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 ~~March 31,~~June 30, 2022


☐			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 Street

Indiana

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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $2.50 par value	STBA	The 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 - ~~39,311,317~~39,146,291 shares as of ~~April~~July 29, 2022

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

INDEX

S&T BANCORP, INC. AND SUBSIDIARIES

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, 2022 December 31, 2021
(in thousands, except share and per share data) (Unaudited) (Audited)
ASSETS
Cash and due from banks, including interest-bearing deposits of $751,378 and $857,192 at March 31, 2022 and December 31, 2021 $ 823,757 $ 922,215
Securities, at fair value 1,028,218 910,793
Loans held for sale 1,346 1,522
Portfolio loans, net of unearned income 6,963,911 6,999,990
Allowance for credit losses (99,915) (98,576)
Portfolio loans, net 6,863,996 6,901,414
Bank owned life insurance 84,093 83,685
Premises and equipment, net 51,671 52,632
Federal Home Loan Bank and other restricted stock, at cost 9,349 9,519
Goodwill 373,424 373,424
Other intangible assets, net 6,497 6,895
Other assets 189,930 226,430
Total Assets $ 9,432,281 $ 9,488,529
LIABILITIES
Deposits:
Noninterest-bearing demand $ 2,740,315 $ 2,748,586
Interest-bearing demand 1,070,656 979,133
Money market 1,992,916 2,070,579
Savings 1,117,985 1,110,155
Certificates of deposit 1,038,586 1,088,071
Total Deposits 7,960,458 7,996,524
Securities sold under repurchase agreements 70,112 84,491
Long-term borrowings 22,171 22,430
Junior subordinated debt securities 54,408 54,393
Other liabilities 140,182 124,237
Total Liabilities 8,247,331 8,282,075
SHAREHOLDERS’ EQUITY
Common stock ($2.50 par value)
Authorized—50,000,000 shares
Issued—41,449,444 shares at March 31, 2022 and December 31, 2021
Outstanding—39,351,688 shares at March 31, 2022 and 39,351,194 shares at December 31, 2021 103,623 103,623
Additional paid-in capital 403,841 403,095
Retained earnings 791,345 773,659
Accumulated other comprehensive loss (47,043) (7,090)
Treasury stock — 2,097,756 shares at March 31, 2022 and 2,098,250 shares at December 31, 2021, at cost (66,816) (66,833)
Total Shareholders’ Equity 1,184,950 1,206,454
Total Liabilities and Shareholders’ Equity $ 9,432,281 $ 9,488,529


	June 30, 2022			December 31, 2021
(in thousands, except share and per share data)	(Unaudited)			(Audited)
ASSETS
Cash and due from banks, including interest-bearing deposits of $263,504 and $857,192 at June 30, 2022 and December 31, 2021		$	344,694		$	922,215
Securities, at fair value		1,068,576			910,793
Loans held for sale		1,311			1,522
Portfolio loans, net of unearned income		7,040,894			6,999,990
Allowance for credit losses		(98,095)			(98,576)
Portfolio loans, net		6,942,799			6,901,414
Bank owned life insurance		84,536			83,685
Premises and equipment, net		50,913			52,632
Federal Home Loan Bank and other restricted stock, at cost		7,949			9,519
Goodwill		373,424			373,424
Other intangible assets, net		6,120			6,895
Other assets		223,492			226,430
Total Assets		$	9,103,814		$	9,488,529
LIABILITIES
Deposits:
Noninterest-bearing demand		$	2,736,849		$	2,748,586
Interest-bearing demand		880,432			979,133
Money market		1,888,506			2,070,579
Savings		1,125,344			1,110,155
Certificates of deposit		981,116			1,088,071

Total Deposits		7,612,247			7,996,524
Securities sold under repurchase agreements		39,259			84,491

Long-term borrowings		21,988			22,430
Junior subordinated debt securities		54,423			54,393

Other liabilities		197,539			124,237
Total Liabilities		7,925,456			8,282,075
SHAREHOLDERS’ EQUITY
Common stock ($2.50 par value) Authorized—50,000,000 shares Issued—41,449,444 shares at June 30, 2022 and December 31, 2021 Outstanding—39,148,999 shares at June 30, 2022 and 39,351,194 shares at December 31, 2021		103,623			103,623
Additional paid-in capital		404,841			403,095
Retained earnings		809,644			773,659
Accumulated other comprehensive loss		(67,171)			(7,090)
Treasury stock — 2,300,445 shares at June 30, 2022 and 2,098,250 shares at December 31, 2021, at cost		(72,579)			(66,833)
Total Shareholders’ Equity		1,178,358			1,206,454
Total Liabilities and Shareholders’ Equity		$	9,103,814		$	9,488,529

See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


		Three Months Ended March 31,				Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands, except per share data)	(dollars in thousands, except per share data)		2022	2021			(dollars in thousands, except per share data)	2022				2021			2022		2021
INTEREST AND DIVIDEND INCOME	INTEREST AND DIVIDEND INCOME										INTEREST AND DIVIDEND INCOME
Loans, including fees	Loans, including fees			$	64,593				$	70,232	Loans, including fees	$	71,018		$	66,942	$	135,611	$	137,174
Investment Securities:	Investment Securities:										Investment Securities:
Taxable	Taxable			4,936					3,563		Taxable	5,995			3,793		10,931		7,356
Tax-exempt	Tax-exempt			482					813		Tax-exempt	484			690		966		1,503
Dividends	Dividends			98					173		Dividends	102			152		200		325
Total Interest and Dividend Income	Total Interest and Dividend Income			70,109					74,781		Total Interest and Dividend Income	77,599			71,577		147,708		146,358
INTEREST EXPENSE	INTEREST EXPENSE										INTEREST EXPENSE
Deposits	Deposits			1,853					3,481		Deposits	1,790			2,652		3,643		6,133
Borrowings and junior subordinated debt securities	Borrowings and junior subordinated debt securities			523					641		Borrowings and junior subordinated debt securities	615			621		1,138		1,263
Total Interest Expense	Total Interest Expense			2,376					4,122		Total Interest Expense	2,405			3,273		4,781		7,396
NET INTEREST INCOME	NET INTEREST INCOME			67,733					70,659		NET INTEREST INCOME	75,194			68,304		142,927		138,962
Provision for credit losses	Provision for credit losses			(512)					3,137		Provision for credit losses	3,204			2,561		2,692		5,699
Net Interest Income After Provision for Credit Losses	Net Interest Income After Provision for Credit Losses			68,245					67,522		Net Interest Income After Provision for Credit Losses	71,990			65,743		140,235		133,263
NONINTEREST INCOME	NONINTEREST INCOME										NONINTEREST INCOME

Net gain on sale of securities											Net gain on sale of securities	—			29		—		29
Debit and credit card	Debit and credit card			5,063					4,162		Debit and credit card	4,756			4,744		9,819		8,906
Service charges on deposit accounts	Service charges on deposit accounts			3,974					3,474		Service charges on deposit accounts	4,181			3,642		8,155		7,116
Wealth management	Wealth management			3,242					2,944		Wealth management	3,247			3,167		6,489		6,111
Mortgage banking	Mortgage banking			1,015					4,310		Mortgage banking	466			1,734		1,481		6,044

Other	Other			1,932					2,346		Other	(20)			2,108		1,912		4,541
Total Noninterest Income	Total Noninterest Income			15,226					17,236		Total Noninterest Income	12,630			15,424		27,856		32,747
NONINTEREST EXPENSE	NONINTEREST EXPENSE										NONINTEREST EXPENSE
Salaries and employee benefits	Salaries and employee benefits			23,712					23,327		Salaries and employee benefits	24,811			24,515		48,523		47,842
Data processing and information technology	Data processing and information technology			4,435					4,225		Data processing and information technology	4,104			3,787		8,539		8,012
Occupancy	Occupancy			3,882					3,827		Occupancy	3,634			3,434		7,516		7,261
Furniture, equipment and software	Furniture, equipment and software			2,777					2,640		Furniture, equipment and software	2,939			2,402		5,716		5,042
Other taxes											Other taxes	1,682			1,832		3,219		3,268
Professional services and legal	Professional services and legal			1,949					1,531		Professional services and legal	2,380			1,637		4,329		3,168
Other taxes				1,537					1,436
Marketing	Marketing			1,361					1,322		Marketing	1,524			996		2,885		2,318
FDIC insurance	FDIC insurance			937					1,046		FDIC insurance	882			924		1,819		1,970

Other	Other			6,824					6,226		Other	6,468			6,302		13,292		12,614
Total Noninterest Expense	Total Noninterest Expense			47,414					45,580		Total Noninterest Expense	48,424			45,829		95,838		91,495
Income Before Taxes	Income Before Taxes			36,057					39,178		Income Before Taxes	36,196			35,338		72,253		74,515
Income tax expense	Income tax expense			6,914					7,276		Income tax expense	7,338			6,971		14,252		14,247
Net Income	Net Income			$	29,143				$	31,902	Net Income	$	28,858		$	28,367	$	58,001	$	60,268
Earnings per share—basic	Earnings per share—basic			$	0.74				$	0.81	Earnings per share—basic	$	0.74		$	0.73	$	1.48	$	1.54
Earnings per share—diluted	Earnings per share—diluted			$	0.74				$	0.81	Earnings per share—diluted	$	0.74		$	0.72	$	1.48	$	1.54
Dividends declared per share	Dividends declared per share			$	0.29				$	0.28	Dividends declared per share	$	0.30		$	0.28	$	0.59	$	0.56
Comprehensive Income (Loss)	Comprehensive Income (Loss)			$	(10,810)				$	23,992	Comprehensive Income (Loss)	$	8,730		$	30,911	$	(2,080)	$	54,902

See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)


		For the Three Months Ended March 31, 2021																			Three months ended June 30, 2021
(dollars in thousands, except share and per share data)	(dollars in thousands, except share and per share data)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total			(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
Balance at March 31, 2021																				Balance at March 31, 2021		$	103,623		$	401,353		$	731,718		$	1,061		$	(69,477)		$	1,168,278
Net income for the three months ended June 30, 2021																				Net income for the three months ended June 30, 2021		—			—			28,367			—			—			28,367
Other comprehensive income, net of tax																				Other comprehensive income, net of tax		—			—			—			2,544			—			2,544

Cash dividends declared ($0.28 per share)																				Cash dividends declared ($0.28 per share)		—			—			(10,989)			—			—			(10,989)
Treasury stock issued for restricted stock awards (98,519 shares)																				Treasury stock issued for restricted stock awards (98,519 shares)		—			—			(3,139)			—			3,139			—
Forfeitures of restricted stock awards (21,157 shares)																				Forfeitures of restricted stock awards (21,157 shares)		—			—			515			—			(682)			(167)

Recognition of restricted stock compensation expense																				Recognition of restricted stock compensation expense		—			700			—			—			—			700
Balance at June 30, 2021																				Balance at June 30, 2021		$	103,623		$	402,053		$	746,472		$	3,605		$	(67,020)		$	1,188,733
See Notes to Consolidated Financial Statements																				See Notes to Consolidated Financial Statements

																					Three months ended June 30, 2022
(dollars in thousands, except share and per share data)																				(dollars in thousands, except share and per share data)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance at March 31, 2022																				Balance at March 31, 2022		$	103,623		$	403,841		$	791,345		$	(47,043)		$	(66,816)		$	1,184,950
Net income for the three months ended June 30, 2022																				Net income for the three months ended June 30, 2022		—			—			28,858			—			—			28,858
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax		—			—			—			(7,910)			—			(7,910)		Other comprehensive loss, net of tax		—			—			—			(20,128)			—			(20,128)

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)			—			—			730			—			(865)			(135)
Cash dividends declared ($0.30 per share)																				Cash dividends declared ($0.30 per share)		—			—			(11,791)			—			—			(11,791)

Forfeitures of restricted stock awards (51,469 shares)																				Forfeitures of restricted stock awards (51,469 shares)		—			—			1,232			—			(1,610)			(378)

Repurchase of S&T Stock (151,220 shares)																				Repurchase of S&T Stock (151,220 shares)		—			—			—			—			(4,153)			(4,153)
Recognition of restricted stock compensation expense	Recognition of restricted stock compensation expense		—			685			—			—			—			685		Recognition of restricted stock compensation expense		—			1,000			—			—			—			1,000
Balance at March 31, 2021			$	103,623		$	401,353		$	731,718		$	1,061		$	(69,477)		$	1,168,278
Balance at June 30, 2022																				Balance at June 30, 2022		$	103,623		$	404,841		$	809,644		$	(67,171)		$	(72,579)		$	1,178,358
See Notes to Consolidated Financial Statements	See Notes to Consolidated Financial Statements																			See Notes to Consolidated Financial Statements
		For the Three Months Ended March 31, 2022
(dollars in thousands, except share and per share data)		Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance at January 1, 2022			$	103,623		$	403,095		$	773,659		$	(7,090)		$	(66,833)		$	1,206,454
Net income for the three months ended March 31, 2022			—			—			29,143			—			—			29,143
Other comprehensive loss, net of tax			—			—			—			(39,953)			—			(39,953)

Cash dividends declared ($0.29 per share)			—			—			(11,384)			—			—			(11,384)
Treasury stock issued for restricted stock awards (4,250 shares, net of forfeitures of 3,756 shares)			—			—			(73)			—			17			(56)

Recognition of restricted stock compensation expense			—			746			—			—			—			746
Balance at March 31, 2022			$	103,623		$	403,841		$	791,345		$	(47,043)		$	(66,816)		$	1,184,950
See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)


	Six months ended June 30, 2021
(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, 2021		$	103,623		$	400,668		$	710,061		$	8,971		$	(68,612)		$	1,154,711
Net income for the six months ended June 30, 2021		—			—			60,268			—			—			60,268
Other comprehensive loss, net of tax		—			—			—			(5,366)			—			(5,366)
Cash dividends declared ($0.56 per share)		—			—			(21,963)			—			—			(21,963)
Treasury stock issued for restricted stock awards (99,711 shares)		—			—			(3,177)			—			3,177			—
Forfeitures of restricted stock awards (51,999 shares)		—			—			1,283			—			(1,585)			(302)


Recognition of restricted stock compensation expense		—			1,385			—			—			—			1,385
Balance at June 30, 2021		$	103,623		$	402,053		$	746,472		$	3,605		$	(67,020)		$	1,188,733
See Notes to Consolidated Financial Statements

	Six months ended June 30, 2022
(dollars in thousands, except share and per share data)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance at January 1, 2022		$	103,623		$	403,095		$	773,659		$	(7,090)		$	(66,833)		$	1,206,454
Net income for the six months ended June 30, 2022		—			—			58,001			—			—			58,001
Other comprehensive loss, net of tax		—			—			—			(60,081)			—			(60,081)

Cash dividends declared ($0.59 per share)		—			—			(23,175)			—			—			(23,175)
Treasury stock issued for restricted stock awards (4,250 shares)		—			—			(135)			—			135			—
Forfeitures of restricted stock awards (55,225 shares)		—			—			1,294			—			(1,728)			(434)

Repurchase of S&T Stock (151,220 shares)		—			—			—			—			(4,153)			(4,153)
Recognition of restricted stock compensation expense		—			1,746			—			—			—			1,746
Balance at June 30, 2022		$	103,623		$	404,841		$	809,644		$	(67,171)		$	(72,579)		$	1,178,358

See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Three Months Ended March 31,						Six months ended June 30,
(dollars in thousands)	(dollars in thousands)		2022		2021		(dollars in thousands)		2022		2021
OPERATING ACTIVITIES	OPERATING ACTIVITIES						OPERATING ACTIVITIES

Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities		$	86,596	$	90,000	Net Cash Provided by Operating Activities		$	153,301	$	128,043
INVESTING ACTIVITIES	INVESTING ACTIVITIES						INVESTING ACTIVITIES
Purchases of securities	Purchases of securities		(211,265)		(89,038)		Purchases of securities		(311,969)		(153,587)
Proceeds from maturities, prepayments and calls of securities	Proceeds from maturities, prepayments and calls of securities		44,025		34,715		Proceeds from maturities, prepayments and calls of securities		79,759		72,951
Proceeds from redemption of FHLB stock			5,818		3,988
Purchases of FHLB stock			(5,648)		(3,157)
Net decrease in loans			38,449		33,937
Proceeds from sales of securities							Proceeds from sales of securities		—		1,917
Proceeds from redemption of Federal Home Loan Bank stock							Proceeds from redemption of Federal Home Loan Bank stock		11,465		13,137
Purchases of Federal Home Loan Bank stock							Purchases of Federal Home Loan Bank stock		(9,895)		(10,213)
Net (increase) decrease in loans							Net (increase) decrease in loans		(45,440)		201,545
Proceeds from sale of portfolio loans	Proceeds from sale of portfolio loans		—		640		Proceeds from sale of portfolio loans		4,326		3,438
Proceeds from sale of other real estate owned			6,285		145

Purchases of premises and equipment	Purchases of premises and equipment		(660)		(811)		Purchases of premises and equipment		(1,556)		(1,926)
Proceeds from the sale of premises and equipment	Proceeds from the sale of premises and equipment		56		74		Proceeds from the sale of premises and equipment		131		74

Net Cash Used in Investing Activities			(122,940)		(19,507)
Net Cash (Used in) Provided by Investing Activities							Net Cash (Used in) Provided by Investing Activities		(273,179)		127,336
FINANCING ACTIVITIES	FINANCING ACTIVITIES						FINANCING ACTIVITIES
Net increase in core deposits			13,419		522,528
Net (decrease) increase in core deposits							Net (decrease) increase in core deposits		(277,322)		712,568
Net decrease in certificates of deposit	Net decrease in certificates of deposit		(49,465)		(67,003)		Net decrease in certificates of deposit		(106,915)		(117,782)
Net (decrease) increase in securities sold under repurchase agreements	Net (decrease) increase in securities sold under repurchase agreements		(14,379)		2,254		Net (decrease) increase in securities sold under repurchase agreements		(45,232)		3,424
Net decrease in short-term borrowings	Net decrease in short-term borrowings		—		(75,000)		Net decrease in short-term borrowings		—		(75,000)

Repayments on long-term borrowings	Repayments on long-term borrowings		(259)		(399)		Repayments on long-term borrowings		(442)		(712)

Treasury shares issued-net			(56)		(135)
Repurchase of shares for taxes on restricted stock							Repurchase of shares for taxes on restricted stock		(434)		(302)

Cash dividends paid to common shareholders	Cash dividends paid to common shareholders		(11,374)		(10,975)		Cash dividends paid to common shareholders		(23,145)		(21,963)

Repurchase of common stock							Repurchase of common stock		(4,153)		—

Net Cash (Used in) Provided by Financing Activities	Net Cash (Used in) Provided by Financing Activities		(62,114)		371,270		Net Cash (Used in) Provided by Financing Activities		(457,643)		500,233
Net (decrease) increase in cash and cash equivalents	Net (decrease) increase in cash and cash equivalents		(98,458)		441,763		Net (decrease) increase in cash and cash equivalents		(577,521)		755,612
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period		922,215		229,666		Cash and cash equivalents at beginning of period		922,215		229,666
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period		$	823,757	$	671,429	Cash and Cash Equivalents at End of Period		$	344,694	$	985,278

Supplemental Disclosures	Supplemental Disclosures						Supplemental Disclosures
Loans transferred to held for sale	Loans transferred to held for sale		$	—	$	2,798	Loans transferred to held for sale		$	—	$	2,798

Cash paid for interest	Cash paid for interest		$	2,507	$	5,368	Cash paid for interest		$	5,028	$	9,114
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds		$	75	$	197	Cash paid for income taxes, net of refunds		$	12,225	$	12,097

Transfers of loans to other real estate owned	Transfers of loans to other real estate owned		$	—	$	77	Transfers of loans to other real estate owned		$	18	$	90

See Notes to Consolidated Financial Statements

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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, 2021, filed with the Securities and Exchange Commission, or SEC, on February 28, ~~2022.~~2022 (2021 Form 10-K). 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.

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.

Accounting Policy for Derivative Instruments and Hedging Activities

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, we entered into 4 interest rate swaps designated as cash flow hedges to hedge the variable cash flows associated with existing variable rate assets. We have updated our accounting policy for derivative instruments and hedging activities to include hedge accounting.

All derivatives are evaluated at inception to determine whether it is a hedging or non-hedging activity. The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. As long as the cash flow hedge continues to qualify for hedge accounting, the entire change in the fair value of the hedging instrument is recorded in Accumulated Other Comprehensive Income (Loss), or AOCI, and recognized in earnings as the hedged transaction affects earnings.

Refer to our ~~Annual Report on~~2021 Form 10-K for ~~the year ended December 31, 2021, as filed with the SEC on February 28, 2022, for~~a discussion of our complete Accounting Policy for Derivative Instruments and Hedging Activities.

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 1. BASIS OF PRESENTATION - continued

Recently Adopted Accounting Standards Updates, or ASU or Updated

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

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. 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. In January 2021, the FASB issued ASU 2021-01, Reference Rate Addendum (Topic 848) which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. We adopted ASU 2020-04 and ASU 2021-01 on January 1, 2022. We are utilizing the LIBOR transition relief as contract modifications are made during the course of the reference rate reform transition period. ASU 2020-04 and ASU 2021-01 did not have a material impact on our consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

~~Accounting Policy for~~Financial Instruments Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage ~~Disclosure~~Disclosures

In March 2022, the FASB issued ASU 2022-02, Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures. The guidance eliminates the “once a TDR, always a TDR” requirement for loan disclosures and requires disclosures about the performance of modified loans to borrowers experiencing financial difficulty in the 12 months following the modification.

The amendments eliminate the recognition and measurement guidance related to TDRs for creditors that have adopted ASC 326 Financial Instruments - Credit Losses. We adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, on January 1, 2020. Once applying ASC 326, the required accounting and disclosures for a loan modified in a TDR no longer provide decision-useful information. ASC 326 requires the recognition of lifetime expected credit losses when a loan is originated or acquired, so the effect of credit losses that occur in loans modified in TDRs is already included in the allowance for credit losses.

ASU 2022-02 requires a creditor to apply the loan refinancing and restructuring guidance in ASC 310-205 (consistent with the accounting for other loan modifications) to determine whether a modification results in a new loan or a continuation of an existing loan. It also requires enhanced disclosures for modifications in the form of interest rate reductions, principal forgiveness, other-than-insignificant payment delays, or term extensions (or combinations thereof) of loans made to borrowers experiencing financial difficulty. Disclosures are required regardless of whether a modification of a loan to a borrower experiencing financial difficulty results in a new loan. The objective of the disclosures is to provide information about the type and magnitude of modifications and the degree of their success in mitigating potential credit losses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods therein. Early adoption is permitted, however, we have not elected to do so. We are currently evaluating the impact of this ASU which will require new disclosures, but we do not expect it to have a material impact on our consolidated financial statements.

