UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________
FORM 10-Q
______________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to                
Commission file number 0-12508
______________________________________ 
S&T BANCORP INC.
(Exact name of registrant as specified in its charter)
______________________________________ 
Pennsylvania 25-1434426
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
800 Philadelphia StreetIndianaPA 15701
(Address of principal executive offices) (zip code)
800-325-2265
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $2.50 par valueSTBAThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated 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 - 39,146,29138,967,075 shares as of July 29, 2022April 28, 2023



Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES



INDEX
S&T BANCORP, INC. AND SUBSIDIARIES
 
  Page No.



1

Table of Contents

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


June 30, 2022December 31, 2021March 31, 2023December 31, 2022
(in thousands, except share and per share data)(in thousands, except share and per share data)(Unaudited)(Audited)(in thousands, except share and per share data)(Unaudited)(Audited)
ASSETSASSETSASSETS
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 
Cash and due from banks, including interest-bearing deposits of $151,209 and $138,149 at March 31, 2023 and December 31, 2022Cash and due from banks, including interest-bearing deposits of $151,209 and $138,149 at March 31, 2023 and December 31, 2022$244,152 $210,009 
Securities, at fair valueSecurities, at fair value1,068,576 910,793 Securities, at fair value998,708 1,002,778 
Loans held for saleLoans held for sale1,311 1,522 Loans held for sale81 16 
Portfolio loans, net of unearned incomePortfolio loans, net of unearned income7,040,894 6,999,990 Portfolio loans, net of unearned income7,251,064 7,183,969 
Allowance for credit lossesAllowance for credit losses(98,095)(98,576)Allowance for credit losses(108,113)(101,340)
Portfolio loans, netPortfolio loans, net6,942,799 6,901,414 Portfolio loans, net7,142,951 7,082,629 
Bank owned life insuranceBank owned life insurance84,536 83,685 Bank owned life insurance85,476 85,185 
Premises and equipment, netPremises and equipment, net50,913 52,632 Premises and equipment, net49,126 49,285 
Federal Home Loan Bank and other restricted stock, at costFederal Home Loan Bank and other restricted stock, at cost7,949 9,519 Federal Home Loan Bank and other restricted stock, at cost30,262 23,035 
GoodwillGoodwill373,424 373,424 Goodwill373,424 373,424 
Other intangible assets, netOther intangible assets, net6,120 6,895 Other intangible assets, net5,039 5,378 
Other assetsOther assets223,492 226,430 Other assets264,223 278,828 
Total AssetsTotal Assets$9,103,814 $9,488,529 Total Assets$9,193,442 $9,110,567 
LIABILITIESLIABILITIESLIABILITIES
Deposits:Deposits:Deposits:
Noninterest-bearing demandNoninterest-bearing demand$2,736,849 $2,748,586 Noninterest-bearing demand$2,468,638 $2,588,692 
Interest-bearing demandInterest-bearing demand880,432 979,133 Interest-bearing demand841,130 846,653 
Money marketMoney market1,888,506 2,070,579 Money market1,599,814 1,731,521 
SavingsSavings1,125,344 1,110,155 Savings1,068,274 1,118,511 
Certificates of depositCertificates of deposit981,116 1,088,071 Certificates of deposit1,175,238 934,593 
Total DepositsTotal Deposits7,612,247 7,996,524 Total Deposits7,153,094 7,219,970 
Securities sold under repurchase agreements39,259 84,491 
Short-term borrowingsShort-term borrowings495,000 370,000 
Long-term borrowingsLong-term borrowings21,988 22,430 Long-term borrowings14,628 14,741 
Junior subordinated debt securitiesJunior subordinated debt securities54,423 54,393 Junior subordinated debt securities54,468 54,453 
Other liabilitiesOther liabilities197,539 124,237 Other liabilities248,457 266,744 
Total LiabilitiesTotal Liabilities7,925,456 8,282,075 Total Liabilities7,965,647 7,925,908 
SHAREHOLDERS’ EQUITYSHAREHOLDERS’ EQUITYSHAREHOLDERS’ 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 
Common stock ($2.50 par value)
Authorized—50,000,000 shares
Issued—41,449,444 shares at March 31, 2023 and December 31, 2022
Outstanding—38,998,156 shares at March 31, 2023 and 38,999,733 shares at December 31, 2022
Common stock ($2.50 par value)
Authorized—50,000,000 shares
Issued—41,449,444 shares at March 31, 2023 and December 31, 2022
Outstanding—38,998,156 shares at March 31, 2023 and 38,999,733 shares at December 31, 2022
103,623 103,623 
Additional paid-in capitalAdditional paid-in capital404,841 403,095 Additional paid-in capital407,113 406,283 
Retained earningsRetained earnings809,644 773,659 Retained earnings890,840 863,948 
Accumulated other comprehensive lossAccumulated other comprehensive loss(67,171)(7,090)Accumulated other comprehensive loss(96,658)(112,125)
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)
Treasury stock — 2,451,288 shares at March 31, 2023 and 2,449,711 shares at December 31, 2022, at costTreasury stock — 2,451,288 shares at March 31, 2023 and 2,449,711 shares at December 31, 2022, at cost(77,123)(77,070)
Total Shareholders’ EquityTotal Shareholders’ Equity1,178,358 1,206,454 Total Shareholders’ Equity1,227,795 1,184,659 
Total Liabilities and Shareholders’ EquityTotal Liabilities and Shareholders’ Equity$9,103,814 $9,488,529 Total Liabilities and Shareholders’ Equity$9,193,442 $9,110,567 
See Notes to Consolidated Financial Statements
2

