021 - 05/31/202002/28/2021— — — 37,441,683 
06/03/01/20202021 - 06/30/202003/31/2021— — — 37,441,683 
Total— $— — $37,441,683 
(1)On September 16, 2019,March 15, 2021, our Board of Directors authorized aan extension of the $50 million share repurchase plan.plan, which was set to expire March 31, 2021. This authorization extended the expiration date of the repurchase authorization, which is effectiveplan through March 31, 2021,2022. The plan permits S&T to repurchase from time to time up to the previously authorized $50 million in aggregate value of shares of S&T's common stock, with $37.4 million of capacity remaining at March 31, 2021, through a combination of open market and privately negotiated repurchases. The specific timing, price and quantity of repurchases will be at the discretion of S&T and will depend on a variety of factors, including general market conditions, the trading price of common stock, legal and contractual requirements, applicable securities laws and S&T's financial performance. The repurchase plan does not obligate us to repurchase any particular number of shares. We expect to fund any repurchases from cash on hand and internally generated funds. Repurchase activity was suspended in March 2020 as the impact of the COVID-19 pandemic spread.Any share repurchases will not occur unless permissible under applicable laws.

7156
Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
On August 4, 2020, we entered into a severance and general release agreement with David P. Ruddock in connection with his previously announced resignation.Under the terms of the agreement, Mr. Ruddock will receive (a) a total gross payment of three hundred thirty-five thousand, four hundred and fifty dollars ($335,450.00), paid in three installments: (i) the first payment of one half of this total to be made within thirty days after the seven (7) day revocation period provided to Mr. Ruddock in the agreement expires without a revocation (in the gross amount of $167,725.00), and the remaining two payments, each for one quarter of the total - one in December 2020 and the final payment made on August 2, 2021 (each in the gross amount of $83,862.50) (b) payment of his COBRA health insurance coverage for twelve (12) months or until he obtains coverage from a new employer, (c) an additional amount of thirty-two thousand dollars ($32,000.00) within thirty days after the revocation period expires without a revocation, and (d) ownership of the S&T automobile and cell phone with Mr. Ruddock assuming operations, maintenance, insurance and all other cost and responsibilities regarding them.None
Item 6. Exhibits
Agreement and Plan of Merger, dated June 5, 2019, by and between DNB Financial Corporation and S&T Bancorp, Inc. Filed as Exhibit 2.1 to S&T Bancorp, Inc. Current Report on Form 8-K filed on June 5, 2019, and incorporated herein by reference.
Confidentiality, Trade Secrets, Non-Solicitation and Severance and General Release Agreement, dated August 4,October 21, 2020, by and between David P. RuddockGeorge Basara and S&T Bancorp, Inc.,*Filed herewith
Severance Agreement dated April 20, 2015 by and between George Basara and S&T Bank and any of their subsidiaries or affiliated business*Bancorp, Inc.*Filed herewith
Rule 13a-14(a) Certification of the Chief Executive Officer.Filed herewith
Rule 13a-14(a) Certification of the Chief Financial Officer.Filed herewith
Rule 13a-14(b) Certification of the Chief Executive Officer and Chief Financial Officer.Filed herewith
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.DEFXBRL Taxonomy Extension Definition Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File ((formatted(formatted as Inline XBRL and contained in Exhibits 101))
* Management Contract or Compensatory Plan or Arrangement
7257

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
S&T Bancorp, Inc.
(Registrant)
AugustMay 5, 20202021/s Mark Kochvar
Mark Kochvar
Senior Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and Duly Authorized Signatory)
7358