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 2. EARNINGS PER SHARE

Diluted earnings per share is calculated using both the two-class and the treasury stock methods with the more dilutive method used to determine diluted earnings per share. The two-class method was used to determine earnings per share for the three and six months ended ~~March 31,~~June 30, 2022 and 2021. The following table reconciles the numerators and denominators of basic and diluted earnings per share calculations for the periods presented:


		Three Months Ended March 31,						Three months ended June 30,						Six months ended June 30,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2022			2021				(in thousands, except share and per share data)	2022		2021			2022		2021
Numerator for Earnings per Share—Basic and Diluted:	Numerator for Earnings per Share—Basic and Diluted:										Numerator for Earnings per Share—Basic and Diluted:
Net income	Net income		$	29,143		$	31,902				Net income	$	28,858		$	28,367	$	58,001	$	60,268
Less: Income allocated to participating shares	Less: Income allocated to participating shares		109			141					Less: Income allocated to participating shares	74			141		185		283
Net Income Allocated to Shareholders	Net Income Allocated to Shareholders		$	29,034		$	31,761				Net Income Allocated to Shareholders	$	28,784		$	28,226	$	57,816	$	59,985
Denominator for Earnings per Share - Basic and Diluted:	Denominator for Earnings per Share - Basic and Diluted:										Denominator for Earnings per Share - Basic and Diluted:
Weighted Average Shares Outstanding—Basic	Weighted Average Shares Outstanding—Basic		39,073,754			39,021,208					Weighted Average Shares Outstanding—Basic	39,083,429			39,048,971		39,077,305		39,039,007
Add: Average participating shares outstanding	Add: Average participating shares outstanding		16,179			—					Add: Average participating shares outstanding	16,202			—		18,411		—
Denominator for Two-Class Method—Diluted	Denominator for Two-Class Method—Diluted		39,089,933			39,021,208					Denominator for Two-Class Method—Diluted	39,099,631			39,048,971		39,095,716		39,039,007

Earnings per share—basic	Earnings per share—basic		$	0.74		$	0.81				Earnings per share—basic	$	0.74		$	0.73	$	1.48	$	1.54
Earnings per share—diluted	Earnings per share—diluted		$	0.74		$	0.81				Earnings per share—diluted	$	0.74		$	0.72	$	1.48	$	1.54

Restricted stock considered anti-dilutive excluded from potentially dilutive shares	Restricted stock considered anti-dilutive excluded from potentially dilutive shares		—			165					Restricted stock considered anti-dilutive excluded from potentially dilutive shares	1,500			25		94		424

NOTE 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, 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.~~

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 3. FAIR VALUE MEASUREMENTS - continued

There have been no changes in our valuation methodologies during the three and six months ended ~~March 31,~~June 30, 2022. Refer to Note 1 of the Notes to Consolidated Financial Statements in our ~~Annual Report on~~2021 Form 10-K ~~for the year ended December 31, 2021~~ for more information on the valuation methodologies that we use for financial instruments recorded at fair value on a recurring or nonrecurring basis.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following tables present our assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level at the dates presented:


		March 31, 2022									June 30, 2022
(dollars in thousands)	(dollars in thousands)	Level 1		Level 2		Level 3		Total		(dollars in thousands)	Level 1		Level 2		Level 3		Total
ASSETS	ASSETS									ASSETS
Available-for-sale debt securities:	Available-for-sale debt securities:									Available-for-sale debt securities:
U.S. Treasury securities	U.S. Treasury securities	$	129,994	$	—	$	—	$	129,994	U.S. Treasury securities	$	136,282	$	—	$	—	$	136,282
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	—		58,493		—		58,493		Obligations of U.S. government corporations and agencies	—		52,815		—		52,815
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	—		385,602		—		385,602		Collateralized mortgage obligations of U.S. government corporations and agencies	—		427,635		—		427,635
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	—		50,446		—		50,446		Residential mortgage-backed securities of U.S. government corporations and agencies	—		46,416		—		46,416
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	—		330,811		—		330,811		Commercial mortgage-backed securities of U.S. government corporations and agencies	—		333,994		—		333,994
Corporate obligations	Corporate obligations	—		500		—		500		Corporate obligations	—		500		—		500
Obligations of states and political subdivisions	Obligations of states and political subdivisions	—		71,234		—		71,234		Obligations of states and political subdivisions	—		69,850		—		69,850
Total Available-for-sale Debt Securities	Total Available-for-sale Debt Securities	129,994		897,086		—		1,027,080		Total Available-for-sale Debt Securities	136,282		931,210		—		1,067,492
Marketable equity securities	Marketable equity securities	1,060		78		—		1,138		Marketable equity securities	1,015		69		—		1,084
Total Securities	Total Securities	131,054		897,164		—		1,028,218		Total Securities	137,297		931,279		—		1,068,576
Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	8,888		—		—		8,888		Securities held in a deferred compensation plan	7,678		—		—		7,678
Derivative financial assets:	Derivative financial assets:									Derivative financial assets:
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	—		29,056		—		29,056		Interest rate swaps - commercial loans	—		51,097		—		51,097
Interest rate lock commitments	Interest rate lock commitments	—		—		185		185		Interest rate lock commitments	—		—		56		56
Forward sale contracts - mortgage loans		—		—		192		192

Interest rate swaps - cash flow hedge	Interest rate swaps - cash flow hedge	—		135		—		135		Interest rate swaps - cash flow hedge	—		368		—		368
Total Assets	Total Assets	$	139,942	$	926,355	$	377	$	1,066,674	Total Assets	$	144,975	$	982,744	$	56	$	1,127,775
LIABILITIES	LIABILITIES									LIABILITIES
Derivative financial liabilities:	Derivative financial liabilities:									Derivative financial liabilities:
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	$	—	$	29,092	$	—	$	29,092	Interest rate swaps - commercial loans	$	—	$	51,193	$	—	$	51,193

Forward sale contracts - mortgage loans										Forward sale contracts - mortgage loans	—		—		2		2
Interest rate swaps - cash flow hedge	Interest rate swaps - cash flow hedge	—		2,600		—		2,600		Interest rate swaps - cash flow hedge	—		5,946		—		5,946
Total Liabilities	Total Liabilities	$	—	$	31,692	$	—	$	31,692	Total Liabilities	$	—	$	57,139	$	2	$	57,141

910

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 3. FAIR VALUE MEASUREMENTS - continued


	December 31, 2021
(dollars in thousands)	Level 1		Level 2		Level 3		Total
ASSETS
Available-for-sale debt securities:
U.S. Treasury securities	$	95,327	$	—	$	—	$	95,327
Obligations of U.S. government corporations and agencies	—		70,348		—		70,348
Collateralized mortgage obligations of U.S. government corporations and agencies	—		270,294		—		270,294
Residential mortgage-backed securities of U.S. government corporations and agencies	—		56,793		—		56,793
Commercial mortgage-backed securities of U.S. government corporations and agencies	—		341,300		—		341,300
Corporate obligations	—		500		—		500
Obligations of states and political subdivisions	—		75,089		—		75,089
Total Available-for-sale Debt Securities	95,327		814,324		—		909,651
Marketable equity securities	1,061		81		—		1,142
Total Securities	96,388		814,405		—		910,793
Securities held in a deferred compensation plan	10,230		—		—		10,230
Derivative financial assets:
Interest rate swaps - commercial loans	—		33,528		—		33,528
Interest rate lock commitments	—		—		401		401
Forward sale contracts - mortgage loans	—		—		4		4

Interest rate swaps - cash flow hedge	—		—		—		—
Total Assets	$	106,618	$	847,933	$	405	$	954,956
LIABILITIES
Derivative financial liabilities:
Interest rate swaps - commercial loans	$	—	$	33,631	$	—	$	33,631



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

Assets Recorded at Fair Value on a Nonrecurring Basis

We may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. Nonrecurring assets are recorded at the lower of cost or fair value in our consolidated financial statements. There were no liabilities measured at fair value on a nonrecurring basis at either ~~March 31,~~June 30, 2022 or December 31, 2021.

~~For~~ Level 3 assets measured at fair value on a nonrecurring basis ~~as of March 31, 2022~~ and ~~December 31, 2021,~~ the significant unobservable inputs used in the fair value measurements as of June 30, 2022 and December 31, 2021 were as follows:

March 31, 2022

Valuation Technique

Significant Unobservable Inputs

Range

Weighted Average

(1)

June 30, 2022

Valuation Technique

Significant Unobservable Inputs

Range

Weighted Average

(1)

(dollars in thousands)

Loans individually evaluated

5,919

Collateral method

Appraisal adjustment

10.00%

0.96%

Loans individually evaluated

Collateral method

Appraisal adjustment

10%

10.00%

Total Assets

5,919

Total Assets

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


	December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Range			Weighted Average (1) (2)
(dollars in thousands)
Loans individually evaluated	$	7,268	Collateral method	Appraisal adjustment	0%	-	20%	4.48%
Other real estate owned	1,011		Collateral method	Appraisal adjustment	2.53%			2.53%



Total Assets	$	8,279
(1) Weighted averages for loans individually evaluated were weighted by loan amounts. (2) Weighted averages for other real estate owned were weighted by OREO balances.

1011

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 3. FAIR VALUE MEASUREMENTS - continued

The following tables present the carrying values and fair values of our financial instruments at the dates presented:


		Carrying Value(1)		Fair Value Measurements at March 31, 2022									Carrying Value(1)		Fair Value Measurements at June 30, 2022
(dollars in thousands)	(dollars in thousands)			Total		Level 1		Level 2		Level 3		(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS	ASSETS											ASSETS
Cash and due from banks, including interest-bearing deposits	Cash and due from banks, including interest-bearing deposits	$	823,757	$	823,757	$	823,757	$	—	$	—	Cash and due from banks, including interest-bearing deposits	$	344,694	$	344,694	$	344,694	$	—	$	—
Securities	Securities	1,028,218		1,028,218		131,054		897,164		—		Securities	1,068,576		1,068,576		137,297		931,279		—
Loans held for sale	Loans held for sale	1,346		1,346		—		—		1,346		Loans held for sale	1,311		1,326		—		—		1,326
Portfolio loans, net	Portfolio loans, net	6,863,996		6,671,212		—		—		6,671,212		Portfolio loans, net	6,942,799		6,784,189		—		—		6,784,189
Collateral receivable		—		—		—		—		—

Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	8,888		8,888		8,888		—		—		Securities held in a deferred compensation plan	7,678		7,678		7,678		—		—
Mortgage servicing rights	Mortgage servicing rights	7,789		9,791		—		—		9,791		Mortgage servicing rights	7,575		9,996		—		—		9,996
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	29,056		29,056		—		29,056		—		Interest rate swaps - commercial loans	51,097		51,097		—		51,097		—
Interest rate swaps - cash flow hedge	Interest rate swaps - cash flow hedge	135		135		—		135		—		Interest rate swaps - cash flow hedge	368		368		—		368		—
Interest rate lock commitments	Interest rate lock commitments	185		185		—		—		185		Interest rate lock commitments	56		56		—		—		56
Forward sale contracts		192		192		—		—		192

LIABILITIES	LIABILITIES											LIABILITIES
Deposits	Deposits	$	7,960,458	$	7,947,434	$	6,921,872	$	1,025,562	$	—	Deposits	$	7,612,247	$	7,591,465	$	6,631,131	$	960,334	$	—
Collateral payable	Collateral payable	23,501		23,501		23,501		—		—		Collateral payable	52,709		52,709		52,709		—		—
Securities sold under repurchase agreements	Securities sold under repurchase agreements	70,112		70,112		70,112		—		—		Securities sold under repurchase agreements	39,259		39,259		39,259		—		—

Short-term borrowings												Short-term borrowings	—		—		—		—		—
Long-term borrowings	Long-term borrowings	22,172		21,954		4,249		17,705		—		Long-term borrowings	21,988		21,634		4,196		17,438		—
Junior subordinated debt securities	Junior subordinated debt securities	54,408		54,408		54,408		—		—		Junior subordinated debt securities	54,423		54,423		54,423		—		—
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	29,092		29,092		—		29,092		—		Interest rate swaps - commercial loans	51,193		51,193		—		51,193		—
Interest rate swaps - cash flow hedge	Interest rate swaps - cash flow hedge	2,600		2,600		—		2,600		—		Interest rate swaps - cash flow hedge	5,946		5,946		—		5,946		—

Forward sale contracts - mortgage loans												Forward sale contracts - mortgage loans	2		2		—		—		2
(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, 2021
(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits	$	922,215	$	922,215	$	922,215	$	—	$	—
Securities	910,793		910,793		96,388		814,405		—
Loans held for sale	1,522		1,522		—		—		1,522
Portfolio loans, net	6,901,414		6,815,468		—		—		6,815,468
Collateral receivable	37,363		37,363		37,363		—		—
Securities held in a deferred compensation plan	10,230		10,230		10,230		—		—
Mortgage servicing rights	7,677		7,677		—		—		7,677
Interest rate swaps	33,528		33,528		—		33,528		—
Interest rate lock commitments	401		401		—		—		401
Forward sale contracts	4		4		—		—		4
LIABILITIES
Deposits	$	7,996,524	$	7,992,942	$	6,908,453	$	1,084,489	$	—

Securities sold under repurchase agreements	84,491		84,491		84,491		—		—
Short-term borrowings	—		—		—		—		—
Long-term borrowings	22,430		22,678		4,300		18,378		—
Junior subordinated debt securities	54,393		54,393		54,393		—		—
Interest rate swaps - commercial loans	33,631		33,631		—		33,631		—

(1) As reported in the Consolidated Balance Sheets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 4. SECURITIES

The following table presents the fair values of our securities portfolio at the dates presented:


(dollars in thousands)	(dollars in thousands)	March 31, 2022			December 31, 2021			(dollars in thousands)	June 30, 2022			December 31, 2021
Available-for-sale debt securities	Available-for-sale debt securities		$	1,027,080		$	909,651	Available-for-sale debt securities		$	1,067,492		$	909,651
Marketable equity securities	Marketable equity securities		1,138			1,142		Marketable equity securities		1,084			1,142
Total Securities	Total Securities		$	1,028,218		$	910,793	Total Securities		$	1,068,576		$	910,793

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:


		March 31, 2022												December 31, 2021													June 30, 2022												December 31, 2021
(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 Gains			Gross Unrealized Losses			Fair Value
U.S. Treasury securities	U.S. Treasury securities		$	136,695		$	41		$	(6,742)		$	129,994		$	95,954		$	115		$	(742)		$	95,327	U.S. Treasury securities		$	145,820		$	155		$	(9,693)		$	136,282		$	95,954		$	115		$	(742)		$	95,327
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies		58,570			179			(256)			58,493			68,599			1,749			—			70,348		Obligations of U.S. government corporations and agencies		53,542			7			(734)			52,815			68,599			1,749			—			70,348
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies		404,626			179			(19,203)			385,602			270,696			2,408			(2,810)			270,294		Collateralized mortgage obligations of U.S. government corporations and agencies		456,889			312			(29,566)			427,635			270,696			2,408			(2,810)			270,294
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies		54,444			52			(4,050)			50,446			57,029			392			(628)			56,793		Residential mortgage-backed securities of U.S. government corporations and agencies		52,289			19			(5,892)			46,416			57,029			392			(628)			56,793
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies		340,886			169			(10,244)			330,811			336,918			5,969			(1,587)			341,300		Commercial mortgage-backed securities of U.S. government corporations and agencies		350,432			263			(16,701)			333,994			336,918			5,969			(1,587)			341,300
Corporate obligations	Corporate obligations		500			—			—			500			500			—			—			500		Corporate obligations		500			—			—			500			500			—			—			500
Obligations of states and political subdivisions	Obligations of states and political subdivisions		70,206			1,028			—			71,234			70,539			4,550			—			75,089		Obligations of states and political subdivisions		69,874			455			(479)			69,850			70,539			4,550			—			75,089
Total Available-for-Sale Debt Securities (1)	Total Available-for-Sale Debt Securities (1)		$	1,065,927		$	1,648		$	(40,495)		$	1,027,080		$	900,235		$	15,183		$	(5,767)		$	909,651	Total Available-for-Sale Debt Securities (1)		$	1,129,346		$	1,211		$	(63,065)		$	1,067,492		$	900,235		$	15,183		$	(5,767)		$	909,651

(1) Excludes interest receivable of ~~$3.5~~$3.7 million at ~~March 31,~~June 30, 2022 and $3.3 million at December 31, 2021. Interest receivable is included in other assets in the Consolidated Balance Sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 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:


		March 31, 2022																June 30, 2022
		Less Than 12 Months					12 Months or More					Total						Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	12	$	119,959	$	(6,742)	—	$	—	$	—	12	$	119,959	$	(6,742)	U.S. Treasury securities	12	$	116,707	$	(9,693)	—	$	—	$	—	12	$	116,707	$	(9,693)
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	2	15,296		(256)		—	—		—		2	15,296		(256)		Obligations of U.S. government corporations and agencies	7	47,817		(734)		—	—		—		7	47,817		(734)
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	39	309,426		(15,367)		4	36,986		(3,836)		43	346,412		(19,203)		Collateralized mortgage obligations of U.S. government corporations and agencies	48	352,393		(24,035)		4	34,282		(5,531)		52	386,675		(29,566)
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	9	8,171		(269)		2	39,357		(3,781)		11	47,528		(4,050)		Residential mortgage-backed securities of U.S. government corporations and agencies	12	9,479		(527)		2	36,366		(5,365)		14	45,845		(5,892)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	29	274,993		(10,244)		—	—		—		29	274,993		(10,244)		Commercial mortgage-backed securities of U.S. government corporations and agencies	36	323,896		(16,701)		—	—		—		36	323,896		(16,701)
Corporate bonds		—	—		—		—	—		—		—	—		—
Corporate obligations																	Corporate obligations	1	500		—		—	—		—		1	500		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—		Obligations of states and political subdivisions	2	20,198		(479)		—	—		—		2	20,198		(479)

Total	Total	91	$	727,845	$	(32,878)	6	$	76,343	$	(7,617)	97	$	804,188	$	(40,495)	Total	118	$	870,990	$	(52,169)	6	$	70,648	$	(10,896)	124	$	941,638	$	(63,065)


		December 31, 2021																December 31, 2021
		Less Than 12 Months					12 Months or More					Total						Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	8	$	85,221	$	(742)	—	$	—	$	—	8	$	85,221	$	(742)	U.S. Treasury securities	8	$	85,221	$	(742)	—	$	—	$	—	8	$	85,221	$	(742)
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	—	—		—		—	—		—		—	—		—		Obligations of U.S. government corporations and agencies	—	—		—		—	—		—		—	—		—
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	12	141,204		(2,436)		1	8,933		(374)		13	150,137		(2,810)		Collateralized mortgage obligations of U.S. government corporations and agencies	12	141,204		(2,436)		1	8,933		(374)		13	150,137		(2,810)
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	3	46,042		(628)		—	—		—		3	46,042		(628)		Residential mortgage-backed securities of U.S. government corporations and agencies	3	46,042		(628)		—	—		—		3	46,042		(628)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	7	100,032		(1,587)		—	—		—		7	100,032		(1,587)		Commercial mortgage-backed securities of U.S. government corporations and agencies	7	100,032		(1,587)		—	—		—		7	100,032		(1,587)
Corporate bonds		—	—		—		—	—		—		—	—		—
Corporate obligations																	Corporate obligations	—	—		—		—	—		—		—	—		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—		Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—

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

We evaluate securities with unrealized losses quarterly to determine if the decline in fair value has resulted from credit losses or other factors. There were 97124 debt securities in an unrealized loss position at ~~March 31,~~June 30, 2022 and 31 debt securities in an unrealized loss position at December 31, 2021. We do not intend to sell and it is more likely than not that we will not be required to sell the securities in an unrealized loss position before recovery of their amortized cost. The unrealized losses on the debt securities were attributable to changes in interest rates and not related to the credit quality of the issuers. All debt securities were determined to be investment grade and paying principal and interest according to the contractual terms of the security.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 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)~~/income,~~, for the periods presented:


		March 31, 2022						December 31, 2021							June 30, 2022						December 31, 2021
(dollars in thousands)	(dollars in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Losses		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains		(dollars in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Losses		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains
Total unrealized gains (losses) on available-for-sale debt securities	Total unrealized gains (losses) on available-for-sale debt securities	$	1,648	$	(40,495)	$	(38,847)	$	15,183	$	(5,767)	$	9,416	Total unrealized gains (losses) on available-for-sale debt securities	$	1,211	$	(63,065)	$	(61,854)	$	15,183	$	(5,767)	$	9,416
Income tax (expense) benefit	Income tax (expense) benefit	(354)		8,698		8,344		(3,215)		1,221		(1,994)		Income tax (expense) benefit	(259)		13,474		13,215		(3,215)		1,221		(1,994)
Net Unrealized (Losses) Gains, Net of Tax Included in Accumulated Other Comprehensive Income (Loss)		$	1,294	$	(31,797)	$	(30,503)	$	11,968	$	(4,546)	$	7,422
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)	$	952	$	(49,591)	$	(48,639)	$	11,968	$	(4,546)	$	7,422

The amortized cost and fair value of available-for-sale debt securities at ~~March 31,~~June 30, 2022 by contractual maturity are included in the table below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


		March 31, 2022					June 30, 2022
(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 subdivisions	Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions					Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions
Due in one year or less	Due in one year or less	$	35,616	$	35,824	Due in one year or less	$	35,648	$	35,760
Due after one year through five years	Due after one year through five years	102,542		101,364		Due after one year through five years	117,273		113,923
Due after five years through ten years	Due after five years through ten years	106,550		101,506		Due after five years through ten years	104,696		97,991
Due after ten years	Due after ten years	20,763		21,027		Due after ten years	11,619		11,273
Available-for-Sale Debt Securities With Fixed Maturities	Available-for-Sale Debt Securities With Fixed Maturities	265,471		259,721		Available-for-Sale Debt Securities With Fixed Maturities	269,236		258,947
Debt Securities without a single maturity date	Debt Securities without a single maturity date					Debt Securities without a single maturity date
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	404,626		385,602		Collateralized mortgage obligations of U.S. government corporations and agencies	456,889		427,635
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	54,444		50,446		Residential mortgage-backed securities of U.S. government corporations and agencies	52,289		46,416
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	340,886		330,811		Commercial mortgage-backed securities of U.S. government corporations and agencies	350,432		333,994
Corporate Securities		500		500
Corporate obligations						Corporate obligations	500		500

Total Available-for-Sale Debt Securities	Total Available-for-Sale Debt Securities	$	1,065,927	$	1,027,080	Total Available-for-Sale Debt Securities	$	1,129,346	$	1,067,492

Debt securities ~~with~~are pledged in order to meet various regulatory and legal requirements. Restricted pledged securities had a carrying ~~values~~value of ~~$441.8~~$19.4 million at ~~March 31,~~June 30, 2022 and ~~$466.9~~$23.9 million at December 31, ~~2021 were~~2021. Unrestricted pledged ~~for various regulatory~~securities had a carrying value of $321.2 million at June 30, 2022 and ~~legal requirements.~~$443.0 million at December 31, 2021.