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S&T BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands, except per share data)2022202120222021
INTEREST AND DIVIDEND INCOME
Loans, including fees$71,018 $66,942 $135,611 $137,174 
Investment Securities:
Taxable5,995 3,793 10,931 7,356 
Tax-exempt484 690 966 1,503 
Dividends102 152 200 325 
Total Interest and Dividend Income77,599 71,577 147,708 146,358 
INTEREST EXPENSE
Deposits1,790 2,652 3,643 6,133 
Borrowings and junior subordinated debt securities615 621 1,138 1,263 
Total Interest Expense2,405 3,273 4,781 7,396 
NET INTEREST INCOME75,194 68,304 142,927 138,962 
Provision for credit losses3,204 2,561 2,692 5,699 
Net Interest Income After Provision for Credit Losses71,990 65,743 140,235 133,263 
NONINTEREST INCOME
Net gain on sale of securities— 29 — 29 
Debit and credit card4,756 4,744 9,819 8,906 
Service charges on deposit accounts4,181 3,642 8,155 7,116 
Wealth management3,247 3,167 6,489 6,111 
Mortgage banking466 1,734 1,481 6,044 
Other(20)2,108 1,912 4,541 
Total Noninterest Income12,630 15,424 27,856 32,747 
NONINTEREST EXPENSE
Salaries and employee benefits24,811 24,515 48,523 47,842 
Data processing and information technology4,104 3,787 8,539 8,012 
Occupancy3,634 3,434 7,516 7,261 
Furniture, equipment and software2,939 2,402 5,716 5,042 
Other taxes1,682 1,832 3,219 3,268 
Professional services and legal2,380 1,637 4,329 3,168 
Marketing1,524 996 2,885 2,318 
FDIC insurance882 924 1,819 1,970 
Other6,468 6,302 13,292 12,614 
Total Noninterest Expense48,424 45,829 95,838 91,495 
Income Before Taxes36,196 35,338 72,253 74,515 
Income tax expense7,338 6,971 14,252 14,247 
Net Income$28,858 $28,367 $58,001 $60,268 
Earnings per share—basic$0.74 $0.73 $1.48 $1.54 
Earnings per share—diluted$0.74 $0.72 $1.48 $1.54 
Dividends declared per share$0.30 $0.28 $0.59 $0.56 
Comprehensive Income (Loss)$8,730 $30,911 $(2,080)$54,902 
Three Months Ended March 31,
(dollars in thousands, except per share data)20232022
INTEREST AND DIVIDEND INCOME
Loans, including fees$102,724 $64,593 
Investment Securities:
Taxable7,457 4,936 
Tax-exempt214 482 
Dividends508 98 
Total Interest and Dividend Income110,903 70,109 
INTEREST EXPENSE
Deposits14,903 1,853 
Borrowings, junior subordinated debt securities and other7,209 523 
Total Interest Expense22,112 2,376 
NET INTEREST INCOME88,791 67,733 
Provision for credit losses922 (512)
Net Interest Income After Provision for Credit Losses87,869 68,245 
NONINTEREST INCOME
Debit and credit card4,373 5,063 
Service charges on deposit accounts4,076 3,974 
Wealth management2,948 3,242 
Mortgage banking301 1,015 
Other1,492 1,932 
Total Noninterest Income13,190 15,226 
NONINTEREST EXPENSE
Salaries and employee benefits27,601 23,712 
Data processing and information technology4,258 4,435 
Occupancy3,835 3,882 
Furniture, equipment and software2,861 2,777 
Marketing1,853 1,361 
Professional services and legal1,821 1,949 
Other taxes1,790 1,537 
FDIC insurance1,012 937 
Other6,668 6,824 
Total Noninterest Expense51,699 47,414 
Income Before Taxes49,360 36,057 
Income tax expense9,561 6,914 
Net Income$39,799 $29,143 
Earnings per share—basic$1.02 $0.74 
Earnings per share—diluted$1.02 $0.74 
Dividends declared per share$0.32 $0.29 
Comprehensive Income (Loss)$55,266 $(10,810)
See Notes to Consolidated Financial Statements
3

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


Three 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
Treasury
Stock
Total
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— — 28,367 — — 28,367 
Other comprehensive income, net of tax— — — 2,544 — 2,544 
Cash dividends declared ($0.28 per share)— — (10,989)— — (10,989)
Treasury stock issued for restricted stock awards (98,519 shares)— — (3,139)— 3,139 — 
Forfeitures of restricted stock awards (21,157 shares)— — 515 — (682)(167)
Recognition of restricted stock compensation expense— 700 — — — 700 
Balance at June 30, 2021$103,623 $402,053 $746,472 $3,605 $(67,020)$1,188,733 
See Notes to Consolidated Financial Statements
Three 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 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— — 28,858 — — 28,858 
Other comprehensive loss, net of tax— — — (20,128)— (20,128)
Cash dividends declared ($0.30 per share)— — (11,791)— — (11,791)
Forfeitures of restricted stock awards (51,469 shares)— — 1,232 — (1,610)(378)
Repurchase of S&T Stock (151,220 shares)— — — — (4,153)(4,153)
Recognition of restricted stock compensation expense— 1,000 — — — 1,000 
Balance at June 30, 2022$103,623 $404,841 $809,644 $(67,171)$(72,579)$1,178,358 
See Notes to Consolidated Financial Statements
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 Income (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)— (135)— 135 — 
Forfeitures of restricted stock awards (3,756 shares)— — 62 — (118)(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
Three months ended March 31, 2023
(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, 2023$103,623 $406,283 $863,948 $(112,125)$(77,070)$1,184,659 
Net Income for the three months ended March 31, 2023— — 39,799 — — 39,799 
Other comprehensive income, net of tax— — — 15,467 — 15,467 
Impact of adoption of ASU 2022-02— — (447)— — (447)
Cash dividends declared ($0.32 per share)— — (12,494)— — (12,494)
Forfeitures of restricted stock awards (1,577 shares)— — 34 — (53)(19)
Recognition of restricted stock compensation expense— 830 — — — 830 
Balance at March 31, 2023$103,623 $407,113 $890,840 $(96,658)$(77,123)$1,227,795 
See Notes to Consolidated Financial Statements
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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