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 March 31,				Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	(dollars in thousands)	2022		2021			(dollars in thousands)	2022		2021		2022		2021
Marketable Equity Securities	Marketable Equity Securities						Marketable Equity Securities
Net market (losses) gains recognized		$	(5)	$	116
Net market gains (losses) recognized							Net market gains (losses) recognized	$	(53)	$	28	$	(58)	$	143
Less: Net gains recognized for equity securities sold	Less: Net gains recognized for equity securities sold	—		—			Less: Net gains recognized for equity securities sold	—		3		—		29
Unrealized (Losses) Gains on Equity Securities Still Held		$	(5)	$	116
Unrealized Gains (Losses) on Equity Securities Still Held							Unrealized Gains (Losses) on Equity Securities Still Held	$	(53)	$	25	$	(58)	$	114

Total unrealized gains and losses on marketable equity securities recognized during the current period are included in other noninterest income on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE

Loans are presented net of unearned income of ~~$10.1~~$8.5 million at ~~March 31,~~June 30, 2022 and $14.1 million at December 31, 2021 and net of a discount related to purchase accounting fair value adjustments of ~~$5.7~~$5.3 million at ~~March 31,~~June 30, 2022 and $6.7 million at December 31, 2021. The following table ~~presents~~summarizes the composition of originated and acquired loans as of the dates presented:


(dollars in thousands)	(dollars in thousands)	March 31, 2022		December 31, 2021		(dollars in thousands)	June 30, 2022		December 31, 2021
Commercial	Commercial					Commercial
Commercial real estate	Commercial real estate	$	3,257,955	$	3,236,653	Commercial real estate	$	3,191,670	$	3,236,653
Commercial and industrial	Commercial and industrial	1,675,316		1,728,969		Commercial and industrial	1,695,031		1,728,969
Commercial construction	Commercial construction	398,592		440,962		Commercial construction	410,425		440,962
Total Commercial Loans	Total Commercial Loans	5,331,863		5,406,584		Total Commercial Loans	5,297,126		5,406,584
Consumer	Consumer					Consumer
Consumer real estate	Consumer real estate	1,519,751		1,485,478		Consumer real estate	1,623,830		1,485,478
Other consumer	Other consumer	112,297		107,928		Other consumer	119,938		107,928
Total Consumer Loans	Total Consumer Loans	1,632,048		1,593,406		Total Consumer Loans	1,743,768		1,593,406
Total Portfolio Loans	Total Portfolio Loans	6,963,911		6,999,990		Total Portfolio Loans	7,040,894		6,999,990
Loans held for sale	Loans held for sale	1,346		1,522		Loans held for sale	1,311		1,522
Total Loans (1)	Total Loans (1)	$	6,965,257	$	7,001,512	Total Loans (1)	$	7,042,205	$	7,001,512

(1) Excludes interest receivable of $19.9 million at June 30, 2022 compared to $18.7 million at ~~both March 31, 2022 and~~ December 31, 2021. Interest receivable is included in other assets in the Consolidated Balance Sheets.

Commercial and industrial loans, or C&I, included ~~$41.9~~$11.7 million of loans originated under the Paycheck Protection Program, or PPP, at ~~March 31,~~June 30, 2022 compared to $88.3 million at December 31, 2021. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES Act was signed into law. 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.

Our business banking segment was $1.2 billion at June 30, 2022 compared to $1.1 billion at ~~March 31, 2022 and~~ December 31, 2021. Business banking consists of 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. Business banking consisted of ~~$552.2~~$565.7 million of commercial real estate loans, ~~$216.7~~$217.9 million of C&I loans of which ~~$20.6~~$11.7 million are PPP loans, ~~$15.4~~$15.1 million of commercial construction loans and ~~$357.0~~$364.6 million of loans secured by consumer real estate ~~loans~~ at ~~March 31,~~June 30, 2022. At December 31, 2021 business banking consisted of $546.1 million of commercial real estate loans, $215.4 million of C&I loans of which $39.7 million are PPP loans, $16.2 million of commercial construction loans and $357.9 million of loans secured by consumer real ~~estate loans.~~estate.

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 to determine if additional ACL is needed. Total commercial loans represented ~~76.6~~75.2 percent of total portfolio loans at ~~March 31,~~June 30, 2022 compared to 77.2 percent at December 31, 2021. Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised ~~$3.7~~$3.6 billion, or ~~68.6~~68.0 percent, of total commercial loans and ~~52.5~~51.2 percent of total portfolio loans at ~~March 31,~~June 30, 2022 and $3.7 billion, or 68.0 percent, of total commercial loans and 52.5 percent of total portfolio loans at December 31, 2021.

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 ~~6.1~~6.4 percent of the combined portfolios and ~~3.2~~3.3 percent of total portfolio loans at ~~March 31,~~June 30, 2022. This compares to 5.7 percent of the combined portfolios and 3.0 percent of total portfolio loans at December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued

We ~~individually~~ evaluate all substandard commercial, consumer and ~~nonaccrual commercial~~residential mortgage 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.

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 TDRs as of the dates presented:


		March 31, 2022						December 31, 2021							June 30, 2022						December 31, 2021
(dollars in thousands)	(dollars in thousands)	Performing TDRs		Nonperforming TDRs		Total TDRs		Performing TDRs		Nonperforming TDRs		Total TDRs		(dollars in thousands)	Accruing TDRs		Nonaccruing TDRs		Total TDRs		Accruing TDRs		Nonaccruing TDRs		Total TDRs
Commercial real estate	Commercial real estate	$	—	$	969	$	969	$	—	$	1,697	$	1,697	Commercial real estate	$	—	$	16	$	16	$	—	$	1,697	$	1,697
Commercial and industrial	Commercial and industrial	721		10,225		10,946		748		14,889		15,637		Commercial and industrial	690		—		690		748		14,889		15,637
Commercial construction	Commercial construction	2,167		480		2,647		2,190		2,087		4,277		Commercial construction	1,694		480		2,174		2,190		2,087		4,277
Business banking	Business banking	987		1,586		2,573		858		1,696		2,554		Business banking	680		1,325		2,005		858		1,696		2,554
Consumer real estate	Consumer real estate	6,861		2,129		8,990		6,122		1,405		7,527		Consumer real estate	6,269		2,189		8,458		6,122		1,405		7,527
Other consumer	Other consumer	3		—		3		3		—		3		Other consumer	5		—		5		3		—		3
Total	Total	$	10,739	$	15,389	$	26,128	$	9,921	$	21,774	$	31,695	Total	$	9,338	$	4,010	$	13,348	$	9,921	$	21,774	$	31,695

~~There~~During the three months ended June 30, 2022, there were no ~~TDR's~~TDRs that returned to accruing status compared to 4 TDRs totaling $0.5 million during the three months ended ~~March 31,~~June 30, 2021. During the six months ended June 30, 2022, ~~and March 31,~~there were no TDRs that returned to accruing status compared to 5 TDRs totaling $0.5 million during the six months ended June 30, 2021.

The following tables present the TDRs by portfolio segment and by type of concession for the periods presented:


		Three Months Ended March 31, 2022																Three Months Ended June 30, 2022
		Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)			Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)
(dollars in thousands)	(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments						(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments
Commercial real estate	Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial industrial	Commercial industrial	—	—		—		—		—		—		—		—		Commercial industrial	—	—		—		—		—		—		—		—
Commercial construction	Commercial construction	—	—		—		—		—		—		—		—		Commercial construction	—	—		—		—		—		—		—		—
Business banking	Business banking	—	—		—		—		—		—		—		—		Business banking	—	—		—		—		—		—		—		—
Consumer real estate	Consumer real estate	7	766		—		1,112		—		—		1,878		1,928		Consumer real estate	8	286		—		139		—		—		425		429
Other consumer	Other consumer	—	—		—		—		—		—		—		—		Other consumer	1	2		—		—		—		—		2		3
Total	Total	7	$	766	$	—	$	1,112	$	—	$	—	$	1,878	$	1,928	Total	9	$	288	$	—	$	139	$	—	$	—	$	427	$	432
(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) 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) 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued


		Three Months Ended March 31, 2021																Three Months Ended June 30, 2021
		Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)			Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)
(dollars in thousands)	(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments						(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments
Commercial real estate	Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial industrial	Commercial industrial	2	—		—		821		—		5,475		6,296		6,304		Commercial industrial	—	—		—		—		—		—		—		—
Commercial construction	Commercial construction	—	—		—		—		—		—		—		—		Commercial construction	—	—		—		—		—		—		—		—
Business banking	Business banking	—	—		—		—		—		—		—		—		Business banking	4	—		—		1,130		—		—		1,130		1,130
Consumer real estate	Consumer real estate	11	340		80		—		—		148		568		609		Consumer real estate	4	247		—		—		—		—		247		254
Other consumer	Other consumer	1	1		—		—		—		—		1		1		Other consumer	—	—		—		—		—		—		—		—
Total	Total	14	$	341	$	80	$	821	$	—	$	5,623	$	6,865	$	6,914	Total	8	$	247	$	—	$	1,130	$	—	$	—	$	1,377	$	1,384
(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) 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) 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.


	Six Months Ended June 30, 2022
	Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)
(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments
Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial industrial	—	—		—		—		—		—		—		—
Commercial construction	—	—		—		—		—		—		—		—
Business banking	—	—		—		—		—		—		—		—
Consumer real estate	15	1,043		—		884		—		—		1,927		2,357
Other consumer	1	3		—		—		—		—		3		3
Total	16	$	1,046	$	—	$	884	$	—	$	—	$	1,930	$	2,360
(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.


	Six Months Ended June 30, 2021
	Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)
(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments
Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial industrial	2	—		—		796		5,433		—		6,229		6,304
Commercial construction	—	—		—		—		—		—		—		—
Business banking	5	—		80		1,130		—		—		1,210		1,210
Consumer real estate	13	573		—		—		—		147		720		739
Other consumer	1	—		—		—		—		—		—		1
Total	21	$	573	$	80	$	1,926	$	5,433	$	147	$	8,159	$	8,254
(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.

As of ~~March 31,~~June 30, 2022, we had 1213 commitments to lend an additional ~~$0.8~~$0.3 million on TDRs compared to 2014 commitments to lend an additional ~~$0.8~~$0.7 million as of ~~March 31,~~June 30, 2021. Defaulted TDRs are defined as loans having a payment default of 90 days or more after the restructuring takes ~~place.~~place that were restructured within the last 12 months prior to defaulting. There were no TDRs that defaulted during the three months ended ~~March 31,~~June 30,2022 and 1 TDR for $0.1 million that defaulted during the six months ended June 30, 2022 and ~~March 31,~~no TDRs that defaulted during the three and six months ended June 30, 2021.

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

Nonperforming Assets
(dollars in thousands) March 31, 2022 December 31, 2021
Nonperforming Assets
Nonaccrual loans $ 37,135 $ 44,517
Nonaccrual TDRs 15,389 21,774
Total Nonaccrual Loans 52,524 66,291
OREO 7,028 13,313
Total Nonperforming Assets $ 59,552 $ 79,604

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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 Assets
(dollars in thousands)	June 30, 2022			December 31, 2021
Nonperforming Assets
Nonaccrual loans		$	27,765		$	44,517
Nonaccrual TDRs		4,010			21,774
Total Nonaccrual Loans		31,775			66,291
OREO		7,046			13,313
Total Nonperforming Assets		$	38,821		$	79,604

NOTE 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) Commercial Real Estate, or CRE, 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 construction/development period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

Business Banking—Commercial purpose loans made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards that meet small business market customers’ needs. The business banking portfolio is monitored by utilizing a standard and closely managed process focusing on behavioral and performance criteria. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and business.

Consumer Real Estate—Loans secured by first and second liens such as 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 and unsecured loans and lines ~~and credits cards.~~of credit. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

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.

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.

~~Table of Contents~~

~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued~~

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.

~~Table of Contents~~

~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued~~

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

March 31, 2022
Risk Rating
(dollars in thousands) 2022 2021 2020 2019 2018 2017 and Prior Revolving Revolving-Term Total
Commercial real estate
Pass $ 92,158 $ 367,329 $ 333,477 $ 423,653 $ 308,371 $ 878,459 $ 34,981 $ — $ 2,438,428
Special mention — — 304 25,293 2,634 100,061 — — 128,292
Substandard — — 1,343 13,865 17,707 104,659 1,500 — 139,074
Doubtful — — — — — 5 — — 5
Total commercial real estate 92,158 367,329 335,124 462,811 328,712 1,083,184 36,481 — 2,705,799
Commercial and industrial
Pass 42,350 369,064 106,684 94,211 75,757 157,096 569,064 — 1,414,226
Special mention — 44 816 4,012 2,366 1,137 9,862 — 18,237
Substandard — — — 10,654 1,288 4,072 5,523 — 21,537
Doubtful — — — 4,506 — — — — 4,506
Total commercial and industrial 42,350 369,108 107,500 113,383 79,411 162,305 584,449 — 1,458,506
Commercial construction
Pass 24,551 161,638 70,185 73,539 4,984 4,281 31,026 — 370,204
Special mention — — — 3,578 — 4,423 — — 8,001
Substandard — — 2,157 480 4 2,391 — — 5,032
Doubtful — — — — — — — — —
Total commercial construction 24,551 161,638 72,342 77,597 4,988 11,095 31,026 — 383,237
Business banking
Pass 66,205 255,051 104,999 129,574 100,316 336,209 109,505 505 1,102,364
Special mention — 98 193 2,926 2,853 5,959 161 110 12,300
Substandard — 2 103 2,648 3,150 19,129 927 613 26,572
Doubtful — — — — — — — — —
Total business banking 66,205 255,151 105,295 135,148 106,319 361,297 110,593 1,228 1,141,236
Consumer real estate
Pass 56,244 141,404 96,932 84,920 35,181 223,298 482,845 23,510 1,144,334
Special mention — — — — — 923 — — 923
Substandard 40 82 139 286 1,735 11,402 1,004 2,912 17,600
Doubtful — — — — — — — — —
Total consumer real estate 56,284 141,486 97,071 85,206 36,916 235,623 483,849 26,422 1,162,857
Other consumer
Pass 6,035 15,522 8,176 5,931 2,448 1,349 71,494 1,273 112,228
Special mention — — — — — — — — —
Substandard — — — 17 4 2 — 25 48
Doubtful — — — — — — — — —
Total other consumer 6,035 15,522 8,176 5,948 2,452 1,351 71,494 1,298 112,276
Pass 287,543 1,310,008 720,453 811,828 527,057 1,600,692 1,298,915 25,288 6,581,784
Special mention — 142 1,313 35,809 7,853 112,503 10,023 110 167,753
Substandard 40 84 3,742 27,950 23,888 141,655 8,954 3,550 209,863
Doubtful — — — 4,506 — 5 — — 4,511
Total $ 287,583 $ 1,310,234 $ 725,508 $ 880,093 $ 558,798 $ 1,854,855 $ 1,317,892 $ 28,948 $ 6,963,911

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

December 31, 2021
Risk Rating
(dollars in thousands) 2021 2020 2019 2018 2017 2016 and Prior Revolving Revolving-Term Total
Commercial real estate
Pass $ 385,347 $ 316,003 $ 412,191 $ 314,303 $ 213,019 $ 698,992 $ 35,448 $ — $ 2,375,303
Special mention — — 37,786 6,401 40,445 75,938 — — 160,570
Substandard — 1,356 18,743 14,039 12,555 106,461 1,500 — 154,654
Doubtful — — — — — — — — —
Total commercial real estate 385,347 317,359 468,720 334,743 266,019 881,391 36,948 — 2,690,528
Commercial and industrial
Pass 437,483 126,371 115,359 83,030 37,176 132,182 536,554 — 1,468,155
Special mention 46 — 3,060 2,546 72 832 8,887 — 15,443
Substandard — — 14,221 1,336 4,174 3,456 4,961 — 28,148
Doubtful — — 1,777 — — — — — 1,777
Total commercial and industrial 437,529 126,371 134,417 86,912 41,422 136,470 550,402 — 1,513,523
Commercial construction
Pass 142,321 108,405 111,512 16,838 989 3,539 30,036 — 413,640
Special mention — — — — — 4,458 — — 4,458
Substandard — 2,157 2,020 — — 2,480 — — 6,657
Doubtful — — — — — — — — —
Total commercial construction 142,321 110,562 113,532 16,838 989 10,477 30,036 — 424,755
Business banking
Pass 257,264 107,791 141,411 110,586 79,187 293,215 107,093 443 1,096,990
Special mention 104 151 1,986 1,365 1,057 5,929 160 111 10,863
Substandard 41 106 1,579 3,277 1,645 19,591 977 625 27,841
Doubtful — — — — — — — — —
Total business banking 257,409 108,048 144,976 115,228 81,889 318,735 108,230 1,179 1,135,693
Consumer real estate
Pass 137,465 100,995 91,981 48,531 39,029 231,861 442,530 23,391 1,115,783
Special mention — — — — — 937 — — 937
Substandard — — 184 1,625 1,355 5,664 876 1,161 10,865
Doubtful — — — — — — — — —
Total consumer real estate 137,465 100,995 92,165 50,156 40,384 238,462 443,406 24,552 1,127,585
Other consumer
Pass 19,976 9,396 7,120 2,878 613 2,037 57,702 1,130 100,852
Special mention — — — — — — — — —
Substandard 83 52 141 215 408 4,407 201 1,547 7,054
Doubtful — — — — — — — — —
Total other consumer 20,059 9,448 7,261 3,093 1,021 6,444 57,903 2,677 107,906
Pass 1,379,856 768,961 879,574 576,166 370,013 1,361,826 1,209,363 24,964 6,570,723
Special Mention 150 151 42,832 10,312 41,574 88,094 9,047 111 192,271
Substandard 124 3,671 36,888 20,492 20,137 142,059 8,515 3,333 235,219
Doubtful — — 1,777 — — — — — 1,777
Total $ 1,380,130 $ 772,783 $ 961,071 $ 606,970 $ 431,724 $ 1,591,979 $ 1,226,925 $ 28,408 $ 6,999,990
The following tables present loan balances by year of origination and internally assigned risk rating for our portfolio segments as of the dates presented:


	June 30, 2022
	Risk Rating
(dollars in thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate
Pass	$	179,496	$	359,214	$	296,299	$	432,058	$	284,614	$	804,236	$	22,509	$	—	$	2,378,426
Special mention	—		—		—		8,569		7,391		116,973		—		—		132,933
Substandard	—		3,240		1,331		13,771		15,984		80,309		—		—		114,635
Doubtful	—		—		—		—		—		10		—		—		10
Total Commercial Real Estate	179,496		362,454		297,630		454,398		307,989		1,001,528		22,509		—		2,626,004

Commercial and Industrial
Pass	100,561		340,453		101,459		81,813		70,673		145,354		589,993		—		1,430,306
Special mention	—		42		—		3,898		2,185		215		7,721		—		14,061
Substandard	—		—		—		14,057		1,286		2,120		17,756		—		35,219
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial and Industrial	100,561		340,495		101,459		99,768		74,144		147,689		615,470		—		1,479,586

Commercial Construction
Pass	56,592		153,742		63,832		58,690		4,656		3,222		26,591		—		367,325
Special mention	—		—		—		19,077		—		4,389		—		—		23,466
Substandard	—		—		2,142		480		4		1,918		—		—		4,544
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Construction	56,592		153,742		65,974		78,247		4,660		9,529		26,591		—		395,335

Business Banking
Pass	142,538		248,994		96,053		121,959		91,817		311,935		108,301		538		1,122,135
Special mention	—		92		250		2,904		2,972		5,144		179		110		11,651
Substandard	—		—		2,836		2,194		3,097		18,131		152		594		27,004
Doubtful	—		—		—		—		—		—		—		—		—
Total Business Banking	142,538		249,086		99,139		127,057		97,886		335,210		108,632		1,242		1,160,790

Consumer Real Estate
Pass	146,031		148,128		96,856		78,335		32,192		207,827		510,231		21,874		1,241,474
Special mention	—		—		—		—		—		910		—		—		910
Substandard	39		80		138		285		1,364		11,077		942		2,943		16,868
Doubtful	—		—		—		—		—		—		—		—		—
Total Consumer Real Estate	146,070		148,208		96,994		78,620		33,556		219,814		511,173		24,817		1,259,252

Other Consumer
Pass	12,242		13,787		7,201		4,948		1,898		1,051		77,282		1,489		119,898
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		12		4		—		2		1		—		10		29
Doubtful	—		—		—		—		—		—		—		—		—
Total Other Consumer	12,242		13,799		7,205		4,948		1,900		1,052		77,282		1,499		119,927

Pass	637,460		1,264,318		661,700		777,803		485,850		1,473,625		1,334,907		23,901		6,659,564
Special mention	—		134		250		34,448		12,548		127,631		7,900		110		183,021
Substandard	39		3,332		6,451		30,787		21,737		113,556		18,850		3,547		198,299
Doubtful	—		—		—		—		—		10		—		—		10
Total Loan Balance	$	637,499	$	1,267,784	$	668,401	$	843,038	$	520,135	$	1,714,822	$	1,361,657	$	27,558	$	7,040,894

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued


	December 31, 2021
	Risk Rating
(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate
Pass	$	385,347	$	316,003	$	412,191	$	314,303	$	213,019	$	698,992	$	35,448	$	—	$	2,375,303
Special mention	—		—		37,786		6,401		40,445		75,938		—		—		160,570
Substandard	—		1,356		18,743		14,039		12,555		106,461		1,500		—		154,654
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Real Estate	385,347		317,359		468,720		334,743		266,019		881,391		36,948		—		2,690,528

Commercial and Industrial
Pass	437,483		126,371		115,359		83,030		37,176		132,182		536,554		—		1,468,155
Special mention	46		—		3,060		2,546		72		832		8,887		—		15,443
Substandard	—		—		14,221		1,336		4,174		3,456		4,961		—		28,148
Doubtful	—		—		1,777		—		—		—		—		—		1,777
Total Commercial and Industrial	437,529		126,371		134,417		86,912		41,422		136,470		550,402		—		1,513,523

Commercial Construction
Pass	142,321		108,405		111,512		16,838		989		3,539		30,036		—		413,640
Special mention	—		—		—		—		—		4,458		—		—		4,458
Substandard	—		2,157		2,020		—		—		2,480		—		—		6,657
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Construction	142,321		110,562		113,532		16,838		989		10,477		30,036		—		424,755

Business Banking
Pass	257,264		107,791		141,411		110,586		79,187		293,215		107,093		443		1,096,990
Special mention	104		151		1,986		1,365		1,057		5,929		160		111		10,863
Substandard	41		106		1,579		3,277		1,645		19,591		977		625		27,841
Doubtful	—		—		—		—		—		—		—		—		—
Total Business Banking	257,409		108,048		144,976		115,228		81,889		318,735		108,230		1,179		1,135,693

Consumer Real Estate
Pass	137,465		100,995		91,981		48,531		39,029		231,861		442,530		23,391		1,115,783
Special mention	—		—		—		—		—		937		—		—		937
Substandard	—		—		184		1,625		1,355		5,664		876		1,161		10,865
Doubtful	—		—		—		—		—		—		—		—		—
Total Consumer Real Estate	137,465		100,995		92,165		50,156		40,384		238,462		443,406		24,552		1,127,585

Other Consumer
Pass	19,976		9,396		7,120		2,878		613		2,037		57,702		1,130		100,852
Special mention	—		—		—		—		—		—		—		—		—
Substandard	83		52		141		215		408		4,407		201		1,547		7,054
Doubtful	—		—		—		—		—		—		—		—		—
Total Other Consumer	20,059		9,448		7,261		3,093		1,021		6,444		57,903		2,677		107,906


Pass	1,379,856		768,961		879,574		576,166		370,013		1,361,826		1,209,363		24,964		6,570,723
Special Mention	150		151		42,832		10,312		41,574		88,094		9,047		111		192,271
Substandard	124		3,671		36,888		20,492		20,137		142,059		8,515		3,333		235,219
Doubtful	—		—		1,777		—		—		—		—		—		1,777
Total Loan Balance	$	1,380,130	$	772,783	$	961,071	$	606,970	$	431,724	$	1,591,979	$	1,226,925	$	28,408	$	6,999,990

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS �� continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis. Loans are considered nonperforming and placed on nonaccrual when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists. The risk of loss is generally highest for nonperforming loans.