5

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S&T BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,Three months ended March 31,
(dollars in thousands)(dollars in thousands)20222021(dollars in thousands)20232022
OPERATING ACTIVITIES
Net Cash Provided by Operating ActivitiesNet Cash Provided by Operating Activities$153,301 $128,043 Net Cash Provided by Operating Activities$41,904 $86,596 
INVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIES
Purchases of securitiesPurchases of securities(311,969)(153,587)Purchases of securities(11,226)(211,265)
Proceeds from maturities, prepayments and calls of securitiesProceeds from maturities, prepayments and calls of securities79,759 72,951 Proceeds from maturities, prepayments and calls of securities28,140 44,025 
Proceeds from sales of securities— 1,917 
Proceeds from redemption of Federal Home Loan Bank stockProceeds from redemption of Federal Home Loan Bank stock11,465 13,137 Proceeds from redemption of Federal Home Loan Bank stock15,174 5,818 
Purchases of Federal Home Loan Bank stockPurchases of Federal Home Loan Bank stock(9,895)(10,213)Purchases of Federal Home Loan Bank stock(22,401)(5,648)
Net (increase) decrease in loansNet (increase) decrease in loans(45,440)201,545 Net (increase) decrease in loans(63,646)38,449 
Proceeds from sale of portfolio loansProceeds from sale of portfolio loans4,326 3,438 Proceeds from sale of portfolio loans1,947 — 
Proceeds from sale of other real estate ownedProceeds from sale of other real estate owned— 6,285 
Purchases of premises and equipmentPurchases of premises and equipment(1,556)(1,926)Purchases of premises and equipment(1,439)(660)
Proceeds from the sale of premises and equipmentProceeds from the sale of premises and equipment131 74 Proceeds from the sale of premises and equipment57 56 
Net Cash (Used in) Provided by Investing Activities(273,179)127,336 
Net Cash Used in Investing ActivitiesNet Cash Used in Investing Activities(53,394)(122,940)
FINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIES
Net (decrease) increase in core depositsNet (decrease) increase in core deposits(277,322)712,568 Net (decrease) increase in core deposits(307,521)13,419 
Net decrease in certificates of deposit(106,915)(117,782)
Net (decrease) increase in securities sold under repurchase agreements(45,232)3,424 
Net decrease in short-term borrowings— (75,000)
Net increase (decrease) in certificates of depositNet increase (decrease) in certificates of deposit240,664 (49,465)
Net increase (decrease) in short-term borrowingsNet increase (decrease) in short-term borrowings125,000 (14,379)
Repayments on long-term borrowingsRepayments on long-term borrowings(442)(712)Repayments on long-term borrowings(113)(259)
Repurchase of shares for taxes on restricted stockRepurchase of shares for taxes on restricted stock(434)(302)Repurchase of shares for taxes on restricted stock(19)(56)
Cash dividends paid to common shareholdersCash dividends paid to common shareholders(23,145)(21,963)Cash dividends paid to common shareholders(12,378)(11,374)
Repurchase of common stock(4,153)— 
Net Cash (Used in) Provided by Financing Activities(457,643)500,233 
Net (decrease) increase in cash and cash equivalents(577,521)755,612 
Net Cash Provided by (Used in) Financing ActivitiesNet Cash Provided by (Used in) Financing Activities45,633 (62,114)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents34,143 (98,458)
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period922,215 229,666 Cash and cash equivalents at beginning of period210,009 922,215 
Cash and Cash Equivalents at End of PeriodCash and Cash Equivalents at End of Period$344,694 $985,278 Cash and Cash Equivalents at End of Period$244,152 $823,757 
Supplemental DisclosuresSupplemental DisclosuresSupplemental Disclosures
Loans transferred to held for sale$— $2,798 
Right of use assets obtained in exchange for lease obligationsRight of use assets obtained in exchange for lease obligations$1,270 $— 
Cash paid for interestCash paid for interest$5,028 $9,114 Cash paid for interest$18,095 $2,507 
Cash paid for income taxes, net of refundsCash paid for income taxes, net of refunds$12,225 $12,097 Cash paid for income taxes, net of refunds$(7)$75 
Transfers of loans to other real estate ownedTransfers of loans to other real estate owned$18 $90 Transfers of loans to other real estate owned$11 $— 
See Notes to Consolidated Financial Statements

6
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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, 2021,2022, filed with the Securities and Exchange Commission, or SEC, on February 28, 2022 (202124, 2023 (2022 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 six months ended June 30, 2022, we entered into 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 2021 Form 10-K for a discussion of our complete Accounting Policy for Derivative Instruments and Hedging Activities.
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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
Financial Instruments Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the FASB issued ASU 2022-02, Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures. The guidance eliminates the “once a TDR, always a TDR” requirement for loan disclosures and requires disclosures about the performance of modified loans to borrowers experiencing financial difficulty in the 12 months following the modification.
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 310-205310-20 (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. EarlyWe adopted ASU 2022-02, as of January 1, 2023, using a modified retrospective transition approach. Results for reporting periods beginning after January 1, 2023 are presented under ASU 2022-02 while prior period amounts continue to be reported in accordance with previously applicable GAAP. Under the previously applicable accounting guidance, commercial TDRs were individually assessed to determine if a specific reserve was required in the allowance for credit losses, or ACL. The elimination
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of TDRs resulted in these loans being included in homogenous pools. The adoption is permitted, however, we have not elected to do so. We are currently evaluating the impact of this ASU resulted in a day one cumulative effective adjustment recorded as an increase to our ACL of $0.6 million, with the offset being recorded as a decrease to retained earnings, net of tax. Refer to Note 5 Loans and Allowance for Credit Losses for additional disclosures related to modifications of loans to borrowers experiencing financial difficulty as well as gross charge-off vintage disclosures.
Accounting Standards Updates Issued But Not Yet Adopted
Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
In March 2023, the FASB issued ASU 2023-02, Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method to allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits. If certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which will require new disclosures, but weit receives income tax credits, instead of only low-income-housing tax credit (“LIHTC”) structures. This amendment also eliminates certain LIHTC-specific guidance aligning the accounting with other equity investments in tax credit structures. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. We are evaluating the accounting and disclosure requirements of ASU 2023-02 and do not expect itthem to have a material impacteffect on our consolidated financial statements.

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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 treasury stock method was used to determined earnings per share for the three months ended March 31, 2023 and the two-class method was used to determine earnings per share for the three and six months ended June 30, 2022 and 2021.March 31, 2022. The following table reconciles the numerators and denominators of basic and diluted earnings per share calculations for the periods presented:
Three months ended June 30,Six months ended June 30,
(in thousands, except share and per share data)2022202120222021
Numerator for Earnings per Share—Basic and Diluted:
Net income$28,858 $28,367 $58,001 $60,268 
Less: Income allocated to participating shares74 141 185 283 
Net Income Allocated to Shareholders$28,784 $28,226 $57,816 $59,985 
Denominator for Earnings per Share - Basic and Diluted:
Weighted Average Shares Outstanding—Basic39,083,429 39,048,971 39,077,305 39,039,007 
Add: Average participating shares outstanding16,202 — 18,411 — 
Denominator for Two-Class Method—Diluted39,099,631 39,048,971 39,095,716 39,039,007 
Earnings per share—basic$0.74 $0.73 $1.48 $1.54 
Earnings per share—diluted$0.74 $0.72 $1.48 $1.54 
Restricted stock considered anti-dilutive excluded from potentially dilutive shares1,500 25 94 424 
Three months ended March 31,
(in thousands, except share and per share data)20232022
Numerator for Earnings per Share—Basic and Diluted
Net income$39,799 $29,143 
Less: Income allocated to participating shares45 109 
Net Income Allocated to Shareholders$39,754 $29,034 
Denominator for Earnings per Share—Basic:
Weighted Average Shares Outstanding—Basic38,865,669 39,073,754 
Denominator for Earnings per Share—Treasury Stock Method—Diluted:
Weighted Average Shares Outstanding—Basic38,865,669 39,073,754 
Add: Potentially dilutive shares166,393 112,268 
Denominator for Treasury Stock Method—Diluted39,032,062 39,186,022 
Denominator for Earnings per Share—Two Class Method —Diluted:
Weighted Average Shares Outstanding—Basic38,865,669 39,073,754 
Add: Average participating shares outstanding108,991 16,179 
Denominator for Two-Class Method—Diluted38,974,660 39,089,933 
Earnings per share—Basic$1.02 $0.74 
Earnings per share—Diluted$1.02 $0.74 
Restricted stock considered anti-dilutive excluded from potentially dilutive shares1,133 — 

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 assetsfinancial instruments 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.
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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.