~~Table of Contents~~

~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued~~

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

March 31, 2022
(dollars in thousands) 2022 2021 2020 2019 2018 2017 and Prior Revolving Revolving-Term Total
Commercial real estate
Performing $ 92,158 $ 367,329 $ 335,124 $ 460,353 $ 326,451 $ 1,062,113 $ 36,481 $ — $ 2,680,009
Nonperforming — — — 2,458 2,261 21,071 — — 25,790
Total commercial real estate 92,158 367,329 335,124 462,811 328,712 1,083,184 36,481 — 2,705,799
Commercial and industrial
Performing 42,350 369,108 107,500 104,858 79,353 162,248 582,519 — 1,447,936
Nonperforming — — — 8,525 58 57 1,930 — 10,570
Total commercial and industrial 42,350 369,108 107,500 113,383 79,411 162,305 584,449 — 1,458,506
Commercial construction
Performing 24,551 161,638 72,342 77,117 4,988 10,711 31,026 — 382,373
Nonperforming — — — 480 — 384 — — 864
Total commercial construction 24,551 161,638 72,342 77,597 4,988 11,095 31,026 — 383,237
Business banking
Performing 66,205 255,149 105,295 134,873 104,917 355,063 110,565 1,172 1,133,239
Nonperforming — 2 — 275 1,402 6,234 28 56 7,997
Total business banking 66,205 255,151 105,295 135,148 106,319 361,297 110,593 1,228 1,141,236
Consumer real estate
Performing 56,284 141,486 96,167 84,952 36,674 230,971 483,658 25,487 1,155,679
Nonperforming — — 904 254 242 4,652 191 935 7,178
Total consumer real estate 56,284 141,486 97,071 85,206 36,916 235,623 483,849 26,422 1,162,857
Other consumer
Performing 6,035 15,522 8,051 5,948 2,452 1,351 71,494 1,298 112,151
Nonperforming — — 125 — — — — — 125
Total other consumer 6,035 15,522 8,176 5,948 2,452 1,351 71,494 1,298 112,276
Performing 287,583 1,310,232 724,479 868,101 554,835 1,822,457 1,315,743 27,957 6,911,387
Nonperforming — 2 1,029 11,992 3,963 32,398 2,149 991 52,524
Total $ 287,583 $ 1,310,234 $ 725,508 $ 880,093 $ 558,798 $ 1,854,855 $ 1,317,892 $ 28,948 $ 6,963,911

~~Table of Contents~~

~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued~~

December 31, 2021
(dollars in thousands) 2021 2020 2019 2018 2017 2016 and Prior Revolving Revolving-Term Total
Commercial real estate
Performing $ 385,347 $ 317,359 $ 461,613 $ 332,482 $ 259,723 $ 865,567 $ 36,948 $ — $ 2,659,039
Nonperforming — 0 7,107 2,261 6,296 15,824 — — 31,488
Total commercial real estate 385,347 317,359 468,720 334,743 266,019 881,391 36,948 — 2,690,528
Commercial and industrial
Performing 437,529 126,371 123,944 86,852 38,540 136,427 548,622 — 1,498,285
Nonperforming — — 10,473 60 2,882 43 1,780 — 15,239
Total commercial and industrial 437,529 126,371 134,417 86,912 41,422 136,470 550,402 — 1,513,523
Commercial construction
Performing 142,321 110,562 111,445 16,838 989 10,093 30,036 — 422,284
Nonperforming — — 2,087 — — 384 — — 2,471
Total commercial construction 142,321 110,562 113,532 16,838 989 10,477 30,036 — 424,755
Business banking
Performing 257,368 107,984 144,689 113,820 81,195 311,673 108,202 1,122 1,126,052
Nonperforming 41 64 287 1,408 694 7,062 28 57 9,641
Total business banking 257,409 108,048 144,976 115,228 81,889 318,735 108,230 1,179 1,135,693
Consumer real estate
Performing 137,465 100,253 91,689 49,853 39,657 234,297 443,238 23,839 1,120,291
Nonperforming — 742 476 303 727 4,165 168 713 7,294
Total consumer real estate 137,465 100,995 92,165 50,156 40,384 238,462 443,406 24,552 1,127,585
Other consumer
Performing 20,059 9,290 7,261 3,093 1,021 6,444 57,903 2,677 107,748
Nonperforming — 158 — — — — — — 158
Total other consumer 20,059 9,448 7,261 3,093 1,021 6,444 57,903 2,677 107,906
Performing 1,380,089 771,819 940,641 602,938 421,125 1,564,501 1,224,949 27,638 6,933,699
Nonperforming 41 964 20,430 4,032 10,599 27,478 1,976 770 66,291
Total $ 1,380,130 $ 772,783 $ 961,071 $ 606,970 $ 431,724 $ 1,591,979 $ 1,226,925 $ 28,408 $ 6,999,990

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

March 31, 2022
(dollars in thousands) Current 30-59 Days
Past Due 60-89 Days
Past Due
Past Due 90+ Days Still Accruing(2)
Non - performing Total Past
Due Loans Total Loans
Commercial real estate $ 2,680,009 $ — $ — $ — $ 25,790 $ 25,790 $ 2,705,799
Commercial and industrial 1,447,404 3 — 529 10,570 11,102 1,458,506
Commercial construction 382,373 — — — 864 864 383,237
Business banking 1,130,830 1,409 413 587 7,997 10,406 1,141,236
Consumer real estate 1,152,858 2,693 128 — 7,178 9,999 1,162,857
Other consumer 111,765 176 210 — 125 511 112,276
Total(1)
$ 6,905,239 $ 4,281 $ 751 $ 1,116 $ 52,524 $ 58,672 $ 6,963,911

~~(1)~~ We had 3 loans that were modified totaling $12.5 million under the CARES Act at March 31, 2022. 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 modifications, this delinquency table may not accurately reflect the credit risk associated with these loans.

~~(2)~~ We had 5 loans that were originated under the PPP program totaling $1.1 million at March 31, 2022 that were 90 days or greater past due. These loans were in process of forgiveness and were not considered as nonperforming loans due to the terms of the SBA guarantee.


	June 30, 2022
(dollars in thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate
Performing	$	179,496	$	362,454	$	297,630	$	451,998	$	307,380	$	989,515	$	22,509	$	—	$	2,610,982
Nonperforming	—		—		—		2,400		609		12,013		—		—		15,022
Total Commercial Real Estate	179,496		362,454		297,630		454,398		307,989		1,001,528		22,509		—		2,626,004

Commercial and Industrial
Performing	100,561		340,495		101,459		99,768		74,087		147,634		615,240		—		1,479,244
Nonperforming	—		—		—		—		57		55		230		—		342
Total Commercial and Industrial	100,561		340,495		101,459		99,768		74,144		147,689		615,470		—		1,479,586

Commercial Construction
Performing	56,592		153,742		65,974		77,767		4,660		9,145		26,591		—		394,471
Nonperforming	—		—		—		480		—		384		—		—		864
Total Commercial Construction	56,592		153,742		65,974		78,247		4,660		9,529		26,591		—		395,335

Business Banking
Performing	142,538		249,086		99,139		126,702		96,028		329,746		108,530		1,114		1,152,883
Nonperforming	—		—		—		355		1,858		5,464		102		128		7,907
Total Business Banking	142,538		249,086		99,139		127,057		97,886		335,210		108,632		1,242		1,160,790

Consumer Real Estate
Performing	146,070		148,208		96,073		78,369		33,317		214,842		511,065		23,924		1,251,868
Nonperforming	—		—		921		251		239		4,972		108		893		7,384
Total Consumer Real Estate	146,070		148,208		96,994		78,620		33,556		219,814		511,173		24,817		1,259,252

Other Consumer
Performing	12,242		13,799		7,080		4,948		1,900		921		77,282		1,499		119,671
Nonperforming	—		—		125		—		—		131		—		—		256
Total Other Consumer	12,242		13,799		7,205		4,948		1,900		1,052		77,282		1,499		119,927

Performing	637,499		1,267,784		667,355		839,552		517,372		1,691,803		1,361,217		26,537		7,009,119
Nonperforming	—		—		1,046		3,486		2,763		23,019		440		1,021		31,775
Total Loan Balance	$	637,499	$	1,267,784	$	668,401	$	843,038	$	520,135	$	1,714,822	$	1,361,657	$	27,558	$	7,040,894

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

December 31, 2021
(dollars in thousands) Current 30-59 Days
Past Due 60-89 Days
Past Due Past Due 90+ Days Still Accruing Non - performing Total Past
Due Loans Total Loans
Commercial real estate $ 2,659,040 $ — $ — $ — $ 31,488 $ 31,488 $ 2,690,528
Commercial and industrial 1,497,755 529 — — 15,239 15,768 1,513,523
Commercial construction 421,834 450 — — 2,471 2,921 424,755
Business banking 1,124,748 813 491 — 9,641 10,945 1,135,693
Consumer real estate 1,117,074 1,087 2,130 — 7,294 10,511 1,127,585
Other consumer 107,492 206 50 — 158 414 107,906
Total(1)
$ 6,927,943 $ 3,085 $ 2,671 $ — $ 66,291 $ 72,047 $ 6,999,990
(1) We had 8 loans that were modified totaling $28.8 million under the CARES Act at December 31, 2021. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.


	December 31, 2021
(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate
Performing	$	385,347	$	317,359	$	461,613	$	332,482	$	259,723	$	865,567	$	36,948	$	—	$	2,659,039
Nonperforming	—		0		7,107		2,261		6,296		15,824		—		—		31,488
Total Commercial Real Estate	385,347		317,359		468,720		334,743		266,019		881,391		36,948		—		2,690,528

Commercial and Industrial
Performing	437,529		126,371		123,944		86,852		38,540		136,427		548,622		—		1,498,285
Nonperforming	—		—		10,473		60		2,882		43		1,780		—		15,239
Total Commercial and Industrial	437,529		126,371		134,417		86,912		41,422		136,470		550,402		—		1,513,523

Commercial Construction
Performing	142,321		110,562		111,445		16,838		989		10,093		30,036		—		422,284
Nonperforming	—		—		2,087		—		—		384		—		—		2,471
Total Commercial Construction	142,321		110,562		113,532		16,838		989		10,477		30,036		—		424,755

Business Banking
Performing	257,368		107,984		144,689		113,820		81,195		311,673		108,202		1,122		1,126,052
Nonperforming	41		64		287		1,408		694		7,062		28		57		9,641
Total Business Banking	257,409		108,048		144,976		115,228		81,889		318,735		108,230		1,179		1,135,693

Consumer Real Estate
Performing	137,465		100,253		91,689		49,853		39,657		234,297		443,238		23,839		1,120,291
Nonperforming	—		742		476		303		727		4,165		168		713		7,294
Total Consumer Real Estate	137,465		100,995		92,165		50,156		40,384		238,462		443,406		24,552		1,127,585

Other Consumer
Performing	20,059		9,290		7,261		3,093		1,021		6,444		57,903		2,677		107,748
Nonperforming	—		158		—		—		—		—		—		—		158
Total Other Consumer	20,059		9,448		7,261		3,093		1,021		6,444		57,903		2,677		107,906

Performing	1,380,089		771,819		940,641		602,938		421,125		1,564,501		1,224,949		27,638		6,933,699
Nonperforming	41		964		20,430		4,032		10,599		27,478		1,976		770		66,291
Total Loan Balance	$	1,380,130	$	772,783	$	961,071	$	606,970	$	431,724	$	1,591,979	$	1,226,925	$	28,408	$	6,999,990

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


	June 30, 2022
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Non - performing		Total Past Due Loans		Total Loans
Commercial real estate	$	2,610,642	$	—	$	340	$	15,022	$	15,362	$	2,626,004
Commercial and industrial	1,478,546		698		—		342		1,040		1,479,586
Commercial construction	394,471		—		—		864		864		395,335
Business banking	1,150,781		674		1,428		7,907		10,009		1,160,790
Consumer real estate	1,250,221		1,050		597		7,384		9,031		1,259,252
Other consumer	119,370		225		76		256		557		119,927
Total	$	7,004,031	$	2,647	$	2,441	$	31,775	$	36,863	$	7,040,894

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued


	December 31, 2021
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Non - performing		Total Past Due Loans		Total Loans
Commercial real estate	$	2,659,040	$	—	$	—	$	31,488	$	31,488	$	2,690,528
Commercial and industrial	1,497,755		529		—		15,239		15,768		1,513,523
Commercial construction	421,834		450		—		2,471		2,921		424,755
Business banking	1,124,748		813		491		9,641		10,945		1,135,693
Consumer real estate	1,117,074		1,087		2,130		7,294		10,511		1,127,585
Other consumer	107,492		206		50		158		414		107,906
Total(1)	$	6,927,943	$	3,085	$	2,671	$	66,291	$	72,047	$	6,999,990
(1) We had 8 loans that were modified totaling $28.8 million under the CARES Act at December 31, 2021. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.

The following tables present loans on nonaccrual status by class of loan for the year-to-date periods presented:


											For the Three Months Ended
		March 31, 2022								March 31, 2022			June 30, 2022
(dollars in thousands)	(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Past Due 90+ Days Still Accruing (2)			Interest Income Recognized on Nonaccrual(1)			(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Interest Income Recognized on Nonaccrual(1)
Commercial real estate	Commercial real estate	$	31,488	$	25,790	$	21,058	$	—		$	32		Commercial real estate	$	31,488	$	15,022	$	11,974	$	557
Commercial and industrial	Commercial and industrial	15,239		10,570		1,700		529			32			Commercial and industrial	15,239		342		—		84
Commercial construction	Commercial construction	2,471		864		480		—			—			Commercial construction	2,471		864		480		—
Business banking	Business banking	9,641		7,997		1,586		587			48			Business banking	9,641		7,907		1,326		136
Consumer real estate	Consumer real estate	7,294		7,178		—		—			61			Consumer real estate	7,294		7,384		—		132
Other consumer	Other consumer	158		125		—		—			—			Other consumer	158		256		—		—
Total	Total	$	66,291	$	52,524	$	24,824	$	1,116		$	173		Total	$	66,291	$	31,775	$	13,780	$	909

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

~~(2)~~ ~~We had 5~~ loans ~~that were originated under~~for the PPP program totaling $1.1 million at March 31, 2022 that were 90 days or greater past due. These loans were in process of forgiveness and were not considered as nonperforming loans due to the terms of the SBA guarantee.six months ended June 30, 2022.


										For the Twelve Months Ended
		December 31, 2021								December 31, 2021			December 31, 2021
(dollars in thousands)	(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Past Due 90+ Days Still Accruing		Interest Income Recognized on Nonaccrual(1)		(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Interest Income Recognized on Nonaccrual(1)
Commercial real estate	Commercial real estate	$	101,070	$	31,488	$	28,046	$	—	$	158	Commercial real estate	$	101,070	$	31,488	$	28,046	$	158
Commercial and industrial	Commercial and industrial	16,985		15,239		5,707		—		74		Commercial and industrial	16,985		15,239		5,707		74
Commercial construction	Commercial construction	384		2,471		2,020		—		(28)		Commercial construction	384		2,471		2,020		(28)
Business banking	Business banking	17,122		9,641		1,696		—		427		Business banking	17,122		9,641		1,696		427
Consumer real estate	Consumer real estate	11,117		7,294		—		—		496		Consumer real estate	11,117		7,294		—		496
Other consumer	Other consumer	96		158		—		—		1		Other consumer	96		158		—		1
Total	Total	$	146,774	$	66,291	$	37,469	$	—	$	1,128	Total	$	146,774	$	66,291	$	37,469	$	1,128

(1) Represents only cash payments received and applied to interest on nonaccrual ~~loans.~~loans for the twelve months ended December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

The following tables present collateral-dependent loans by class of ~~loan~~loans as of the dates presented:


		March 31, 2022									June 30, 2022
		Type of Collateral									Type of Collateral
(dollars in thousands)	(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other		(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other
Commercial real estate	Commercial real estate	$	21,058	$	—	$	—	$	571	Commercial real estate	$	11,974	$	—	$	16	$	—
Commercial and industrial	Commercial and industrial	259		721		—		9,859		Commercial and industrial	—		690		—		—
Commercial construction	Commercial construction	2,167		—		—		480		Commercial construction	1,695		—		480		—
Business banking	Business banking	1,028		1,537		—		—		Business banking	795		1,210		—		—
Consumer real estate	Consumer real estate	965		—		—		—		Consumer real estate	598		—		—		—

Total	Total	$	25,477	$	2,258	$	—	$	10,910	Total	$	15,062	$	1,900	$	496	$	—


	December 31, 2021
	Type of Collateral
(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other
Commercial real estate	$	28,046	$	—	$	—	$	—
Commercial and industrial	259		4,905		—		10,473
Commercial construction	4,210		—		—		—
Business banking	910		1,636		—		—
Consumer real estate	1,031		—		—		—

Total	$	34,456	$	6,541	$	—	$	10,473

The following tables present activity in the ACL for the periods presented:
Three Months Ended March 31, 2022
(dollars in thousands) Commercial
Real Estate Commercial and
Industrial Commercial
Construction Business Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 50,700 $ 19,727 $ 5,355 $ 11,338 $ 8,733 $ 2,723 $ 98,576
Provision for credit losses on loans(1)
(1,996) (206) (27) 765 426 340 (698)
Charge-offs — — — (606) (78) (298) (982)
Recoveries 199 2,716 1 — 37 66 3,019
Net Recoveries/(Charge-offs) 199 2,716 1 (606) (41) (232) 2,037
Balance at End of Period $ 48,903 $ 22,237 $ 5,329 $ 11,497 $ 9,118 $ 2,831 $ 99,915
(1) Excludes the provision for credits losses for unfunded commitments

Three Months Ended March 31, 2021
(dollars in thousands) Commercial
Real Estate Commercial and
Industrial Commercial
Construction Business Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 65,656 $ 16,100 $ 7,239 $ 15,917 $ 10,014 $ 2,686 $ 117,612
Provision for credit losses on loans(1)
1,996 2,728 (911) 514 (844) (182) 3,301
Charge-offs (810) (4,302) — (917) (271) (232) (6,532)
Recoveries — 137 1 166 82 334 720
Net (Charge-offs)/Recoveries (810) (4,165) 1 (751) (189) 102 (5,812)
Balance at End of Period $ 66,842 $ 14,663 $ 6,329 $ 15,680 $ 8,981 $ 2,606 $ 115,101


	Three Months Ended June 30, 2022
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	48,903	$	22,237	$	5,329	$	11,497	$	9,118	$	2,831	$	99,915
Provision for credit losses on loans(1)	(3,678)		948		1,254		1,668		582		418		1,192
Charge-offs	(199)		(5,797)		—		(1,141)		(60)		(481)		(7,678)
Recoveries	288		4,138		—		133		33		74		4,666
Net Recoveries/(Charge-offs)	89		(1,659)		—		(1,008)		(27)		(407)		(3,012)
Balance at End of Period	$	45,314	$	21,526	$	6,583	$	12,157	$	9,673	$	2,842	$	98,095
(1) Excludes the provision for credits losses for unfunded commitments.


	Three Months Ended June 30, 2021
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	66,842	$	14,663	$	6,329	$	15,680	$	8,981	$	2,606	$	115,101

Provision for credit losses on loans(1)	2,937		225		(426)		(560)		(410)		243		2,008
Charge-offs	(7,558)		(473)		—		(410)		(76)		(221)		(8,737)
Recoveries	965		11		2		47		152		88		1,264
Net (Charge-offs)/Recoveries	(6,594)		(462)		2		(363)		76		(132)		(7,473)
Balance at End of Period	$	63,186	$	14,426	$	5,905	$	14,756	$	8,647	$	2,717	$	109,636

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

commitments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued


	Six Months Ended June 30, 2022
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	50,700	$	19,727	$	5,355	$	11,338	$	8,733	$	2,723	$	98,576
Provision for credit losses on loans(1)	(5,475)		768		1,227		2,207		1,010		758		495
Charge-offs	(199)		(5,798)		—		(1,746)		(138)		(780)		(8,661)
Recoveries	288		6,829		1		358		68		141		7,685
Net (Charge-offs)/Recoveries	89		1,031		1		(1,388)		(70)		(639)		(976)
Balance at End of Period	$	45,314	$	21,526	$	6,583	$	12,157	$	9,673	$	2,842	$	98,095
(1) Excludes the provision for credits losses for unfunded commitments.


	Six Months Ended June 30, 2021
(dollars in thousands)	Commercial Real Estate		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	$	65,656	$	16,100	$	7,239	$	15,917	$	10,014	$	2,686	$	117,612
Provision for credit losses on loans(1)	4,933		2,953		(1,337)		(46)		(1,254)		61		5,308
Charge-offs	(8,369)		(4,774)		—		(1,327)		(347)		(453)		(15,270)
Recoveries	965		148		3		213		234		423		1,985
Net (Charge-offs)/Recoveries	(7,403)		(4,627)		3		(1,115)		(113)		(30)		(13,285)
Balance at End of Period	$	63,186	$	14,426	$	5,905	$	14,756	$	8,647	$	2,717	$	109,636
(1) Excludes the provision for credits losses for unfunded commitments.

The C&I portfolio included ~~$41.9~~$11.7 million of loans originated under the PPP program at ~~March 31,~~June 30, 2022 compared to ~~$499.1~~$336.1 million for the same period in ~~2021.The~~2021. The PPP loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL.

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivatives Designated as Hedging Instruments

Cash Flow Hedges of Interest Rate Risk

As part of our interest rate risk management strategy, we use interest rate swaps to add stability to interest income and to manage exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for making variable rate payments over the life of the agreements without exchange of the underlying notional amount.

For designated derivatives that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are received on variable rate assets. During the next twelve months, we estimate that an additional $2.3 million will be reclassified as a decrease to interest income.

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued

Derivatives Not Designated as Hedging Instruments

Interest Rate Contracts with Customers

Interest rate swaps with customers are contracts in which a series of cash 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.

Interest rate swaps with customers 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 Condensed Consolidated Statements of Comprehensive Income (Loss).

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 estimated fair value of the derivatives during the commitment period are recorded in current earnings and included in mortgage banking in the Condensed Consolidated Statements of Comprehensive Income (Loss).

~~Derivatives Designated as Hedging Instruments~~

~~Cash Flow Hedges of Interest Rate Risk~~

As part of our interest rate risk management strategy, we use interest rate swaps to add stability to interest income and to manage exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involveThe following table indicates the ~~receipt of fixed-rate~~ amounts ~~from a counterparty in exchange for making variable rate payments over~~representing the ~~life of the agreements without exchange of the underlying notional amount.~~

During the three months ended March 31, 2022, we entered into 4 interest rate swaps designated as cash flow hedges to hedge the variable cash flows associated with existing variable-rate assets. These contacts each have a notional value of ~~$50.0 million~~derivative assets and ~~extend out over~~derivative liabilities for the ~~next five years.~~

For designated derivatives that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are received on variable rate assets. During the next twelve months, we estimate that an additional $0.6 million will be reclassified as an increase to interest income.

dates presented:


	Derivative Assets (Included in Other Assets)								Derivative Liabilities (Included in Other Liabilities)
	June 30, 2022				December 31, 2021				June 30, 2022				December 31, 2021
(dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts - cash flow hedge (1)	$	50,000	$	368			$	—	$	250,000	$	5,946			$	—
Total Derivatives Designated as Hedging Instruments			$	368			$	—			$	5,946			$	—

Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts - commercial loans	$	1,039,932	$	51,097	$	1,017,178	$	33,528	$	1,039,932	$	51,193	$	1,017,178	$	33,361
Interest rate lock commitments - mortgage loans	2,062		56		12,148		401		—		—		—		—
Forward sales contracts - mortgage loans	—		—		8,436		4		645		2		—		—
Total Derivatives Not Designated as Hedging Instruments			$	51,153			$	33,933			$	51,195			$	33,361

Total Derivatives			$	51,521			$	33,933			$	57,141			$	33,631
(1) Derivative assets and derivative liabilities include interest receivable of $0.6 million and $0.2 million as of June 30,2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued

~~The following table indicates the amounts representing the value of derivative assets and derivative liabilities for the dates presented:~~
Derivative Assets
(Included in Other Assets) Derivative Liabilities
(Included in Other Liabilities)
March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021
(dollars in thousands) Notional
Amount Fair
Value Notional Amount Fair
Value Notional
Amount Fair
Value Notional
Amount Fair
Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts - cash flow hedge $ 50,000 $ 135 $ — $ 150,000 $ 2,600 $ —
Total Derivatives Designated as Hedging Instruments $ 135 $ — $ 2,600 $ —
Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts - commercial customers $ 1,034,249 $ 29,056 $ 1,017,178 $ 33,528 $ 1,034,249 $ 29,092 $ 1,017,178 $ 33,361
Interest rate lock commitments - mortgage loans 13,901 185 12,148 401 — — —
Forward sales contracts - mortgage loans 13,503 192 8,436 4 — — —
Total Derivatives Not Designated as Hedging Instruments $ 29,433 $ 33,933 $ 29,092 $ 33,361
Total Derivatives $ 29,568 $ 33,933 $ 31,692 $ 33,631

The following table indicates the gross amounts of interest rate swap derivative assets and derivative liabilities, the amounts offset and the carrying values in the Consolidated Balance Sheets at ~~March 31, 2022:~~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)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		(dollars in thousands)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Gross amounts recognized	Gross amounts recognized	$	34,957	$	37,289	$	37,402	$	37,392	Gross amounts recognized	$	52,493	$	37,289	$	58,192	$	37,392
Gross amounts offset	Gross amounts offset	(5,766)		(3,761)		(5,710)		(3,761)		Gross amounts offset	(1,028)		(3,761)		(1,053)		(3,761)
Net amounts presented in the Consolidated Balance Sheets	Net amounts presented in the Consolidated Balance Sheets	29,191		33,528		31,692		33,631		Net amounts presented in the Consolidated Balance Sheets	51,465		33,528		57,139		33,631
Cash collateral received/pledged(1)	Cash collateral received/pledged(1)	(23,501)		—		—		(33,631)		Cash collateral received/pledged(1)	(43,543)		—		—		(33,631)
Net Amount	Net Amount	$	5,690	$	33,528	$	31,692	$	—	Net Amount	$	7,922	$	33,528	$	57,139	$	—
(1) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the cash collateral cannot reduce the net derivative position below zero. Therefore, excess cash collateral, if any, is not reflected above.	(1) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the cash collateral cannot reduce the net derivative position below zero. Therefore, excess cash collateral, if any, is not reflected above.									(1) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the cash collateral cannot reduce the net derivative position below zero. Therefore, excess cash collateral, if any, is not reflected above.

The following table presents the effect of the cash flow hedges on OCI and on the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three ~~months ended March 31, 2022~~month periods presented:


	Amount of Gain or (Loss) Recognized in Other Comprehensive Income						Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income
(dollars in thousands)	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Derivatives in Cash Flow Hedging Relationships:
Interest rate swap contracts - cash flow hedge		$	(3,271)		$	—		$	786		$	—

Total		$	(3,271)		$	—		$	786		$	—

The following table presents the effect of the cash flow hedges on OCI and ~~2021.~~on the Condensed Consolidated Statements of Comprehensive Income (Loss) for the six month periods presented:


		Amount of Gain or (Loss) Recognized in Other Comprehensive Income						Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income							Amount of Gain or (Loss) Recognized in Other Comprehensive Income						Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income
(dollars in thousands)	(dollars in thousands)	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021			(dollars in thousands)	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Derivatives in Cash Flow Hedging Relationships:	Derivatives in Cash Flow Hedging Relationships:													Derivatives in Cash Flow Hedging Relationships:
Interest rate swap contracts - cash flow hedge	Interest rate swap contracts - cash flow hedge		$	(2,601)		$	—		$	137		$	—	Interest rate swap contracts - cash flow hedge		$	(5,872)		$	—		$	922		$	—

Total	Total		$	(2,601)		$	—		$	137		$	—	Total		$	(5,872)		$	—		$	922		$	—

The following table indicates the gain or loss recognized in income on derivatives not designated as hedging instruments for the periods presented:


	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2022			2021			2022			2021
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loans		$	(61)		$	5		$	7		$	315
Interest rate lock commitments—mortgage loans		(129)			(883)			(346)			(2,642)
Forward sale contracts—mortgage loans		(194)			194			(5)			1,173
Total Derivatives (Loss) Gain		$	(384)		$	(684)		$	(344)		$	(1,154)

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

~~NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued~~

Three Months Ended March 31,
(dollars in thousands) 2022 2021
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial customers $ 68 $ 310
Interest rate lock commitments—mortgage loans (217) (1,759)
Forward sale contracts—mortgage loans 188 979
Total Derivatives Gain/(Loss) $ 39 $ (470)

NOTE 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 consolidated financial statements. Our exposure to credit loss, in the event the customer does not satisfy the terms of the agreement, equals the contractual amount of the obligation less the value of any collateral. We apply the same credit policies in making commitments and standby letters of credit that are used for the underwriting of loans to customers. Commitments generally have fixed expiration dates, annual renewals or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

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)	March 31, 2022			December 31, 2021			(dollars in thousands)	June 30, 2022			December 31, 2021
Commitments to extend credit	Commitments to extend credit		$	2,481,275		$	2,583,957	Commitments to extend credit		$	2,600,322		$	2,583,957
Standby letters of credit	Standby letters of credit		79,550			87,335		Standby letters of credit		80,665			87,335
Total	Total		$	2,560,825		$	2,671,292	Total		$	2,680,987		$	2,671,292

Allowance for Credit Losses on Unfunded Loan Commitments

We maintain an allowance for credit losses on unfunded commercial and consumer lending commitments and letters of credit to provide for the risk of loss 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 Condensed Consolidated Statements of Comprehensive Income (Loss). 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 as of the dates presented:


		Three Months Ended March 31,						Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	(dollars in thousands)	2022			2021				(dollars in thousands)	2022		2021			2022		2021
Balance at beginning of period	Balance at beginning of period		$	5,189		$	4,467				Balance at beginning of period	$	5,375		$	4,303	$	5,189	$	4,467

Provision for credit losses	Provision for credit losses		186			(164)					Provision for credit losses	2,012			555		2,198		391
Total	Total		$	5,375		$	4,303				Total	$	7,387		$	4,858	$	7,387	$	4,858

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 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 March 31, 2022									Three Months Ended March 31, 2021										Three Months Ended June 30, 2022									Three Months Ended June 30, 2021
(dollars in thousands)	(dollars in thousands)	Pre-Tax Amount			Tax Benefit (Expense)			Net of Tax Amount			Pre-Tax Amount			Tax Benefit (Expense)			Net of Tax Amount			(dollars in thousands)	Pre-Tax Amount			Tax Benefit (Expense)			Net of Tax Amount			Pre-Tax Amount			Tax Benefit (Expense)			Net of Tax Amount
Change in net unrealized (losses) gains on debt securities available-for-sale			$	(48,261)		$	10,332		$	(37,929)		$	(9,712)		$	2,072		$	(7,640)
Change in net unrealized gains (losses) on available-for-sale debt securities																				Change in net unrealized gains (losses) on available-for-sale debt securities		$	(23,009)		$	4,872		$	(18,137)		$	324		$	(69)		$	255
Change in interest rate swap	Change in interest rate swap		(2,601)			557			(2,044)			—			—			—		Change in interest rate swap		(3,271)			696			(2,575)			—			—			—
Adjustment to funded status of employee benefit plans			(12)			32			20			(343)			73			(270)
Other Comprehensive Loss			$	(50,874)		$	10,921		$	(39,953)		$	(10,055)		$	2,145		$	(7,910)
Adjustment to funded status of employee benefit plans (1)																				Adjustment to funded status of employee benefit plans (1)		766			(182)			584			2,910			(621)			2,289
Other Comprehensive Income (Loss)																				Other Comprehensive Income (Loss)		$	(25,514)		$	5,386		$	(20,128)		$	3,234		$	(690)		$	2,544
(1) Pension settlement accounting was recognized during the period ended June 30, 2021 resulting in a charge of $0.2 million for the three months ended June 30, 2021 immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.																				(1) Pension settlement accounting was recognized during the period ended June 30, 2021 resulting in a charge of $0.2 million for the three months ended June 30, 2021 immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.

																					Six Months Ended June 30, 2022									Six Months Ended June 30, 2021

(dollars in thousands)																				(dollars in thousands)	Pre-Tax Amount			Tax Benefit (Expense)			Net of Tax Amount			Pre-Tax Amount			Tax Benefit (Expense)			Net of Tax Amount
Change in net unrealized losses on available-for-sale debt securities																				Change in net unrealized losses on available-for-sale debt securities		$	(71,270)		$	15,204		$	(56,066)		$	(9,388)		$	2,003		$	(7,385)
Change in interest rate swap																				Change in interest rate swap		(5,872)			1,253			(4,619)			—			—			—
Adjustment to funded status of employee benefit plans (1)																				Adjustment to funded status of employee benefit plans (1)		754			(150)			604			2,567			(548)			2,019
Other Comprehensive Loss																				Other Comprehensive Loss		$	(76,388)		$	16,307		$	(60,081)		$	(6,821)		$	1,455		$	(5,366)
(1) Pension settlement accounting was recognized during the period ended June 30, 2021 resulting in a charge of $0.9 million for the six months ended June 30, 2021 immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.																				(1) Pension settlement accounting was recognized during the period ended June 30, 2021 resulting in a charge of $0.9 million for the six months ended June 30, 2021 immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.

NOTE 10. SHARE REPURCHASE PLAN

On March 21, 2022, our Board of Directors authorized an extension of its $50 million share repurchase plan, which was set to expire March 31, 2022. This authorization extended the expiration date of the repurchase plan through March 31, 2023. The plan permits S&T to repurchase shares up to the previously authorized $50 million in aggregate value of S&T's common stock through a combination of open market and privately negotiated repurchases. The specific timing, price and quantity of repurchases will be at the discretion of S&T and will depend on a variety of factors, including general market conditions, the trading price of common stock, legal and contractual requirements, applicable securities laws and S&T's financial performance. The repurchase plan does not obligate us to repurchase any particular number of shares. At June 30, 2022 there was $33.3 million of capacity remaining under the plan. 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 and six months ended June 30, 2022, we repurchased 151,220 common shares under this plan at a total cost of $4.2 million, or an average of $27.46 per share. During the three and six months ended June 30, 2021 we had no repurchases.

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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 for the three ~~month periods~~and six months ended ~~March 31,~~June 30, 2022 and 2021. 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”~~result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,, “expect”, “anticipate”, “estimate”, “forecast”, “project”, “intend”, “believe”, “assume”, “strategy”, “trend”, “plan”, “outlook”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “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, or ACL; 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; unanticipated changes in our liquidity position; changes in accounting policies, practices, or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; climate change and related legislative and regulatory initiatives; 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 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; our ability to attract and retain talented executives and employees, particularly in light of the strong competition in the marketplace; our ability to successfully manage our CEO transition; general economic or business conditions, including the strength of regional economic conditions in our market area; macroeconomic conditions including inflation and economic uncertainty; the duration and severity of the coronavirus, or 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 elsewhere in this report, and in our ~~Annual Report on~~2021 Form 10-K, ~~for the year ended December 31, 2021,~~ including Part II, 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.

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Critical Accounting Policies and Estimates

We view critical accounting policies to be those which are highly dependent on subjective or complex estimates, assumptions and judgments and where changes in those estimates and assumptions could have a significant impact on the Consolidated Financial Statements. Further, we view critical accounting estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Our critical accounting policies and estimates as of ~~March 31,~~June 30, 2022 remained unchanged from the disclosures presented in our ~~Annual Report on~~2021 Form 10-K ~~for the year ended December 31, 2021~~ under Part II, Item 7 - “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 ~~$9.4~~$9.1 billion at ~~March 31,~~June 30, 2022. 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.

On August 23, 2021, Christopher McComish joined S&T as our new chief executive officer. He brings over 34 years of proven banking leadership with a track record of growth and transformation of commercial, consumer and wealth businesses. Additionally, we have elevated ~~both~~ proven internal leaders and attracted external talent from larger banking institutions to position us for future growth. Our priorities for 2022 and beyond include pursuing high impact growth initiatives, ensuring rigorous credit risk and enterprise governance practices, advancing strategic infrastructure and platform investments, including enhancing our digital platform, investing in organization talent and performance and promoting strategic clarity and effective communications. Organic ~~loan~~ growth continues to be our top priority within our current footprint and through market expansion. Our growth strategy includes a collaborative model that combines expertise from all areas of our business and focuses on satisfying each customer’s individual financial objectives. We also actively evaluate acquisition opportunities that align with our strategic objectives as another source of growth.

Earnings Summary

~~We recognized net~~The following table presents a summary of key profitability metrics for the periods presented:


	Three months ended June 30,								Six months ended June 30,
	2022				2021				2022				2021
Net Income		$	28,858			$	28,367			$	58,001			$	60,268
Earnings Per Share - Diluted		$	0.74			$	0.72			$	1.48			$	1.54
Return on average assets		1.25		%		1.21		%		1.25		%		1.31		%
Return on average shareholders' equity		9.83		%		9.65		%		9.85		%		10.39		%
Return on average tangible shareholders' equity (non-GAAP)		14.63		%		14.41		%		14.62		%		15.57		%

Net income ~~of $29.1~~increased $0.5 million ~~or $0.74 per diluted share~~ for the three months ended ~~March 31,~~June 30, 2022 compared to ~~a net income of $31.9 million, or $0.81 per diluted share for~~ the same period in ~~2021. The $2.8 million decrease in net income for the three months ended March 31, 2022 was~~2021 primarily due to ~~decreases~~an increase in net interest income of ~~$2.9 million and noninterest income of $2.0 million and increases in noninterest expenses of $1.8~~$6.9 million offset by a ~~significant~~decrease in noninterest income of $2.8 million and an increase in noninterest expense of $2.6 million. Net income decreased $2.3 million for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to a decrease in noninterest income of $4.9 million and an increase in noninterest expense of $4.3 million offset by an increase in net interest income of $4.0 million and a decrease in our provision for credit losses of ~~$3.6~~$3.0 million.

Net interest income increased $6.9 million and $4.0 million for the three and six months ended June 30, 2022 compared to the same ~~period~~periods in 2021.

Net interest income decreased $2.9 million to $67.7 million for the three months ended March 31, 2022 compared to $70.6 million during the same period in 2021. The decline was primarily due to reduced PPP revenue of $4.1 million compared to the prior period. The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points for the three months ended March 31, 2022 compared to the same period in 2021. Increased interest-bearing deposits with banks negatively impacted the net interest margin on an FTE basis (non-GAAP) by 16 basis pointsincreased 40 and ~~reduced revenue from PPP loans negatively impacted the net interest margin on an FTE basis (non-GAAP) by~~ 4 basis points for the three and six months ended ~~March 31, 2022 compared to the prior period.~~

The provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, decreased $3.6 million to a negative $0.5 million for the three months ended March 31, 2022 compared to $3.1 million for the same period in 2021. The significant decrease in the provision for credit losses during the three months ended March 31, 2022 was mainly due to a $2.5 million recovery on a C&I relationship during the first quarter of 2022 and improvement in economic conditions resulting in declines in our criticized and classified assets and nonperforming loans.

~~Noninterest income decreased $2.0 million for the three months ended March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021. The ~~decrease~~increases in ~~noninterest~~net interest income and NIM on an FTE basis (non-GAAP) were primarily ~~related to a decrease of $3.3 million in mortgage banking~~ due to ~~a lower volume of loans originated for sale in the secondary market. Partially offsetting this decrease was~~ higher ~~debit and credit card fees of $0.9 million and service charges on deposit accounts of $0.5 million due to the improving economic environment resulting in increased customer activity.~~

Noninterest expense increased $1.8 million to $47.4 million for the three months ended March 31, 2022 compared to $45.6 million for the same periods in 2021. Professional services and legal increased by $0.4 million due to increased legal expenses as compared to the same period in 2021.~~Salaries and employee benefits increased $0.4 million due to base rate and~~interest rates during 2022.

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The provision for credit losses increased $0.6 million and decreased $3.0 million to $3.2 million and $2.7 million for the three and six months ended June 30, 2022 compared to $2.6 million and $5.7 million for the same periods in 2021.The increase in the provision for credit losses for the three months ended June 30, 2022 compared to the same period in 2021 was primarily due to an increase of $1.4 million in our provision for unfunded commitments related to higher construction commitments and expected loss rates in our construction portfolio. The decrease in the provision for credit losses for the six months ended June 30, 2022 compared to the same period in 2021 was due primarily to two large C&I loan recoveries totaling $6.6 million which were received during the six months ended June 30, 2022, and reductions in our quantitative reserve due primarily to significant improvement in our hotel portfolio.

Noninterest income decreased $2.8 million to $12.6 million for the three months ended June 30, 2022 and decreased $4.9 million to $27.9 million for the six months ended June 30, 2022 compared to the same periods in 2021. Mortgage banking decreased $1.3 million for the three months ended June 30, 2022 and decreased $4.6 million for the six months ended June 30, 2022. Higher interest rates have resulted in a lower volume of mortgage loans sold in the secondary market during 2022 compared to the prior year. Other noninterest income decreased $2.1 million for the three months ended June 30, 2022 and $2.6 million for the six months ended June 30, 2022 primarily due to the decline in the fair value of the assets in a nonqualified benefit plan which has a corresponding offset in salaries and benefits resulting in no impact to net income.

Noninterest expense increased $2.6 million to $48.4 million for the three months ended June 30, 2022 and increased $4.3 million to $95.8 million for the six months ended June 30, 2022 compared to the same periods in 2021. Professional services and legal increased by $0.7 million for the three months ended June 30, 2022 and $1.2 million for the six months ended June 30, 2022 due to increased consulting engagements compared to the same periods in 2021. Furniture, equipment and software increased $0.5 million for the three months ended June 30, 2022 and increased $0.7 million for the six month ended June 30, 2022 due to new software implementation costs. Salaries and employee benefits increased $0.3 million for the three months ended June 30, 2022 and increased $0.7 million for the six months ended June 30, 2022 due to base rate and incentive increases partially offset by lower pension expense and ~~medical expense. Other noninterest expense increased $0.6 million mainly due to higher other real estate owned, or OREO, expense compared to~~a decline in the ~~same period~~fair value of the liability in ~~2021.~~a nonqualified benefit plan.

The provision for income taxes ~~decreased $0.4~~increased $0.3 million to ~~$6.9~~$7.3 million for the three months ended ~~March 31,~~June 30, 2022 and increased $0.1 million to $14.3 million for the six months ended June 30, 2022 compared to ~~$7.3~~$7.0 million and $14.2 million for the same ~~period in 2021. The decrease in income tax expense was primarily due to the decrease in pretax income of $3.1 million compared to the same period~~periods in 2021. Our effective tax rate was ~~19.2~~20.3 percent and 19.7 percent for the three months and six months ended ~~March 31,~~June 30, 2022 compared to ~~18.6~~19.7 percent and 19.1 percent for the ~~same period in~~three and six months ended June 30, 2021. The ~~change~~increases in our effective tax ~~rate~~rates for the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2022 ~~was~~were primarily due to ~~decreased tax benefits associated with~~a $0.5 million decrease in low income housing tax credits ~~in 2022~~ compared to the same periods in 2021.

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, each on a fully taxable equivalent, or FTE, ~~basis, which~~basis. Management also uses return on average tangible shareholders' equity, or ROTE to evaluate and measure performance. These metrics are non-GAAP financial measures. Management believes ~~net interest income and net interest margin on an FTE basis~~these performance metrics 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.