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NOTE 3. FAIR VALUE MEASUREMENTS - continued
There have been no changes in our valuation methodologies during the three and six months ended June 30, 2022.March 31, 2023. Refer to Note 1 of the Notes to Consolidated Financial Statements in our 20212022 Form 10-K 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:
June 30, 2022
(dollars in thousands)Level 1Level 2Level 3Total
ASSETS
Available-for-sale debt securities:
U.S. Treasury securities$136,282 $— $— $136,282 
Obligations of U.S. government corporations and agencies— 52,815 — 52,815 
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— 46,416 — 46,416 
Commercial mortgage-backed securities of U.S. government corporations and agencies— 333,994 — 333,994 
Corporate obligations— 500 — 500 
Obligations of states and political subdivisions— 69,850 — 69,850 
Total Available-for-sale Debt Securities136,282 931,210  1,067,492 
Marketable equity securities1,015 69 — 1,084 
Total Securities137,297 931,279  1,068,576 
Securities held in a deferred compensation plan7,678 — — 7,678 
Derivative financial assets:
Interest rate swaps - commercial loans— 51,097 — 51,097 
Interest rate lock commitments— — 56 56 
Interest rate swaps - cash flow hedge 368  368 
Total Assets$144,975 $982,744 $56 $1,127,775 
LIABILITIES
Derivative financial liabilities:
Interest rate swaps - commercial loans$— $51,193 $— $51,193 
Forward sale contracts - mortgage loans— — 
Interest rate swaps - cash flow hedge— 5,946 — 5,946 
Total Liabilities$ $57,139 $2 $57,141 
March 31, 2023
(dollars in thousands)Level 1Level 2Level 3Total
ASSETS
Available-for-sale debt securities:
U.S. Treasury securities$133,704 $— $— $133,704 
Obligations of U.S. government corporations and agencies— 42,095 — 42,095 
Collateralized mortgage obligations of U.S. government corporations and agencies— 432,739 — 432,739 
Residential mortgage-backed securities of U.S. government corporations and agencies— 41,170 — 41,170 
Commercial mortgage-backed securities of U.S. government corporations and agencies— 317,099 — 317,099 
Obligations of states and political subdivisions— 30,895 — 30,895 
Total Available-for-sale Debt Securities133,704 863,998  997,702 
Marketable equity securities953 53 — 1,006 
Total Securities134,657 864,051  998,708 
Securities held in a deferred compensation plan7,790 — — 7,790 
Derivative financial assets:
Interest rate swaps - commercial loans— 67,397 — 67,397 
Interest rate lock commitments— — 
Total Assets$142,447 $931,448 $6 $1,073,901 
LIABILITIES
Derivative financial liabilities:
Interest rate swaps - commercial loans$— $67,397 $— $67,397 
Interest rate swaps - cash flow hedge— 15,288 — 15,288 
Total Liabilities$ $82,685 $ $82,685 
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NOTE 3. FAIR VALUE MEASUREMENTS - continued
December 31, 2021December 31, 2022
(dollars in thousands)(dollars in thousands)Level 1Level 2Level 3Total(dollars in thousands)Level 1Level 2Level 3Total
ASSETSASSETSASSETS
Available-for-sale debt securities:Available-for-sale debt securities:Available-for-sale debt securities:
U.S. Treasury securitiesU.S. Treasury securities$95,327 $— $— $95,327 U.S. Treasury securities$131,695 $— $— $131,695 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies— 70,348 — 70,348 Obligations of U.S. government corporations and agencies— 41,811 — 41,811 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies— 270,294 — 270,294 Collateralized mortgage obligations of U.S. government corporations and agencies— 428,407 — 428,407 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies— 56,793 — 56,793 Residential mortgage-backed securities of U.S. government corporations and agencies— 41,587 — 41,587 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies— 341,300 — 341,300 Commercial mortgage-backed securities of U.S. government corporations and agencies— 327,313 — 327,313 
Corporate obligationsCorporate obligations— 500 — 500 Corporate obligations— 500 — 500 
Obligations of states and political subdivisionsObligations of states and political subdivisions— 75,089 — 75,089 Obligations of states and political subdivisions— 30,471 — 30,471 
Total Available-for-sale Debt SecuritiesTotal Available-for-sale Debt Securities95,327 814,324  909,651 Total Available-for-sale Debt Securities131,695 870,089  1,001,784 
Marketable equity securitiesMarketable equity securities1,061 81 — 1,142 Marketable equity securities952 42 — 994 
Total SecuritiesTotal Securities96,388 814,405  910,793 Total Securities132,647 870,131  1,002,778 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan10,230 — — 10,230 Securities held in a deferred compensation plan8,087 — — 8,087 
Derivative financial assets:Derivative financial assets:Derivative financial assets:
Interest rate swaps - commercial loansInterest rate swaps - commercial loans— 33,528 — 33,528 Interest rate swaps - commercial loans— 83,449 — 83,449 
Interest rate lock commitmentsInterest rate lock commitments— — 401 401 Interest rate lock commitments— — 
Forward sale contracts - mortgage loansForward sale contracts - mortgage loans— — Forward sale contracts - mortgage loans— — 
Interest rate swaps - cash flow hedge —   
Total AssetsTotal Assets$106,618 $847,933 $405 $954,956 Total Assets$140,734 $953,580 $7 $1,094,321 
LIABILITIESLIABILITIESLIABILITIES
Derivative financial liabilities:Derivative financial liabilities:Derivative financial liabilities:
Interest rate swaps - commercial loansInterest rate swaps - commercial loans$— $33,631 $— $33,631 Interest rate swaps - commercial loans$— $83,449 $— $83,449 
Interest rate swaps - cash flow hedgeInterest rate swaps - cash flow hedge— 21,368 — 21,368 
Total LiabilitiesTotal Liabilities$ $33,631 $ $33,631 Total Liabilities$ $104,817 $ $104,817 
Assets Recorded at Fair Value on a Nonrecurring Basis
We may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. Nonrecurring assets are recorded at the lower of cost or fair value in our consolidated financial statements. There were no liabilities measured at fair value on a nonrecurring basis at either June 30, 2022March 31, 2023 or December 31, 2021.2022.
There were no Level 3 assets measured at fair value on a nonrecurring basis as of March 31, 2023. Level 3 assets measured at fair value on a nonrecurring basis and the significant unobservable inputs used in the fair value measurements as of June 30, 2022 and December 31, 20212022 were as follows:
June 30, 2022Valuation TechniqueSignificant Unobservable InputsRange
Weighted Average
(1)
(dollars in thousands)
Loans individually evaluated$Collateral methodAppraisal adjustment10%10.00%
Total Assets$6 
(1) Weighted averages for loans individually evaluated were weighted by loan amounts.

December 31, 2021Valuation TechniqueSignificant Unobservable InputsRange
Weighted Average
(1) (2)
(dollars in thousands)
Loans individually evaluated$7,268 Collateral methodAppraisal adjustment0%-20%4.48%
Other real estate owned1,011 Collateral methodAppraisal adjustment2.53%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.
December 31, 2022Valuation TechniqueSignificant Unobservable InputsRangeWeighted Average
(dollars in thousands)
Other real estate owned3,060 Collateral methodDiscount rate13.00%13.00%
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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 June 30, 2022
Carrying
Value(1)
Fair Value Measurements at March 31, 2023
(dollars in thousands)(dollars in thousands)TotalLevel 1Level 2Level 3(dollars in thousands)TotalLevel 1Level 2Level 3
ASSETSASSETSASSETS
Cash and due from banks, including interest-bearing depositsCash and due from banks, including interest-bearing deposits$344,694 $344,694 $344,694 $— $— Cash and due from banks, including interest-bearing deposits$244,152 $244,152 $244,152 $— $— 
SecuritiesSecurities1,068,576 1,068,576 137,297 931,279 — Securities998,708 998,708 134,657 864,051 
Loans held for saleLoans held for sale1,311 1,326 — — 1,326 Loans held for sale81 81 — 81 — 
Portfolio loans, netPortfolio loans, net6,942,799 6,784,189 — — 6,784,189 Portfolio loans, net7,142,951 6,883,297 — — 6,883,297 
Collateral receivableCollateral receivable4,901 4,901 4,901 — — 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan7,678 7,678 7,678 — — Securities held in a deferred compensation plan7,790 7,790 7,790 — — 
Mortgage servicing rightsMortgage servicing rights7,575 9,996 — — 9,996 Mortgage servicing rights6,935 9,335 — — 9,335 
Interest rate swaps - commercial loansInterest rate swaps - commercial loans51,097 51,097 — 51,097 — Interest rate swaps - commercial loans67,397 67,397 — 67,397 — 
Interest rate swaps - cash flow hedge368 368 — 368 — 
Interest rate lock commitmentsInterest rate lock commitments56 56 — — 56 Interest rate lock commitments— — 
LIABILITIESLIABILITIESLIABILITIES
DepositsDeposits$7,612,247 $7,591,465 $6,631,131 $960,334 $— Deposits$7,153,094 $7,132,944 $5,977,856 $1,155,088 $— 
Collateral payableCollateral payable52,709 52,709 52,709 — — Collateral payable55,301 55,301 55,301 — — 
Securities sold under repurchase agreements39,259 39,259 39,259 — — 
Short-term borrowingsShort-term borrowings— — — — — Short-term borrowings495,000 495,000 — 495,000 — 
Long-term borrowingsLong-term borrowings21,988 21,634 4,196 17,438 — Long-term borrowings14,628 14,162 — 14,162 — 
Junior subordinated debt securitiesJunior subordinated debt securities54,423 54,423 54,423 — — Junior subordinated debt securities54,468 54,468 — 54,468 — 
Interest rate swaps - commercial loansInterest rate swaps - commercial loans51,193 51,193 — 51,193 — Interest rate swaps - commercial loans67,397 67,397 — 67,397 — 
Interest rate swaps - cash flow hedgeInterest rate swaps - cash flow hedge5,946 5,946 — 5,946 — Interest rate swaps - cash flow hedge15,288 15,288 — 15,288 — 
Forward sale contracts - mortgage loans— — 
(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
Carrying
Value(1)
Fair Value Measurements at December 31, 2022
(dollars in thousands)(dollars in thousands)TotalLevel 1Level 2Level 3(dollars in thousands)TotalLevel 1Level 2Level 3
ASSETSASSETSASSETS
Cash and due from banks, including interest-bearing depositsCash and due from banks, including interest-bearing deposits$922,215 $922,215 $922,215 $— $— Cash and due from banks, including interest-bearing deposits$210,009 $210,009 $210,009 $— $— 
SecuritiesSecurities910,793 910,793 96,388 814,405 — Securities1,002,778 1,002,778 132,647 870,131 — 
Loans held for saleLoans held for sale1,522 1,522 — — 1,522 Loans held for sale16 16 — 16 — 
Portfolio loans, netPortfolio loans, net6,901,414 6,815,468 — — 6,815,468 Portfolio loans, net7,082,629 6,815,167 — — 6,815,167 
Collateral receivableCollateral receivable37,363 37,363 37,363 — — Collateral receivable6,307 6,307 6,307 — — 
Securities held in a deferred compensation planSecurities held in a deferred compensation plan10,230 10,230 10,230 — — Securities held in a deferred compensation plan8,087 8,087 8,087 — — 
Mortgage servicing rightsMortgage servicing rights7,677 7,677 — — 7,677 Mortgage servicing rights7,147 9,994 — — 9,994 
Interest rate swaps33,528 33,528 — 33,528 — 
Interest rate swaps - commercial loansInterest rate swaps - commercial loans83,449 83,449 — 83,449 — 
Interest rate lock commitmentsInterest rate lock commitments401 401 — — 401 Interest rate lock commitments— — 
Forward sale contractsForward sale contracts— — Forward sale contracts— — 
LIABILITIESLIABILITIESLIABILITIES
DepositsDeposits$7,996,524 $7,992,942 $6,908,453 $1,084,489 $— Deposits$7,219,970 $7,194,225 $6,285,377 $908,848 $— 
Collateral payableCollateral payable65,065 65,065 65,065 — — 
Securities sold under repurchase agreements84,491 84,491 84,491 — — 
Short-term borrowingsShort-term borrowings— — — — — Short-term borrowings370,000 370,000 — 370,000 — 
Long-term borrowingsLong-term borrowings22,430 22,678 4,300 18,378 — Long-term borrowings14,741 14,174 — 14,174 — 
Junior subordinated debt securitiesJunior subordinated debt securities54,393 54,393 54,393 — — Junior subordinated debt securities54,453 54,453 — 54,453 — 
Interest rate swaps - commercial loansInterest rate swaps - commercial loans33,631 33,631 — 33,631 — Interest rate swaps - commercial loans83,449 83,449 — 83,449 — 
Interest rate swaps - cash flow hedgeInterest rate swaps - cash flow hedge21,368 21,368 — 21,368 — 
(1) As reported in the Consolidated Balance Sheets
(1) As reported in the Consolidated Balance Sheets
(1) As reported in the Consolidated Balance Sheets
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NOTE 4. SECURITIES
The following table presents the fair values of our securities portfolio at the dates presented:
(dollars in thousands)June 30, 2022December 31, 2021
Available-for-sale debt securities$1,067,492 $909,651 
Marketable equity securities1,084 1,142 
Total Securities$1,068,576 $910,793 
Available-for-Sale Debt Securities
(dollars in thousands)March 31, 2023December 31, 2022