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 Condensed Consolidated Statements of Comprehensive Income (Loss) 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 ~~March 31,~~June 30, 2022 Compared to Three and Six Months Ended ~~March 31,~~June 30, 2021 - Net Interest Income" section of this MD&A.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Average tangible shareholders' equity is a key profitability metric used by management to measure financial performance. The following table provides a reconciliation of return on average tangible shareholders' equity (non-GAAP) by reconciling net income (GAAP) per the Condensed Consolidated Statements of Comprehensive Income (Loss) to net income before amortization and intangibles and average shareholder's equity to average tangible shareholders' equity for the periods presented:


	Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2022				2021				2022				2021
Net income (annualized)		$	115,750			$	113,778			$	116,964			$	121,535
Plus: amortization of intangibles (annualized), net of tax		1,197				1,395				1,236				1,429
Net income before amortization of intangibles (annualized)		$	116,947			$	115,173			$	118,200			$	122,964

Average shareholders' equity		$	1,177,550			$	1,179,002			$	1,187,069			$	1,169,620
Less: average goodwill and other intangible assets, net of deferred tax liability		(378,453)				(379,784)				(378,606)				(379,963)
Average tangible shareholders' equity		$	799,097			$	799,218			$	808,463			$	789,657
Return on average tangible shareholders' equity (non-GAAP)		14.63		%		14.41		%		14.62		%		15.57		%

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three and Six Months Ended ~~March 31,~~June 30, 2022 Compared to

Three and Six Months Ended ~~March 31,~~June 30, 2021

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 and the dividend-received deduction for equity securities using the federal statutory tax rate of 21 percent for each period. 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 Condensed Consolidated Statements of Comprehensive Income (Loss) to net interest income and net interest margin on an FTE basis for the periods presented:


		Three Months Ended March 31,								Three Months Ended June 30,							Six Months Ended June 30,
(dollars in thousands)	(dollars in thousands)	2022				2021					(dollars in thousands)	2022		2021				2022			2021
Total interest and dividend income	Total interest and dividend income		$	70,109			$	74,781					Total interest and dividend income	$	77,599			$	71,577		$	147,708		$	146,358
Total interest expense	Total interest expense		2,376				4,122						Total interest expense	2,405				3,273			4,781			7,396
Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)	Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)		67,733				70,659						Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)	75,194				68,304			142,927			138,962
Adjustment to FTE basis	Adjustment to FTE basis		493				663						Adjustment to FTE basis	506				585			999			1,249
Net Interest Income on an FTE Basis (Non-GAAP)	Net Interest Income on an FTE Basis (Non-GAAP)		$	68,226			$	71,322					Net Interest Income on an FTE Basis (Non-GAAP)	$	75,700			$	68,889		$	143,926		$	140,211
Net interest margin	Net interest margin		3.14		%		3.44		%				Net interest margin	3.53		%		3.13		%	3.33		%	3.28		%
Adjustment to FTE basis	Adjustment to FTE basis		0.02		%		0.03		%				Adjustment to FTE basis	0.03		%		0.03		%	0.02		%	0.03		%
Net Interest Margin on an FTE Basis (Non-GAAP)	Net Interest Margin on an FTE Basis (Non-GAAP)		3.16		%		3.47		%				Net Interest Margin on an FTE Basis (Non-GAAP)	3.56		%		3.16		%	3.35		%	3.31		%

Income amounts are annualized for rate calculations.

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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 March 31, 2022							Three Months Ended March 31, 2021								Three Months Ended June 30, 2022							Three Months Ended June 30, 2021
(dollars in thousands)	(dollars in thousands)	Average Balance		Interest			Rate		Average Balance		Interest			Rate		(dollars in thousands)	Average Balance		Interest			Rate		Average Balance		Interest			Rate
ASSETS	ASSETS															ASSETS
Interest-bearing deposits with banks	Interest-bearing deposits with banks	$	756,141		$	303	0.16	%	$	302,219		$	65	0.09	%	Interest-bearing deposits with banks	$	528,413		$	1,029	0.78	%	$	785,465		$	175	0.09	%
Securities, at fair value(1)(2)	Securities, at fair value(1)(2)	1,002,212			5,265		2.10	%	782,118			4,566		2.34	%	Securities, at fair value(1)(2)	1,024,106			5,601		2.19	%	826,861			4,529		2.19	%
Loans held for sale	Loans held for sale	1,545			14		3.51	%	6,360			45		2.83	%	Loans held for sale	1,406			14		3.95	%	4,353			33		3.01	%
Commercial real estate	Commercial real estate	3,257,238			29,345		3.65	%	3,253,641			30,136		3.76	%	Commercial real estate	3,197,406			32,978		4.14	%	3,251,894			29,930		3.69	%
Commercial and industrial	Commercial and industrial	1,712,865			16,827		3.98	%	1,957,459			20,817		4.31	%	Commercial and industrial	1,685,728			18,119		4.31	%	1,890,538			18,363		3.90	%
Commercial construction	Commercial construction	409,264			3,329		3.30	%	485,269			4,034		3.37	%	Commercial construction	404,856			3,812		3.78	%	462,928			3,854		3.34	%
Total Commercial Loans	Total Commercial Loans	5,379,367			49,501		3.73	%	5,696,369			54,987		3.91	%	Total Commercial Loans	5,287,990			54,909		4.16	%	5,605,359			52,147		3.73	%
Residential mortgage	Residential mortgage	896,268			8,962		4.02	%	897,427			9,416		4.22	%	Residential mortgage	939,756			9,337		3.98	%	863,254			8,996		4.17	%
Home equity	Home equity	570,781			4,823		3.43	%	532,708			4,791		3.65	%	Home equity	594,529			5,282		3.56	%	535,933			4,682		3.50	%
Installment and other consumer	Installment and other consumer	109,972			1,475		5.44	%	79,907			1,247		6.33	%	Installment and other consumer	119,041			1,590		5.36	%	84,259			1,271		6.05	%
Consumer construction	Consumer construction	21,833			181		3.37	%	15,908			188		4.79	%	Consumer construction	31,204			261		3.36	%	13,264			211		6.39	%
Total Consumer Loans	Total Consumer Loans	1,598,854			15,441		3.90	%	1,525,950			15,642		4.14	%	Total Consumer Loans	1,684,530			16,470		3.92	%	1,496,710			15,160		4.06	%
Total Portfolio Loans	Total Portfolio Loans	6,978,221			64,942		3.77	%	7,222,319			70,630		3.96	%	Total Portfolio Loans	6,972,520			71,379		4.11	%	7,102,069			67,307		3.80	%
Total Loans(1)(3)	Total Loans(1)(3)	6,979,765			64,955		3.77	%	7,228,679			70,675		3.96	%	Total Loans(1)(3)	6,973,926			71,393		4.11	%	7,106,422			67,339		3.80	%
Federal Home Loan Bank and other restricted stock	Federal Home Loan Bank and other restricted stock	9,280			79		3.40	%	11,242			139		4.94	%	Federal Home Loan Bank and other restricted stock	8,939			82		3.69	%	10,529			119		4.51	%
Total Interest-earning Assets	Total Interest-earning Assets	8,747,398			70,602		3.27	%	8,324,259			75,445		3.67	%	Total Interest-earning Assets	8,535,384			78,105		3.67	%	8,729,277			72,162		3.31	%
Noninterest-earning assets	Noninterest-earning assets	709,246							756,273							Noninterest-earning assets	690,207							704,635
Total Assets	Total Assets	$	9,456,644						$	9,080,532						Total Assets	$	9,225,591						$	9,433,911
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY															LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand	Interest-bearing demand	$	986,639		$	185	0.08	%	$	895,891		$	222	0.10	%	Interest-bearing demand	$	979,514		$	176	0.07	%	$	998,134		$	230	0.09	%
Money market	Money market	2,055,857			746		0.15	%	1,968,779			943		0.19	%	Money market	1,930,852			709		0.15	%	2,037,976			894		0.18	%
Savings	Savings	1,109,048			78		0.03	%	995,228			152		0.06	%	Savings	1,118,346			128		0.05	%	1,044,899			70		0.03	%
Certificates of deposit	Certificates of deposit	1,070,189			844		0.32	%	1,344,604			2,165		0.65	%	Certificates of deposit	1,001,775			778		0.31	%	1,291,194			1,458		0.45	%
Total Interest-bearing Deposits	Total Interest-bearing Deposits	5,221,733			1,853		0.14	%	5,204,503			3,481		0.27	%	Total Interest-bearing Deposits	5,030,487			1,790		0.14	%	5,372,203			2,652		0.20	%
Securities sold under repurchase agreements	Securities sold under repurchase agreements	81,790			20		0.10	%	64,653			25		0.15	%	Securities sold under repurchase agreements	50,037			13		0.10	%	67,838			17		0.10	%
Short-term borrowings		—			—		—	%	25,556			12		0.19	%

Long-term borrowings	Long-term borrowings	22,310			107		1.95	%	23,471			116		2.00	%	Long-term borrowings	22,072			111		2.01	%	23,113			116		2.01	%
Junior subordinated debt securities	Junior subordinated debt securities	54,398			395		2.95	%	64,088			488		3.09	%	Junior subordinated debt securities	54,413			492		3.62	%	64,103			488		3.06	%
Total Borrowings	Total Borrowings	158,498			523		1.34	%	177,768			641		1.46	%	Total Borrowings	126,522			615		1.95	%	155,054			621		1.61	%
Total Interest-bearing Liabilities	Total Interest-bearing Liabilities	5,380,231			2,376		0.18	%	5,382,271			4,123		0.31	%	Total Interest-bearing Liabilities	5,157,009			2,405		0.19	%	5,527,256			3,273		0.24	%
Noninterest-bearing liabilities	Noninterest-bearing liabilities	2,879,718							2,538,149							Noninterest-bearing liabilities	2,891,032							2,727,653
Shareholders' equity	Shareholders' equity	1,196,694							1,160,113							Shareholders' equity	1,177,550							1,179,002
Total Liabilities and Shareholders' Equity	Total Liabilities and Shareholders' Equity	$	9,456,644						$	9,080,532						Total Liabilities and Shareholders' Equity	$	9,225,591						$	9,433,911
Net Interest Income (1)(2)	Net Interest Income (1)(2)				$	68,226						$	71,322			Net Interest Income (1)(2)				$	75,700						$	68,889
Net Interest Margin (1)(2)	Net Interest Margin (1)(2)						3.16	%						3.47	%	Net Interest Margin (1)(2)						3.56	%						3.16	%

(1) Tax-exempt interest income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent.

(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.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


	Six Months Ended June 30, 2022							Six Months Ended June 30, 2021
(dollars in thousands)	Average Balance		Interest			Rate		Average Balance		Interest			Rate
ASSETS
Interest-bearing deposits with banks	$	641,648		$	1,332	0.42	%	$	545,177		$	240	0.09	%
Securities, at fair value(1)(2)	1,013,219			10,866		2.14	%	804,613			9,095		2.26	%
Loans held for sale	1,475			27		3.72	%	5,351			78		2.90	%
Commercial real estate	3,227,156			62,323		3.89	%	3,252,763			60,066		3.72	%
Commercial and industrial	1,699,222			34,946		4.15	%	1,923,813			39,180		4.10	%
Commercial construction	407,048			7,141		3.54	%	474,037			7,887		3.36	%
Total Commercial Loans	5,333,426			104,410		3.95	%	5,650,613			107,134		3.82	%
Residential mortgage	918,132			18,299		4.00	%	880,246			18,412		4.20	%
Home equity	582,721			10,105		3.50	%	534,329			9,473		3.58	%
Installment and other consumer	114,531			3,065		5.40	%	82,095			2,518		6.19	%
Consumer construction	26,544			443		3.36	%	14,578			399		5.52	%
Total Consumer Loans	1,641,928			31,911		3.91	%	1,511,249			30,803		4.10	%
Total Portfolio Loans	6,975,354			136,321		3.94	%	7,161,862			137,936		3.88	%
Total Loans(1)(3)	6,976,829			136,348		3.94	%	7,167,213			138,014		3.88	%
Federal Home Loan Bank and other restricted stock	9,108			161		3.54	%	10,884			257		4.73	%
Total Interest-earning Assets	8,640,804			148,708		3.47	%	8,527,887			147,607		3.49	%
Noninterest-earning assets	699,097							730,117
Total Assets	$	9,339,901						$	9,258,003
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand	$	983,057		$	361	0.07	%	$	947,295		$	452	0.10	%
Money market	1,993,009			1,455		0.15	%	2,003,569			1,837		0.18	%
Savings	1,113,723			206		0.04	%	1,020,201			221		0.04	%
Certificates of deposit	1,035,793			1,621		0.32	%	1,317,751			3,623		0.55	%
Total Interest-bearing Deposits	5,125,582			3,644		0.14	%	5,288,816			6,133		0.23	%
Securities sold under repurchase agreements	65,826			33		0.10	%	66,254			42		0.13	%
Short-term borrowings	—			—		—	%	12,707			12		0.19	%
Long-term borrowings	22,190			218		1.98	%	23,291			232		2.01	%
Junior subordinated debt securities	54,406			887		3.29	%	64,095			977		3.07	%
Total Borrowings	142,422			1,138		1.61	%	166,348			1,262		1.53	%
Total Interest-bearing Liabilities	5,268,004			4,781		0.18	%	5,455,164			7,396		0.27	%
Noninterest-bearing liabilities	2,884,828							2,633,219
Shareholders' equity	1,187,069							1,169,620
Total Liabilities and Shareholders' Equity	$	9,339,901						$	9,258,003
Net Interest Income (1)(2)				$	143,926						$	140,211
Net Interest Margin (1)(2)						3.35	%						3.31	%

(1) Tax-exempt interest income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent.

(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.

Net interest income on an FTE basis (non-GAAP) increased $6.8 million and $3.7 million for the three and six months ended June 30, 2022 compared to the same periods in 2021. The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 40 and 4 basis points for the three and six months ended June 30, 2022 compared to the same periods in 2021. The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2022.

Interest income on an FTE basis (non-GAAP) increased $5.9 million and $1.1 million for the three and six months ended June 30, 2022 compared to the same periods in 2021. The increases in interest income on an FTE basis (non-GAAP) were primarily due to higher interest rates partially offset by lower Paycheck Protection Program, or PPP, income. Average PPP loans decreased $431.4 million and $413.0 million compared to the three and six months ended June 30, 2021. Average loan balances, excluding PPP loans, increased $298.9 million and $222.6 million for the three and six months ended June 30, 2022 compared to the same periods in 2021. The yield on average loans increased 31 basis points and 6 basis points for the three and

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~~Net interest income on an FTE basis (non-GAAP) decreased $3.1 million for the three~~six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in ~~2021. The decline was primarily~~2021 due to ~~reduced PPP revenue of $4.1~~increased interest rates. Average securities increased $197.2 million ~~compared to the prior period. The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points~~and $208.6 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same period in 2021. Increased interest-bearing deposits with banks negatively impacted the net interest margin on an FTE basis (non-GAAP) by 16 basis points and reduced revenue from PPP loans negatively impacted the net interest margin on an FTE basis (non-GAAP) by 4 basis points for the three months ended March 31, 2022 compared to the prior period.

Interest income on an FTE basis (non-GAAP) decreased $4.8 million for the three months ended March 31, 2022 compared to the same period in 2021. The decrease in interest income was primarily due to reduced PPP revenue. Average PPP loans decreased $394.3 million compared to the three months ended March 31, 2021. Average loan balances, excluding PPP loans, increased $145.4 million for the three months ended March 31, 2022 compared to the same period in 2021. Average securities increased $220.1 million for the three months ended March 31, 2022 compared to the same periodperiods in 2021. Securities increased due to interest-bearing deposits with banks being redeployed to higher yielding assets. Average interest-bearing deposits with banks decreased $257.1 million and increased ~~$453.9~~$96.5 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period in 2021 due to PPP forgiveness and a significant increase in average deposits as a result of customer PPP loans and stimulus payments along with customers' liquidity preferences~~periods in 2021. Overall, the FTE rate on interest-earning assets (non-GAAP) increased 36 basis points and decreased 402 basis points for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same period in 2021.

Interest expense decreased ~~$1.7~~$0.9 million and $2.6 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021. The ~~decrease was~~decreases in interest expense were primarily due to lower average rates paid on interest-bearing deposits compared to the same ~~period~~periods in 2021. Average interest-bearing deposits ~~increased $17.2~~decreased $341.7 million and $163.2 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021. The decreases were concentrated in higher-balance, rate sensitive accounts. Additionally, we discontinued a money market product during the first quarter of 2022 that was indexed to the Federal Funds rate which caused declines in money market balances. The average rate paid on interest-bearing deposits decreased 136 and 9 basis points for the three and six months ended June 30, 2022 compared to the same ~~period~~periods in 2021 primarily due to decreased balances in rate sensitive accounts and the maturities of higher costing certificates of deposit. Average demand deposits increased ~~$372.3~~$137.4 million and $254.2 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021. We experienced demand deposit growth throughout 2021 due to customer PPP loans and stimulus payments along with customers' liquidity preferences. Average ~~brokered deposits decreased $40.7 million and average~~ total borrowings decreased ~~$19.3~~$28.5 million and $23.9 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021 due to ~~maturities~~the payoff of a subordinated debt and ~~a reduced need for wholesale funding.~~lower customer repo balances. Overall, the cost of interest-bearing liabilities decreased 135 and 9 basis points for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021.

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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 March 31, 2022 Compared to March 31, 2021					Three Months Ended June 31, 2022 Compared to June 31, 2021								Six Months Ended June 31, 2022 Compared to June 31, 2021
(dollars in thousands)	(dollars in thousands)		Volume (4)		Rate (4)			Total		(dollars in thousands)	Volume (4)		Rate (4)		Total		Volume (4)		Rate (4)		Total
Interest earned on:	Interest earned on:									Interest earned on:
Interest-bearing deposits with banks	Interest-bearing deposits with banks		$	98	$	140		$	238	Interest-bearing deposits with banks	$	(57)	$	912	$	855	$	42	$	1,050	$	1,093
Securities, at fair value(1)(2)	Securities, at fair value(1)(2)		1,285		(586)			699		Securities, at fair value(1)(2)	1,080		(9)		1,071		2,358		(588)		1,770
Loans held for sale	Loans held for sale		(34)		3			(31)		Loans held for sale	(22)		3		(19)		(56)		6		(50)
Commercial real estate	Commercial real estate		33		(825)			(791)		Commercial real estate	(502)		3,549		3,048		(473)		2,729		2,256
Commercial and industrial	Commercial and industrial		(2,601)		(1,389)			(3,990)		Commercial and industrial	(1,989)		1,746		(244)		(4,574)		340		(4,234)
Commercial construction	Commercial construction		(632)		(73)			(704)		Commercial construction	(483)		441		(42)		(1,115)		368		(746)
Total Commercial Loans	Total Commercial Loans		(3,200)		(2,287)			(5,486)		Total Commercial Loans	(2,974)		5,736		2,762		(6,161)		3,437		(2,724)
Residential mortgage	Residential mortgage		(12)		(442)			(454)		Residential mortgage	797		(456)		341		792		(905)		(113)
Home equity	Home equity		342		(311)			31		Home equity	512		88		600		858		(227)		631
Installment and other consumer	Installment and other consumer		469		(242)			227		Installment and other consumer	525		(205)		319		995		(448)		547
Consumer construction	Consumer construction		70		(77)			(7)		Consumer construction	286		(236)		50		328		(285)		43
Total Consumer Loans	Total Consumer Loans		870		(1,071)			(202)		Total Consumer Loans	2,120		(810)		1,310		2,973		(1,865)		1,108
Total Portfolio Loans	Total Portfolio Loans		(2,330)		(3,358)			(5,688)		Total Portfolio Loans	(855)		4,927		4,072		(3,188)		1,573		(1,616)
Total Loans (1)(3)	Total Loans (1)(3)		(2,364)		(3,355)			(5,719)		Total Loans (1)(3)	(877)		4,930		4,053		(3,245)		1,579		(1,666)
Federal Home Loan Bank and other restricted stock	Federal Home Loan Bank and other restricted stock		(24)		(36)			(60)		Federal Home Loan Bank and other restricted stock	(18)		(18)		(36)		(42)		(54)		(96)
Change in Interest Earned on Interest-earning Assets	Change in Interest Earned on Interest-earning Assets		$	(1,006)	$	(3,836)		$	(4,842)	Change in Interest Earned on Interest-earning Assets	$	129	$	5,815	$	5,943	$	(886)	$	1,987	$	1,101
Interest paid on:	Interest paid on:									Interest paid on:
Interest-bearing demand	Interest-bearing demand		$	22	$	(59)		$	(36)	Interest-bearing demand	$	(4)	$	(50)	$	(54)	$	17	$	(108)	$	(90)
Money market	Money market		42		(239)			(197)		Money market	(47)		(138)		(185)		(10)		(373)		(382)
Savings	Savings		17		(91)			(74)		Savings	5		54		58		20		(36)		(15)
Certificates of deposit	Certificates of deposit		(442)		(879)			(1,321)		Certificates of deposit	(327)		(354)		(680)		(775)		(1,226)		(2,001)
Total Interest-bearing Deposits	Total Interest-bearing Deposits		(360)		(1,268)			(1,628)		Total Interest-bearing Deposits	(373)		(488)		(861)		(747)		(1,742)		(2,490)
Securities sold under repurchase agreements	Securities sold under repurchase agreements		7		(11)			(4)		Securities sold under repurchase agreements	(4)		—		(4)		—		(8)		(9)
Short-term borrowings	Short-term borrowings		(12)		—			(12)		Short-term borrowings	—		—		—		(12)		—		(12)
Long-term borrowings	Long-term borrowings		(6)		(3)			(9)		Long-term borrowings	(5)		—		(5)		(11)		(3)		(14)
Junior subordinated debt securities	Junior subordinated debt securities		(74)		(19)			(93)		Junior subordinated debt securities	(74)		77		3		(148)		58		(90)
Total Borrowings	Total Borrowings		(85)		(33)			(118)		Total Borrowings	(84)		77		(6)		(171)		46		(125)
Change in Interest Paid on Interest-bearing Liabilities	Change in Interest Paid on Interest-bearing Liabilities		(445)		(1,301)			(1,746)		Change in Interest Paid on Interest-bearing Liabilities	(457)		(411)		$	(868)	(918)		(1,696)		(2,614)
Change in Net Interest Income	Change in Net Interest Income		$	(561)	$	(2,536)		$	(3,096)	Change in Net Interest Income	$	585	$	6,226	$	6,811	$	32	$	3,683	$	3,715

(1) Tax-exempt income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent.

(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 credit losses in the portfolio at the balance sheet date. The provision for credit losses increased $0.6 million and decreased ~~$3.6~~$3.0 million to ~~a negative $0.5~~$3.2 million and $2.7 million for the three and six months ended ~~March 31,~~June 30, 2022 compared to ~~$3.1~~$2.6 million and $5.7 million for the same ~~period~~periods in 2021. The provision for credit losses included $2.0 million and $2.2 million for the reserve for unfunded commitments for the three and six months ended June 30, 2022 compared to $0.6 million and $0.4 million for the same periods in 2021.

The ~~decrease~~increase in the provision for credit losses of ~~$3.6~~$0.6 million for the three months ended ~~March 31,~~June 30, 2022 compared to the same period in 2021 was primarily due to ~~a $2.5~~an increase of $1.4 million ~~recovery on~~in our provision for unfunded commitments related to higher construction commitments and expected loss rates in our construction portfolio. The decrease in the provision for credit losses of $3.0 million for the six months ended June 30, 2022 compared to the same period in 2021 was due primarily to two large C&I loan recoveries totaling $6.6 million which were received during the six months ended June 30, 2022, and reductions in our quantitative reserve due primarily to significant improvement in our hotel portfolio.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the three and six months ended June 30, 2022, we had net loan charge-offs of $3.0 million and $1.0 million compared to $7.5 million and $13.3 million for the same periods in 2021. The most significant charge-off for the three and six months ended June 30, 2022 was a C&I relationship that was resolved through a note sale resulting in a $5.5 million charge-off during the ~~first quarter of 2022 and improvement in economic conditions resulting in an improved forecast and declines in our criticized and classified assets and nonperforming loans.~~

Net loan recoveries were $2.0 million for the three months ended March 31, 2022 compared to net loan charge-offs of $5.8 million for the same period in 2021. The net recoveries were primarily due to the above mentioned recovery that occurred during the firstsecond quarter of 2022.

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

Noninterest Income


	Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)	2022			2021			$ Change			% Change			2022			2021			$ Change			% Change
Net gain on sale of securities		$	—		$	29		$	(29)		NM			$	—		$	29		$	(29)		NM
Debit and credit card		4,756			4,744			12			0.3	%		9,819			8,906			913			10.3	%
Service charges on deposit accounts		4,181			3,642			539			14.8	%		8,155			7,116			1,039			14.6	%
Wealth management		3,247			3,167			80			2.5	%		6,489			6,111			378			6.2	%
Mortgage banking		466			1,734			(1,268)			(73.1)	%		1,481			6,044			(4,563)			(75.5)	%

Other		(20)			2,108			(2,128)			(100.9)	%		1,912			4,541			(2,629)			(57.9)	%
Total Noninterest Income		$	12,630		$	15,424		$	(2,794)		(18.1)	%		$	27,856		$	32,747		$	(4,891)		(14.9)	%
NM - not meaningful

Noninterest Expense


	Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)	2022			2021			$ Change			% Change				2022		2021			$ Change			% Change
Salaries and employee benefits		$	24,811		$	24,515		$	296		1.2	%		$	48,523		$	47,842		$	681		1.4	%
Data processing and information technology		4,104			3,787			317			8.4	%		8,539			8,012			527			6.6	%
Occupancy		3,634			3,434			200			5.8	%		7,516			7,261			255			3.5	%
Furniture, equipment and software		2,939			2,402			537			22.3	%		5,716			5,042			674			13.4	%
Other taxes		1,682			1,832			(150)			(8.2)	%		3,219			3,268			(49)			(1.5)	%
Professional services and legal		2,380			1,637			743			45.4	%		4,329			3,168			1,161			36.6	%
Marketing		1,524			996			528			53.0	%		2,885			2,318			567			24.5	%
FDIC insurance		882			924			(42)			(4.5)	%		1,819			1,970			(151)			(7.7)	%

Other		6,468			6,302��			166			2.6	%		13,292			12,614			678			5.4	%
Total Noninterest Expense		$	48,424		$	45,829		$	2,595		5.7	%		$	95,838		$	91,495		$	4,343		4.7	%

Noninterest expense increased $2.6 million to $48.4 million for the three months ended June 30, 2022 and increased $4.3 million to $95.8 million for the six months ended June 30, 2022 compared to the same periods in 2021. Professional services and legal increased by $0.7 million for the three months ended June 30, 2022 and $1.2 million for the six months ended June 30, 2022 due to increased consulting engagements compared to the same periods in 2021. Furniture, equipment and software increased $0.5 million for the three months ended June 30, 2022 and increased $0.7 million for the six month ended June 30, 2022 due to new software implementation costs. Marketing costs increased $0.5 million for the three months ended June 30, 2022 and increased $0.6 million for the six months ended June 30, 2022 due to increased marketing efforts and additional campaigns. Data processing and information technology costs increased by $0.3 million for the three months ended June 30, 2022 and increased $0.5 million for the six months ended June 30, 2022 due to increased information technology outsourcing costs. Salaries and employee benefits increased $0.3 million for the three months ended June 30, 2022 and increased $0.7 million for the six months ended June 30, 2022 due to base rate and incentive increases partially offset by lower pension expense and a decline in fair value of the liability in a nonqualified benefit plan. The decrease in pension expense

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related to retirees electing lump-sum distributions causing settlement accounting in the same period in 2021. Other noninterest expenses increased $0.2 million and $0.7 million for the three and six months ended June 30, 2022 due to increased travel and employee expenses and increased expenses in amortization related to our qualified affordable housing projects.

Provision for Income Taxes

The provision for income taxes increased $0.3 million to $7.3 million for the three months ended June 30, 2022 and increased $0.1 million to $14.3 million for the six months ended June 30, 2022 compared to $7.0 million and $14.2 million for the same periods in 2021. Our effective tax rate was 20.3 percent and 19.7 percent for the three months and six months ended June 30, 2022 compared to 19.7 percent and 19.1 percent for the three and six months ended June 30, 2021. The increases in our effective tax rates for the three and six month periods ended June 30, 2022 were primarily due to a $0.5 million decrease in low income housing tax credits compared to the same periods in 2021.

Financial Condition as of June 30, 2022

Total assets decreased $384.7 million to $9.1 billion at June 30, 2022 compared to $9.5 billion at December 31, 2021. Cash and due from banks decreased $577.5 million to $344.7 million at June 30, 2022 compared to $922.2 million at December 31, 2021 primarily due to a decrease in deposits of $384.3 million. Total portfolio loans increased $40.9 million to remain relatively stable at $7.0 billion at June 30, 2022 compared to December 31, 2021. The commercial loan portfolio decreased $109.5 million compared to December 31, 2021. C&I loans decreased $33.9 million which mainly related to a decline in PPP loans of $76.6 million since December 31, 2021. The consumer loan portfolio increased $150.4 million with increases in consumer real estate of $138.4 million and other consumer of $12.0 million. Excluding the PPP loans, portfolio loans increased $117.5 million compared to December 31, 2021.

Securities increased $157.8 million to $1.1 billion at June 30, 2022 from $910.8 million at December 31, 2021. The increase in securities is primarily due to interest-bearing deposits with banks being redeployed to higher yielding assets. The bond portfolio had a net unrealized loss of $61.9 million at June 30, 2022 compared to a net unrealized gain of $9.4 million at December 31, 2021 due to higher interest rates.

Our deposits decreased $384.3 million to $7.6 billion at June 30, 2022 compared to $8.0 billion at December 31, 2021. Noninterest-bearing demand deposits were stable at $2.7 billion at June 30, 2022 compared to December 31, 2021. Interest-bearing demand deposits decreased $98.7 million and money market decreased $182.1 million which was concentrated in higher balance, rate sensitive accounts. Certificates of deposits decreased $107.0 million due to maturities compared to December 31, 2021.

Total borrowings decreased $45.6 million to $115.7 million at June 30, 2022 compared to $161.3 million at December 31, 2021. The decrease in borrowings is primarily related to a decline in securities sold under repurchase agreements of $45.2 million compared to December 31, 2021.We no longer offer repurchase agreements as a product for our customers and the remaining balance is in process of being transferred to other deposit products.

Total shareholders’ equity decreased by $28.1 million to remain relatively stable at $1.2 billion at June 30, 2022 compared to December 31, 2021. The decrease was primarily due to other comprehensive losses of $60.1 million, dividends of $23.2 million and common stock repurchases of $4.2 million offset by net income of $58.0 million. The $60.1 million in other comprehensive losses was primarily due to net unrealized losses of $61.9 million on our available-for-sale bond portfolio due to interest rate increases from December 31, 2021 to June 30, 2022.

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~~Noninterest Income~~
Three Months Ended March 31,
(dollars in thousands) 2022 2021 $ Change % Change
Net gain on sale of securities $ — $ — $ — $ —
Debit and credit card 5,063 4,162 901 21.6 %
Service charges on deposit accounts 3,974 3,474 500 14.4 %
Wealth management 3,242 2,944 298 10.1 %
Mortgage banking 1,015 4,310 (3,295) (76.5) %
Other 1,932 2,346 (414) (17.6) %
Total Noninterest Income $ 15,226 $ 17,236 $ (2,010) (11.7) %

Noninterest income decreased $2.0 million to $15.2 million for the three months ended March 31, 2022 as compared to the same period in 2021. The decrease in noninterest income primarily related to a decrease of $3.3 million in mortgage banking due to the lower volume of loans originated for sale in the secondary market. Other noninterest income also decreased $0.4 million primarily due to a change in the valuation of our deferred compensation plan, which has a corresponding offset in salaries and employee benefits resulting in no impact to net income compared to the first quarter of 2021. The improving economic environment drove higher customer activity resulting in increased debit and credit card fees of $0.9 million, service charges on deposit accounts of $0.5 million and wealth management income of $0.3 million compared to 2021.

~~Noninterest Expense~~
Three Months Ended March 31,
(dollars in thousands) 2022 2021 $ Change % Change
Salaries and employee benefits $ 23,712 $ 23,327 $ 385 1.7 %
Data processing and information technology 4,435 4,225 210 5.0 %
Occupancy 3,882 3,827 55 1.4 %
Furniture, equipment and software 2,777 2,640 137 5.2 %
Professional services and legal 1,949 1,531 418 27.3 %
Other taxes 1,537 1,436 101 7.0 %
Marketing 1,361 1,322 39 3.0 %
FDIC insurance 937 1,046 (109) (10.4) %
Other noninterest expense 6,824 6,226 598 9.6 %
Total Noninterest Expense $ 47,414 $ 45,580 $ 1,834 4.0 %

Noninterest expense increased $1.8 million to $47.4 million for the three months ended March 31, 2022 as compared to the same period in 2021. Professional services and legal increased by $0.4 million due to increased legal expenses as compared to the same period in 2021.Salaries and employee benefits increased $0.4 million due to base rate and incentive increases partially offset by lower pension and medical expense. The decrease in pension expense related to retirees electing lump-sum distributions causing settlement accounting in the same period in 2021. Other noninterest expense increased $0.6 million mainly due to higher other real estate owned, or OREO, expense compared to the same period in 2021.

~~Provision for Income Taxes~~

The provision for income taxes decreased $0.4 million to $6.9 million for the three months ended March 31, 2022 compared to $7.3 million for the same period in 2021. The decrease in income tax expense was primarily due to the decrease in pretax income of $3.1 million compared to the same period in 2021. Our effective tax rate was 19.2 percent for the three months ended March 31, 2022 compared to 18.6 percent for the same period in 2021. The change in our effective tax rate for the three months ended March 31, 2022 was primarily due to decreased tax benefits associated with low income housing tax credits in 2022 compared to 2021.

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~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Financial Condition as of March 31, 2022~~

~~Total assets decreased $56.2 million to $9.4 billion at March 31, 2022 compared to $9.5 billion at December 31, 2021.~~ ~~Cash and due from banks decreased $98.5 million to $823.8 million at March 31, 2022 compared to $922.2 million at December 31, 2021 due to an increase of $117.4 million in securities.~~ ~~Total portfolio loans decreased $36.1 million to $7.0 billion at March 31, 2022 and December 31, 2021.~~ The commercial loan portfolio decreased $74.7 million compared to December 31, 2021. C&I loans decreased $53.7 million which mainly related to a decline in PPP loans of $46.4 million since December 31, 2021. The consumer loan portfolio increased $38.6 million with increases in residential mortgage of $12.6 million, consumer construction of $4.1 million, home equity of $17.6 million, and other consumer of $4.3 million. Excluding the PPP loans, portfolio loans increased $10.3 million compared to December 31, 2021.

Securities increased $117.4 million to $1.0 billion at March 31, 2022 from $910.8 million at December 31, 2021. The increase in securities is primarily due to interest-bearing deposits with banks being redeployed to higher yielding assets. The bond portfolio had a net unrealized loss of $38.8 million at March 31, 2022 compared to a net unrealized gain of $9.4 million at December 31, 2021 due to higher interest rates.

Our deposits decreased $36.1 million, with total deposits of $8.0 billion at both March 31, 2022 and December 31, 2021. Deposits remain stable with an improvement in the overall deposit mix to lower costing products compared to December 31, 2021.

Total borrowings decreased $14.6 million to $146.7 million at March 31, 2022 compared to $161.3 million at December 31, 2021. The decrease in borrowings is primarily related to a decline in securities sold under repurchase agreements of $14.4 million compared to December 31, 2021.

Total shareholders’ equity decreased by $21.5 million to $1.2 billion at March 31, 2022, compared to $1.2 billion at December 31, 2021. The decrease was due to other comprehensive losses of $39.9 million and dividends of $11.4 million offset by net income of $29.1 million. Accumulated other comprehensive loss of $7.1 million at December 31, 2021 increased to $47.0 at March 31, 2022. The $39.9 million increase in accumulated other comprehensive loss was primarily due to net unrealized losses of $38.8 million on our available-for-sale bond portfolio due to interest rate increases from December 31, 2021 to March 31, 2022.

Securities Activity


(dollars in thousands)	(dollars in thousands)	March 31, 2022			December 31, 2021			$ Change			(dollars in thousands)	June 30, 2022			December 31, 2021			$ Change
U.S. Treasury securities	U.S. Treasury securities		$	129,994		$	95,327		$	34,667	U.S. Treasury securities		$	136,282		$	95,327		$	40,955
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies		58,493			70,348			(11,855)		Obligations of U.S. government corporations and agencies		52,815			70,348			(17,533)
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies		385,602			270,294			115,308		Collateralized mortgage obligations of U.S. government corporations and agencies		427,635			270,294			157,341
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies		50,446			56,793			(6,347)		Residential mortgage-backed securities of U.S. government corporations and agencies		46,416			56,793			(10,377)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies		330,811			341,300			(10,489)		Commercial mortgage-backed securities of U.S. government corporations and agencies		333,994			341,300			(7,306)
Corporate obligations	Corporate obligations		500			500			—		Corporate obligations		500			500			—
Obligations of states and political subdivisions	Obligations of states and political subdivisions		71,234			75,089			(3,855)		Obligations of states and political subdivisions		69,850			75,089			(5,239)
Available-for-Sale Debt Securities	Available-for-Sale Debt Securities		1,027,080			909,651			117,429		Available-for-Sale Debt Securities		1,067,492			909,651			157,841
Marketable equity securities	Marketable equity securities		1,138			1,142			(4)		Marketable equity securities		1,084			1,142			(58)
Total Securities	Total Securities		$	1,028,218		$	910,793		$	117,425	Total Securities		$	1,068,576		$	910,793		$	157,783

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 ~~$117.4~~$157.8 million to ~~$1.0~~$1.1 billion at ~~March 31,~~June 30, 2022 from $910.8 million at December 31, 2021. The increase in securities was primarily due to investing interest-bearing deposits with ~~bank~~banks into higher yielding assets.

At ~~March 31,~~June 30, 2022, our bond portfolio was in a net unrealized loss position of ~~$38.9~~$61.9 million compared to a net unrealized gain position of $9.4 million at December 31, 2021. At ~~March 31,~~June 30, 2022, total gross unrealized gains in the bond portfolio were ~~$1.6~~$1.2 million offset by gross unrealized losses of ~~$40.5~~$63.1 million compared to December 31, 2021, when total gross unrealized gains were $15.2 million offset by gross unrealized losses of $5.8 million. The decrease in the net unrealized gain position was primarily due to an increase in interest rates from December 31, 2021 to ~~March 31,~~June 30, 2022.

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~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Loan Composition


		March 31, 2022				December 31, 2021									June 30, 2022				December 31, 2021
(dollars in thousands)	(dollars in thousands)	Amount		% of Loans		Amount		% of Loans		$ Change		% Change		(dollars in thousands)	Amount		% of Loans		Amount		% of Loans		$ Change		% Change
Commercial	Commercial													Commercial
Commercial real estate	Commercial real estate	$	3,257,955	46.8	%	$	3,236,653	46.2	%	$	21,302	0.7	%	Commercial real estate	$	3,191,670	45.3	%	$	3,236,653	46.2	%	$	(44,983)	(1.4)	%
Commercial and industrial	Commercial and industrial	1,675,316		24.1	%	1,728,969		24.7	%	(53,653)		(3.1)	%	Commercial and industrial	1,695,031		24.1	%	1,728,969		24.7	%	(33,938)		(2.0)	%
Commercial construction	Commercial construction	398,592		5.7	%	440,962		6.3	%	(42,370)		(9.6)	%	Commercial construction	410,425		5.8	%	440,962		6.3	%	(30,537)		(6.9)	%

Total Commercial Loans	Total Commercial Loans	5,331,863		76.6	%	5,406,584		77.2	%	(74,721)		(1.4)	%	Total Commercial Loans	5,297,126		75.2	%	5,406,584		77.2	%	(109,458)		(2.0)	%
Consumer	Consumer													Consumer
Consumer real estate	Consumer real estate	1,519,751		21.8	%	1,485,478		21.2	%	34,273		2.3	%	Consumer real estate	1,623,830		23.1	%	1,485,478		21.2	%	138,352		9.3	%
Other consumer	Other consumer	112,297		1.6	%	107,928		1.5	%	4,369		4.0	%	Other consumer	119,938		1.7	%	107,928		1.5	%	12,010		11.1	%
Total Consumer Loans	Total Consumer Loans	1,632,048		23.4	%	1,593,406		22.8	%	38,642		2.4	%	Total Consumer Loans	1,743,768		24.8	%	1,593,406		22.8	%	150,362		9.4	%
Total Portfolio Loans	Total Portfolio Loans	6,963,911		100.0	%	6,999,990		100.0	%	(36,079)		(0.5)	%	Total Portfolio Loans	7,040,894		100.0	%	6,999,990		100.0	%	40,904		0.6	%
Loans held for sale	Loans held for sale	1,346				1,522				(176)		(11.6)	%	Loans held for sale	1,311				1,522				(211)		(13.9)	%
Total Loans	Total Loans	$	6,965,257			$	7,001,512			$	(36,255)	(0.5)	%	Total Loans	$	7,042,205			$	7,001,512			$	40,693	0.6	%

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.

Total portfolio loans ~~decreased $36.1~~increased $40.9 million to remain relatively stable at $7.0 billion at ~~March 31,~~June 30, 2022 compared to December 31, 2021. Portfolio loans excluding PPP loans increased ~~$10.3~~$117.5 million compared to December 31, ~~2021.~~2021. As of ~~March 31,~~June 30, 2022, 74 percent of our total loans are variable rate loans and 26 percent are fixed rate loans.

Commercial loans, including CRE, C&I and commercial construction, comprised ~~76.6~~75.2 percent of total portfolio loans at ~~March 31,~~June 30, 2022 and 77.2 percent at December 31, 2021. The commercial loan portfolio decreased ~~$74.7~~$109.5 million at ~~March 31,~~June 30, 2022 compared to December 31, 2021. C&I loans decreased ~~$53.7~~$33.9 million at ~~March 31,~~June 30, 2022 which mainly related to a PPP loan decline of ~~$46.4~~$76.6 million since December 31, 2021.

~~As of March 31, 2022, we~~We had ~~$41.9~~$11.7 million of PPP loans included in C&I at June 30, 2022 compared to $88.3 million at December 31, 2021. The decrease in PPP loans was due to loan forgiveness. PPP loans are forgivable, in whole or in part, if the proceeds are used

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

for payroll and other permitted expenses in accordance with the requirements of the PPP. These loans carry a fixed rate of 1 percent and a term of two years, or 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 ~~23.4~~24.8 percent of our total portfolio loans at ~~March 31,~~June 30, 2022 and 22.8 percent at December 31, 2021. The consumer loan portfolio increased ~~$38.6~~$150.4 million at ~~March 31,~~June 30, 2022 with increases in consumer real estate of ~~$34.3~~$138.4 million and other consumer of ~~$4.4~~$12.0 million compared to December 31, 2021. Portfolio consumer real estate loans increased in 2022 due to a shift from mortgage loans sold to loans held in the portfolio due to increased jumbo loans and the pricing of loans in the secondary market.

Allowance for Credit Losses

The following table presents activity in the ACL for the periods presented:


	Six Months Ended June 30, 2022
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	50,700	$	19,727	$	5,355	$	11,338	$	8,733	$	2,723	$	98,576
Provision for credit losses on loans(1)	(5,475)		768		1,227		2,207		1,010		758		495
Charge-offs	(199)		(5,798)		—		(1,746)		(138)		(780)		(8,661)
Recoveries	288		6,829		1		358		68		141		7,685
Net Recoveries/(Charge-offs)	89		1,031		1		(1,388)		(70)		(639)		(976)
Balance at End of Period	$	45,314	$	21,526	$	6,583	$	12,157	$	9,673	$	2,842	$	98,095
(1) Excludes the provision for credit losses for unfunded commitments.

The following table presents key ACL ratios for the periods presented:


	June 30, 2022		December 31, 2021
Ratio of net charge-offs to average loans outstanding(1)	0.01	%	0.49	%
Allowance for credit losses as a percentage of total portfolio loans	1.39	%	1.41	%
Allowance for credit losses as a percentage of total portfolio loans - excluding PPP loans	1.40	%	1.43	%
Allowance for credit losses to nonperforming loans	309	%	149	%

(1) Year-to-date net charge-offs annualized

The ACL was $98.1 million, or 1.39 percent of total portfolio loans, at June 30, 2022 compared to $98.6 million, or 1.41 percent of total portfolio loans, at December 31, 2021. The quantitative reserve decreased $5.4 million primarily due to significant improvement in our hotel portfolio. Specific reserves on loans individually assessed decreased $1.8 million due to the resolution of a C&I relationship through a note sale which resulted in a $5.5 million charge-off during the three months ended June 30, 2022. The qualitative reserve increased $6.7 million primarily due to additional segment allocations made in our healthcare portfolio and an increase in our economic forecast related to concerns with rising inflation and macroeconomic conditions.

Net loan charge-offs were $1.0 million, or 0.01 percent of average loans, for the six months ended June 30, 2022. The most significant charge-off was the above mentioned C&I relationship for $5.5 million. Offsetting loan charge-offs were $6.6 million of loan recoveries related to two C&I relationships during the six months ended June 30, 2022.

Substandard loans decreased $36.9 million to $198.3 million at June 30, 2022 compared to $235.2 million at December 31, 2021. The decrease in substandard loans was due to $42.7 million of loan upgrades in our hotel portfolio and $30.5 million of

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~The following table presents activity in the ACL for the periods presented:~~

Three Months Ended March 31, 2022
(dollars in thousands) Commercial
Real Estate Commercial and
Industrial Commercial
Construction Business Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 50,700 $ 19,727 $ 5,355 $ 11,338 $ 8,733 $ 2,723 $ 98,576
Provision for credit losses on loans(1)
(1,996) (206) (27) 765 426 340 (698)
Charge-offs — — — (606) (78) (298) (982)
Recoveries 199 2,716 1 — 37 66 3,019
Net Recoveries/(Charge-offs) 199 2,716 1 (606) (41) (232) 2,037
Balance at End of Period $ 48,903 $ 22,237 $ 5,329 $ 11,497 $ 9,118 $ 2,831 $ 99,915
(1) Excludes the provision for credit losses for unfunded commitments.

~~The following table presents key ACL ratios for the periods presented:~~

March 31, 2022 December 31, 2021
Ratio of net charge-offs to average loans outstanding(1)
(0.12) % 0.49 %
Allowance for credit losses as a percentage of total portfolio loans 1.43 % 1.41 %
Allowance for loan losses as a percentage of total portfolio loans - excluding PPP loans 1.44 % 1.43 %
Allowance for credit losses to nonperforming loans 190 % 149 %

~~(1)~~ ~~Annualized~~

The ACL was $99.9 million, or 1.43 percent of total portfolio loans, at March 31, 2022 compared to $98.6 million, or 1.41 percent of total portfolio loans, at December 31, 2021. The increase in the ACL of $1.3 million was due to a $2.7 million increase in specific reserves on loans individually assessed and a $2.0 million increase in the overall qualitative reserve. The increase in specific reserves on loans individually assessed was due to a $2.7 million increase for a C&I relationship due to continued market deterioration in the estimated enterprise value of the company. The increase in the overall qualitative reserve was the result of additional segment allocations made in our healthcare and C&I portfolios due to continued uncertainty related to the COVID-19 variant and an increase in our economic forecast due primarily to concerns with rising inflation and macroeconomic conditions. Offsetting this increase was a $3.4 million decrease in the quantitative reserve due primarily to improving trends in our hotel portfolio.