Available-for-sale debt securities$997,702 $1,001,784 
Marketable equity securities1,006 994 
Total Securities$998,708 $1,002,778 
The following tables present the amortized cost and fair value of available-for-sale debt securities as of the dates presented:
June 30, 2022December 31, 2021 March 31, 2023December 31, 2022
(dollars in thousands)(dollars in thousands)Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
Gross Unrealized GainsGross
Unrealized
Losses
Fair
Value
(dollars in thousands)Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
Gross Unrealized GainsGross
Unrealized
Losses
Fair
Value
U.S. Treasury securitiesU.S. Treasury securities$145,820 $155 $(9,693)$136,282 $95,954 $115 $(742)$95,327 U.S. Treasury securities$145,139 $19 $(11,454)$133,704 $145,416 $— $(13,721)$131,695 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies53,542 (734)52,815 68,599 1,749 — 70,348 Obligations of U.S. government corporations and agencies43,445 — (1,350)42,095 43,479 — (1,668)41,811 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies456,889 312 (29,566)427,635 270,696 2,408 (2,810)270,294 Collateralized mortgage obligations of U.S. government corporations and agencies479,804 309 (47,374)432,739 482,039 203 (53,835)428,407 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies52,289 19 (5,892)46,416 57,029 392 (628)56,793 Residential mortgage-backed securities of U.S. government corporations and agencies48,273 (7,108)41,170 49,418 (7,834)41,587 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies350,432 263 (16,701)333,994 336,918 5,969 (1,587)341,300 Commercial mortgage-backed securities of U.S. government corporations and agencies338,646 115 (21,662)317,099 352,465 — (25,152)327,313 
Corporate obligationsCorporate obligations500 — — 500 500 — — 500 Corporate obligations— — — — 500 — — 500 
Obligations of states and political subdivisionsObligations of states and political subdivisions69,874 455 (479)69,850 70,539 4,550 — 75,089 Obligations of states and political subdivisions30,656 239 — 30,895 30,788 55 (372)30,471 
Total Available-for-Sale Debt Securities (1)
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 
Total Available-for-Sale Debt Securities (1)
$1,085,963 $687 $(88,948)$997,702 $1,104,105 $261 $(102,582)$1,001,784 
(1) Excludes interest receivable of $3.7$3.3 million at June 30, 2022March 31, 2023 and $3.3$3.7 million at December 31, 2021.2022. Interest receivable is included in other assets in the Consolidated Balance Sheets.
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S&T BANCORP, INC. AND SUBSIDIARIES
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:
June 30, 2022March 31, 2023
Less Than 12 Months12 Months or MoreTotalLess Than 12 Months12 Months or MoreTotal
(dollars in thousands)(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
U.S. Treasury securitiesU.S. Treasury securities12$116,707 $(9,693)$— $— 12$116,707 $(9,693)U.S. Treasury securities1$9,413 $(112)12$114,151 $(11,342)13$123,564 $(11,454)
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies747,817 (734)— — 747,817 (734)Obligations of U.S. government corporations and agencies427,382 (618)214,713 (732)642,095 (1,350)
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies48352,393 (24,035)434,282 (5,531)52386,675 (29,566)Collateralized mortgage obligations of U.S. government corporations and agencies16130,667 (3,867)43283,266 (43,507)59413,933 (47,374)
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies129,479 (527)236,366 (5,365)1445,845 (5,892)Residential mortgage-backed securities of U.S. government corporations and agencies31,487 (69)1239,280 (7,039)1540,767 (7,108)
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies36323,896 (16,701)— — 36323,896 (16,701)Commercial mortgage-backed securities of U.S. government corporations and agencies963,174 (1,607)25243,481 (20,055)34306,655 (21,662)
Corporate obligations1500 — — — 1500 — 
Obligations of states and political subdivisionsObligations of states and political subdivisions220,198 (479)— — 220,198 (479)Obligations of states and political subdivisions— — — — — — 
TotalTotal118$870,990 $(52,169)6$70,648 $(10,896)124$941,638 $(63,065)Total33$232,123 $(6,273)94$694,891 $(82,675)127$927,014 $(88,948)
December 31, 2021December 31, 2022
Less Than 12 Months12 Months or MoreTotalLess Than 12 Months12 Months or MoreTotal
(dollars in thousands)(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
(dollars in thousands)Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
Number of SecuritiesFair ValueUnrealized
Losses
U.S. Treasury securitiesU.S. Treasury securities8$85,221 $(742)$— $— 8$85,221 $(742)U.S. Treasury securities6$57,057 $(3,363)8$74,638 $(10,358)14$131,695 $(13,721)
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies— — — — — — Obligations of U.S. government corporations and agencies641,811 (1,668)— — 641,811 (1,668)
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies12141,204 (2,436)18,933 (374)13150,137 (2,810)Collateralized mortgage obligations of U.S. government corporations and agencies47296,509 (28,153)13112,902 (25,682)60409,411 (53,835)
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies346,042 (628)— — 346,042 (628)Residential mortgage-backed securities of U.S. government corporations and agencies257,143 (589)334,223 (7,245)2841,366 (7,834)
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies7100,032 (1,587)— — 7100,032 (1,587)Commercial mortgage-backed securities of U.S. government corporations and agencies30241,009 (11,975)786,304 (13,177)37327,313 (25,152)
Corporate obligations— — — — — — 
Obligations of states and political subdivisionsObligations of states and political subdivisions— — — — — — Obligations of states and political subdivisions220,127 (372)— — 220,127 (372)
TotalTotal30$372,499 $(5,393)1$8,933 $(374)31$381,432 $(5,767)Total116$663,656 $(46,120)31$308,067 $(56,462)147$971,723 $(102,582)