~~Net~~ loan recoveries were $2.0 million, or (0.12) percent annualized as a percentage of average loans, for the three months ended March 31, 2022. The net recoveries primarily related to a $2.5 million recovery on a C&I relationship during the first quarter of 2022.

Substandard loans decreased $25.4 million to $209.8 million at March 31, 2022 compared to $235.2 million at December 31, 2021. The decrease in substandard loans was primarily due to $19.7 million of loan upgrades in our hotel portfolio and $12.0 million of various loan payoffs and pay downs.payoffs. The decrease in substandard loans was partially offset by the addition of a ~~$10.5~~$28.5 million ~~CRE~~C&I relationship, which was downgraded to substandard due to financial deterioration that led to cash flow ~~shortfalls.~~shortfalls during the second quarter of 2022. Special mention loans decreased ~~$24.5~~$9.3 million to ~~$167.8~~$183.0 million at ~~March 31,~~June 30, 2022 compared to $192.3 million at December 31, 2021. The decrease in special mention loans was primarily due to ~~the upgrade of three~~loan upgrades in our hotel ~~relationships totaling $21.4 million.~~portfolio.

Troubled debt restructurings, or TDRs, decreased ~~$5.6~~$18.4 million to ~~$26.1~~$13.3 million at ~~March 31,~~June 30, 2022 compared to $31.7 million at December 31, 2021. The decrease in TDRs was primarily due to the payoff of ~~a $4.2 million~~two C&I relationships totaling $14.1 million and a CRE relationship ~~and other loan pay downs.~~totaling $5.7 million. Total TDRs of ~~$26.1~~$13.3 million included ~~$10.7~~$9.3 million, or ~~41.0~~70.0 percent, that were ~~performing~~accruing and ~~$15.4~~$4.0 million, or ~~59.0~~30.0 percent, that were ~~nonperforming~~nonaccruing at ~~March 31,~~June 30, 2022.

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 Condensed Consolidated Statements of Comprehensive Income (Loss). The allowance for unfunded loan commitments increased ~~$0.2~~$2.2 million to ~~$5.4~~$7.4 million at ~~March 31,~~June 30, 2022 compared to $5.2 million at December 31, 2021. This change was primarily ~~due~~related to higher construction commitments and expected loss rates in ~~the~~our construction portfolio. The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.

~~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)	(dollars in thousands)	March 31, 2022				December 31, 2021				$ Change			(dollars in thousands)	June 30, 2022				December 31, 2021				$ Change
Nonperforming Loans (Excluding TDRs)	Nonperforming Loans (Excluding TDRs)												Nonperforming Loans (Excluding TDRs)
Commercial real estate	Commercial real estate		$	24,821			$	29,791			$	(4,970)	Commercial real estate		$	15,006			$	29,791			$	(14,785)
Commercial and industrial	Commercial and industrial		345				350				(5)		Commercial and industrial		342				350				(8)
Commercial construction	Commercial construction		384				384				—		Commercial construction		384				384				—
Business banking	Business banking		6,411				7,945				(1,534)		Business banking		6,582				7,945				(1,363)
Consumer real estate	Consumer real estate		5,049				5,889				(840)		Consumer real estate		5,195				5,889				(694)
Other Consumer	Other Consumer		125				158				(33)		Other Consumer		256				158				98
Total Nonperforming Loans (Excluding TDRs)	Total Nonperforming Loans (Excluding TDRs)		37,135				44,517				(7,382)		Total Nonperforming Loans (Excluding TDRs)		27,765				44,517				(16,752)
Nonperforming Troubled Debt Restructurings	Nonperforming Troubled Debt Restructurings												Nonperforming Troubled Debt Restructurings
Commercial real estate	Commercial real estate		969				1,697				(728)		Commercial real estate		16				1,697				(1,681)
Commercial and industrial	Commercial and industrial		10,225				14,889				(4,664)		Commercial and industrial		—				14,889				(14,889)
Commercial construction	Commercial construction		480				2,087				(1,607)		Commercial construction		480				2,087				(1,607)
Business banking	Business banking		1,586				1,696				(110)		Business banking		1,325				1,696				(371)
Consumer real estate	Consumer real estate		2,129				1,405				724		Consumer real estate		2,189				1,405				784
Other Consumer	Other Consumer		—				—				—		Other Consumer		—				—				—
Total Nonperforming Troubled Debt Restructurings	Total Nonperforming Troubled Debt Restructurings		15,389				21,774				(6,385)		Total Nonperforming Troubled Debt Restructurings		4,010				21,774				(17,764)
Total Nonperforming Loans	Total Nonperforming Loans		52,524				66,291				(13,767)		Total Nonperforming Loans		31,775				66,291				(34,516)
OREO	OREO		7,028				13,313				(6,285)		OREO		7,046				13,313				(6,267)
Total Nonperforming Assets	Total Nonperforming Assets		$	59,552			$	79,604			$	(20,052)	Total Nonperforming Assets		$	38,821			$	79,604			$	(40,783)
Asset Quality Ratios:	Asset Quality Ratios:												Asset Quality Ratios:
Nonperforming loans as a percent of total portfolio loans	Nonperforming loans as a percent of total portfolio loans		0.75		%		0.95		%				Nonperforming loans as a percent of total portfolio loans		0.45		%		0.95		%
Nonperforming assets as a percent of total portfolio loans plus OREO	Nonperforming assets as a percent of total portfolio loans plus OREO		0.85		%		1.13		%				Nonperforming assets as a percent of total portfolio loans plus OREO		0.55		%		1.13		%

Our policy is to place loans in all categories in nonaccrual status when collection of interest or principal is doubtful, or generally when interest or principal payments are 90 days or more past the contractual due date. Nonperforming loans decreased ~~$13.8~~$34.5 million, or ~~20.8~~52.0 percent, to ~~$52.5~~$31.8 million at ~~March 31,~~June 30, 2022 compared to $66.3 million at December 31, 2021. The significant decrease in nonperforming loans primarily related to the payoff of ~~a $4.2 million~~two C&I relationships totaling $14.1 million and a CRE relationship ~~and the return~~totaling $5.7 million. Additionally, four hotel loans were returned to performing status ~~of three hotel loans~~ totaling ~~$4.6 million.~~$6.7 million during the six months ended June 30, 2022. The decrease in OREO ~~during the first quarter of 2022~~ related to the sale of a property for $6.3 ~~million.~~

~~Deposits~~

(dollars in thousands) March 31, 2022 December 31, 2021 $ Change
Noninterest-bearing demand $ 2,740,315 $ 2,748,586 $ (8,271)
Interest-bearing demand 1,070,656 979,133 91,523
Money market 1,992,916 2,070,579 (77,663)
Savings 1,117,985 1,110,155 7,830
Certificates of deposit 1,038,586 1,088,071 (49,485)
Total Deposits $ 7,960,458 $ 7,996,524 $ (36,066)

~~Deposits are our primary source~~million during the first quarter of funds. We believe that our deposit base is stable and that we have the ability to attract new deposits. Total deposits decreased $36.1 million, or 0.5%, with an improving mix to lower yielding deposit-products compared to December 31, 2021.2022.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Deposits


(dollars in thousands)	June 30, 2022			December 31, 2021			$ Change

Noninterest-bearing demand		$	2,736,849		$	2,748,586		$	(11,737)
Interest-bearing demand		880,432			979,133			(98,701)
Money market		1,888,506			2,070,579			(182,073)
Savings		1,125,344			1,110,155			15,189
Certificates of deposit		981,116			1,088,071			(106,955)







Total Deposits		$	7,612,247		$	7,996,524		$	(384,277)

Deposits are our primary source of funds. Our deposit base increased substantially through the Pandemic related to PPP and stimulus programs but we have experienced a decrease in deposits during 2022. Total deposits decreased $384.3 million, or 4.8%, compared to December 31, 2021. Our noninterest-bearing demand deposits remain stable from December 31, 2021. Interest-bearing demand deposits decreased $98.7 million and money market decreased $182.1 million which was concentrated in higher balance, rate sensitive accounts. Additionally, we discontinued a money market product during the first quarter of 2022 that was indexed to the Federal Funds rate which resulted in declines in money markets. Certificates of deposits decreased $107.0 million due to maturities compared to December 31, 2021.

Borrowings


(dollars in thousands)	(dollars in thousands)	March 31, 2022			December 31, 2021			$ Change			(dollars in thousands)	June 30, 2022			December 31, 2021			$ Change
Securities sold under repurchase agreements	Securities sold under repurchase agreements		$	70,112		$	84,491		$	(14,379)	Securities sold under repurchase agreements		$	39,259		$	84,491		$	(45,232)

Long-term borrowings	Long-term borrowings		22,171			22,430			(259)		Long-term borrowings		21,988			22,430			(442)
Junior subordinated debt securities	Junior subordinated debt securities		54,408			54,393			15		Junior subordinated debt securities		54,423			54,393			30
Total Borrowings	Total Borrowings		$	146,691		$	161,314		$	(14,623)	Total Borrowings		$	115,670		$	161,314		$	(45,644)

Borrowings are an additional source of funding for us. Total borrowings decreased ~~$14.6~~$45.6 million compared to December 31, 2021 related to a decrease in securities sold under repurchase agreements. We no longer offer repurchase agreements ~~due~~as a product for our customers and the remaining balance of $39.3 million is in process of being transferred to ~~normal customer activity.~~

~~Information pertaining to short-term borrowings is summarized in the tables below for the three months ended March 31, 2022 and for the twelve months ended December 31, 2021.~~

Securities Sold Under Repurchase Agreements
(dollars in thousands) March 31, 2022 December 31, 2021
Balance at the period end $ 70,112 $ 84,491
Average balance during the period $ 81,790 $ 69,964
Average interest rate during the period 0.10 % 0.11 %
Maximum month-end balance during the period $ 89,366 $ 84,491
Average interest rate at the period end 0.10 % 0.10 %

~~Information pertaining to long-term borrowings is summarized in the tables below for the three months ended March 31, 2022 and for the twelve months ended December 31, 2021.~~

Long-Term Borrowings
(dollars in thousands) March 31, 2022 December 31, 2021
Balance at the period end $ 22,171 $ 22,430
Average balance during the period $ 22,310 $ 22,995
Average interest rate during the period 1.95 % 1.99 %
Maximum month-end balance during the period $ 22,344 $ 23,549
Average interest rate at the period end 1.94 % 1.94 %
Junior Subordinated Debt Securities
(dollars in thousands) March 31, 2022 December 31, 2021
Balance at the period end $ 54,408 $ 54,393
Average balance during the period $ 54,398 $ 61,653
Average interest rate during the period 2.95 % 2.99 %
Maximum month-end balance during the period $ 54,408 $ 64,128
Average interest rate at the period end 3.26 % 2.69 %
other deposit products.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information pertaining to short-term borrowings is summarized in the table below for the six months ended June 30, 2022 and for the twelve months ended December 31, 2021.


	Securities Sold Under Repurchase Agreements
(dollars in thousands)	June 30, 2022			December 31, 2021
Balance at the period end	$	39,259		$	84,491
Average balance during the period	$	65,826		$	69,964
Average interest rate during the period	0.10		%	0.11		%
Maximum month-end balance during the period	$	89,366		$	84,491
Average interest rate at the period end	0.10		%	0.10		%

Information pertaining to long-term borrowings is summarized in the tables below for the six months ended June 30, 2022 and for the twelve months ended December 31, 2021.


	Long-Term Borrowings
(dollars in thousands)	June 30, 2022			December 31, 2021
Balance at the period end	$	21,988		$	22,430
Average balance during the period	$	22,190		$	22,995
Average interest rate during the period	1.98		%	1.99		%
Maximum month-end balance during the period	$	22,344		$	23,549
Average interest rate at the period end	2.03		%	1.94		%

	Junior Subordinated Debt Securities
(dollars in thousands)	June 30, 2022			December 31, 2021
Balance at the period end	$	54,423		$	54,393
Average balance during the period	$	54,406		$	61,653
Average interest rate during the period	3.29		%	2.99		%
Maximum month-end balance during the period	$	54,423		$	64,128
Average interest rate at the period end	4.17		%	2.69		%

Liquidity and Capital Resources

Liquidity is defined as a financial institution’s ability to meet its cash and collateral obligations at a reasonable cost. Our primary future cash needs are centered on the ability to (i) satisfy the financial needs of depositors who may want to withdraw funds or of borrowers needing to access funds to meet their credit needs and (ii) to meet our future cash commitments under contractual obligations with third parties. 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 as of ~~March 31, 2022-Deposits"~~June 30, 2022 - 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.

We have contractual obligations representing required future payments on certificates of deposit, securities sold under repurchase agreements, junior subordinated debt securities, operating and capital leases and purchase obligations. See the Liquidity and Capital Resources portion of our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Form 10-K for more information on these future cash outflows.

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S&T BANCORP, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 ~~March 31,~~June 30, 2022, weS&T Bank had ~~$1.3 billion~~$991.2 million in highly liquid assets which consisted of ~~$750.9~~$263.0 million in interest-bearing deposits with banks, ~~$585.4~~$726.9 million in unpledged securities and ~~$1.4~~$1.3 million in loans held for sale. This resulted in a highly liquid assets to total assets ratio of ~~14.2~~10.9 percent at ~~March~~June 30, 2022. Highly liquid assets have declined by $309.8 million when comparing June 30, 2022 to December 31, ~~2022. Also, at March 31,~~2021. The majority of the decrease in liquid assets is attributed to decreases in cash balances which are primarily a result of decreased deposits. At June 30, 2022, we had remaining borrowing availability of ~~$2.6~~$2.8 billion with the FHLB of Pittsburgh. For more information regarding our outstanding borrowings refer to the "Financial Condition as of ~~March 31, 2022-~~June 30, 2022 - Borrowings" section of this MD&A for more details.

We continue to maintain a strong capital position with our leverage ratio at 10.25 percent at June 30, 2022 compared to 9.74 percent at December 31, 2021, both in excess of the regulatory guideline of 5.00 percent. We continue to be well-capitalized with a risk-based Common Equity Tier 1 ratio of 12.34 percent at June 30, 2022 compared to 12.03 percent at December 31, 2021, both in excess of the regulatory guideline of 6.50 percent to be well-capitalized.

The following table summarizes capital amounts and ratios for S&T and S&T Bank for the dates presented:


(dollars in thousands)	(dollars in thousands)	Adequately Capitalized		Well- Capitalized		March 31, 2022				December 31, 2021				(dollars in thousands)	Adequately Capitalized		Well- Capitalized		June 30, 2022				December 31, 2021
						Amount		Ratio		Amount		Ratio							Amount		Ratio		Amount		Ratio
S&T Bancorp, Inc.	S&T Bancorp, Inc.													S&T Bancorp, Inc.
Tier 1 leverage	Tier 1 leverage	4.00	%	5.00	%	$	897,995	9.85	%	$	889,785	9.74	%	Tier 1 leverage	4.00	%	5.00	%	$	915,985	10.25	%	$	889,785	9.74	%
Common equity tier 1 to risk-weighted assets	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	868,995		12.26	%	860,785		12.03	%	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	886,985		12.34	%	860,785		12.03	%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	897,995		12.67	%	889,785		12.43	%	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	915,985		12.74	%	889,785		12.43	%
Total capital to risk-weighted assets	Total capital to risk-weighted assets	8.00	%	10.00	%	1,004,902		14.18	%	987,420		13.79	%	Total capital to risk-weighted assets	8.00	%	10.00	%	1,023,119		14.23	%	987,420		13.79	%
S&T Bank	S&T Bank													S&T Bank
Tier 1 leverage	Tier 1 leverage	4.00	%	5.00	%	$	870,269	9.55	%	$	864,127	9.46	%	Tier 1 leverage	4.00	%	5.00	%	$	890,488	9.97	%	$	864,127	9.46	%
Common equity tier 1 to risk-weighted assets	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	870,269		12.29	%	864,127		12.09	%	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	890,488		12.39	%	864,127		12.09	%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	870,269		12.29	%	864,127		12.09	%	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	890,488		12.39	%	864,127		12.09	%
Total capital to risk-weighted assets	Total capital to risk-weighted assets	8.00	%	10.00	%	977,177		13.79	%	961,762		13.45	%	Total capital to risk-weighted assets	8.00	%	10.00	%	997,622		13.89	%	961,762		13.45	%

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 due to the COVID-19 pandemic. The IFR provides financial institutions that adopted 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 ~~March 31,~~June 30, 2022, we had not issued any securities pursuant to this shelf registration statement.

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~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

S&T is monitoring and will continue to monitor the impact of the 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.

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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 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 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 1-12 and 13-24 month periods of pretax net interest income and EVE.


		March 31, 2022				December 31, 2021							June 30, 2022										December 31, 2021
		1 - 12 Months	13 - 24 Months	% Change in EVE		1 - 12 Months		13 - 24 Months			% Change in EVE		1 - 12 Months				13 - 24 Months			% Change in EVE			1 - 12 Months			13 - 24 Months			% Change in EVE
Change in Interest Rate (basis points)	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		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
400	400	37.7	44.2		6.4		30.4		40.3				18.4		400	30.1			36.4			(4.0)			30.4			40.3			18.4
300	300	28.2	33.2	10.4		22.5		30.0			19.9	300	22.6				27.5				1.1			22.5			30.0			19.9
200	200	18.7	22.2	11.1		14.9		20.2			18.4	200	15.2				18.5			4.0			14.9			20.2			18.4
100	100	9.1	10.9	7.7		7.0		9.9			11.9	100	7.6				9.4			3.9			7.0			9.9			11.9
-100	-100	(6.5)	(9.1)	(18.9)		(4.6)		(8.4)			(26.3)	-100	(9.2)				(11.8)			(10.5)			(4.6)			(8.4)			(26.3)

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S&T BANCORP, INC. AND SUBSIDIARIES

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 anless improvement in the percentage change in pretax net interest income in the rates up scenarios and a larger decline in the rates down ~~scenarios~~scenario when comparing ~~March 31,~~June 30, 2022 to December 31, 2021. We benefit less in the increasing rate scenarios because we have ~~become more~~less excess cash. We have a larger decline in the decreasing rate scenario because the higher rate environment has increased our asset ~~sensitive due~~yields while our liability costs have remain unchanged to ~~the discontinuation of our indexed money market deposit product.~~date. A decline in interest rates would result in less interest income with limited interest expense reduction. Our EVE analyses show a decline in the percentage change in EVE in the rates up scenarios and an improvement in the rates down scenario when comparing ~~March 31,~~June 30, 2022 to December 31, 2021. The EVE ~~decline is~~changes are due to the impact of ~~a steepened yield curve~~interest rates on the value of ~~non-maturity~~nonmaturity deposits.

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.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of S&T’s 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 ~~March 31,~~June 30, 2022. 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 ~~March 31,~~June 30, 2022, 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

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S&T BANCORP, INC. AND SUBSIDIARIES

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~~2021 Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022 other than the risks described below.

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~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~Item 1A. Risk Factors - continued~~

Russia’s invasion of Ukraine has created significant economic and financial disruptions and uncertainties, which could adversely affect our business, financial condition and results of operations

In late February 2022, Russia launched a large-scale military attack on Ukraine. In response to the military action by Russia, government actions, including broad-ranging economic sanctions against Russia, have been taken by the United States, the United Kingdom, the European Union and other countries. The U.S. and global markets are experiencing volatility and disruption following the start of this military conflict and imposition of sanctions, impacting the financial and commodities markets. The continued impact on financial markets, including the level and volatility of interest rates, could impact our earnings. Furthermore, continued increases in commodity prices contributing to higher inflation could negatively impact our customers and our earnings. Russian military actions and the resulting sanctions could further adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. In addition, Russia may take retaliatory actions and other counter measures including cyberattacks against the U.S., its government, infrastructure and businesses, including S&T. Although the extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility and the result of any diplomatic negotiations remains uncertain, these consequences, including those we cannot yet predict, may cause our business, financial condition, results of operations and the price of our common stock to be adversely affected.

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 ~~first~~second quarter of 2022:

~~Period~~

~~Total number of shares purchased~~

~~Average 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~~

~~01/01/2022 - 01/31/2022~~

—

$—

—

~~37,441,683~~

~~02/01/2022 - 02/28/2022~~

—

~~37,441,683~~

~~03/01/2022 - 03/31/2022~~

—

~~37,441,683~~

~~Total~~

—

$—

—

~~$37,441,683~~


Period	Total number of shares purchased	Average 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
04/01/2022 - 04/30/2022	—	$—	—	37,441,683

05/01/2022 - 05/31/2022	—	—	—	37,441,683

06/01/2022 - 06/30/2022	151,220	27.4611	151,220	33,289,015
Total	151,220	$27.4611	151,220	$33,289,015

(1) On March 21, 2022, our Board of Directors authorized an extension of the $50 million share repurchase plan, which was set to expire March 31, 2022. This authorization extended the expiration date of the repurchase plan through March 31, 2023. 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~~$33.3 million of capacity remaining at ~~March 31,~~June 30, 2022, 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 repurchases from cash on hand and internally generated funds. Share repurchases will not occur unless permissible under applicable laws.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

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S&T BANCORP, INC. AND SUBSIDIARIES

Item 6. Exhibits





2.1	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.
10.1	Severance Agreement dated June 7, 2022 by and between George Basara and S&T Bancorp, Inc. Filed as Exhibit 10.1 to S&T Bancorp, Inc. Current Report on Form 8-K filed on June 10, 2022, and incorporated herein by reference.*
10.2	Form of Restricted Stock Unit Award Agreement - LTIP.*	Filed herewith.
10.3	Form of Restricted Stock Unit Award Agreement - Non-LTIP.*	Filed herewith.
10.4	Form of Restricted Stock Unit Award Agreement - Directors.*	Filed herewith.
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer.
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer.
32	Rule 13a-14(b) Certification of the Chief Executive Officer and Chief Financial Officer.
101.INS	XBRL 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.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)
* Management Contract or Compensatory Plan or Arrangement

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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)

~~May 4,~~August 3, 2022			/ss/ Mark Kochvar
			Mark Kochvar Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Signatory)

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		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets	2

	Condensed Consolidated Statements of Comprehensive Income (Loss)	3

	Consolidated Statements of Changes in Shareholders' Equity	4

	Condensed Consolidated Statements of Cash Flows	56

	Notes to Consolidated Financial Statements	67

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3032

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4449

Item 4.	Controls and Procedures	4550

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4550

Item 1A.	Risk Factors	4551

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4651

Item 3.	Defaults Upon Senior Securities	4651

Item 4.	Mine Safety Disclosures	4651

Item 5.	Other Information	4651

Item 6.	Exhibits	4752

	Signatures	4853