We evaluate securities with unrealized losses quarterly to determine if the decline in fair value has resulted from credit lossesimpairment or other factors. We do not believe any individual unrealized loss as of March 31, 2023 represents a credit impairment. There were 124127 debt securities in an unrealized loss position at June 30, 2022March 31, 2023 and 31147 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.2022. The unrealized losses on the debt securities were primarily 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. 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.
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S&T BANCORP, INC. AND SUBSIDIARIES
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), for the periods presented:
June 30, 2022December 31, 2021March 31, 2023December 31, 2022
(dollars in thousands)(dollars in thousands)Gross Unrealized GainsGross Unrealized LossesNet Unrealized LossesGross Unrealized GainsGross Unrealized LossesNet Unrealized Gains(dollars in thousands)Gross Unrealized GainsGross Unrealized LossesNet Unrealized LossesGross Unrealized GainsGross Unrealized LossesNet Unrealized Losses
Total unrealized gains (losses) on available-for-sale debt securitiesTotal unrealized gains (losses) on available-for-sale debt securities$1,211 $(63,065)$(61,854)$15,183 $(5,767)$9,416 Total unrealized gains (losses) on available-for-sale debt securities$687 $(88,948)$(88,261)$261 $(102,582)$(102,321)
Income tax (expense) benefitIncome tax (expense) benefit(259)13,474 13,215 (3,215)1,221 (1,994)Income tax (expense) benefit(147)19,005 18,858 (56)21,915 21,859 
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 Net Unrealized Gains (Losses), Net of Tax Included in Accumulated Other Comprehensive Income (Loss)$540 $(69,943)$(69,403)$205 $(80,667)$(80,462)
The amortized cost and fair value of available-for-sale debt securities at June 30, 2022March 31, 2023 by contractual maturity are included in the table below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
June 30, 2022March 31, 2023
(dollars in thousands)(dollars in thousands)Amortized
Cost
Fair Value(dollars in thousands)Amortized
Cost
Fair Value
Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisionsObligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisionsObligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions
Due in one year or lessDue in one year or less$35,648 $35,760 Due in one year or less$9,988 $9,827 
Due after one year through five yearsDue after one year through five years117,273 113,923 Due after one year through five years159,631 149,422 
Due after five years through ten yearsDue after five years through ten years104,696 97,991 Due after five years through ten years38,147 35,922 
Due after ten yearsDue after ten years11,619 11,273 Due after ten years11,474 11,523 
Available-for-Sale Debt Securities With Fixed MaturitiesAvailable-for-Sale Debt Securities With Fixed Maturities269,236 258,947 Available-for-Sale Debt Securities With Fixed Maturities219,240 206,694 
Debt Securities without a single maturity dateDebt Securities without a single maturity dateDebt Securities without a single maturity date
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies456,889 427,635 Collateralized mortgage obligations of U.S. government corporations and agencies479,804 432,739 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies52,289 46,416 Residential mortgage-backed securities of U.S. government corporations and agencies48,273 41,170 
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies350,432 333,994 Commercial mortgage-backed securities of U.S. government corporations and agencies338,646 317,099 
Corporate obligations500 500 
Total Available-for-Sale Debt SecuritiesTotal Available-for-Sale Debt Securities$1,129,346 $1,067,492 Total Available-for-Sale Debt Securities$1,085,963 $997,702 
Debt securities are pledged in order to meet various regulatory and legal requirements. Restricted pledged securities had a carrying value of $19.4$18.3 million at June 30, 2022March 31, 2023 and $23.9$17.9 million at December 31, 2021.2022. Unrestricted pledged securities had a carrying value of $321.2$212.3 million at June 30, 2022March 31, 2023 and $443.0$251.5 million at December 31, 2021.2022. Any changes to restricted pledged securities require approval of the pledge beneficiary. Approval is not required for unrestricted pledged securities.
Marketable Equity Securities
The following table presents realized and unrealized net gains and losses for our marketable equity securities for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2022202120222021
Marketable Equity Securities
Net market gains (losses) recognized$(53)$28 $(58)$143 
Less: Net gains recognized for equity securities sold— — 29 
Unrealized Gains (Losses) on Equity Securities Still Held$(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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S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELDALLOWANCE FOR SALECREDIT LOSSES
Loans and Loans Held for Sale
Loans are presented net of unearned income. Unearned income consisted of $8.5net deferred loan fees and costs of $7.4 million at June 30, 2022March 31, 2023 and $14.1$7.5 million at December 31, 20212022 and net of a discount related to purchase accounting fair value adjustments of $5.3$4.4 million at June 30, 2022March 31, 2023 and $6.7$4.7 million at December 31, 2021. 2022.
The following table summarizes the composition of originated and acquired loans as of the dates presented:
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021(dollars in thousands)March 31, 2023December 31, 2022
Commercial
Commercial real estateCommercial real estate$3,191,670 $3,236,653 Commercial real estate$2,523,434 $2,538,839 
Commercial and industrialCommercial and industrial1,695,031 1,728,969 Commercial and industrial1,493,519 1,510,392 
Commercial constructionCommercial construction410,425 440,962 Commercial construction376,855 381,963 
Total Commercial Loans5,297,126 5,406,584 
Consumer
Business bankingBusiness banking1,261,842 1,205,944 
Consumer real estateConsumer real estate1,623,830 1,485,478 Consumer real estate1,475,575 1,421,953 
Other consumerOther consumer119,938 107,928 Other consumer119,839 124,878 
Total Consumer Loans1,743,768 1,593,406 
Total Portfolio LoansTotal Portfolio Loans7,040,894 6,999,990 Total Portfolio Loans$7,251,064 $7,183,969 
Loans held for saleLoans held for sale1,311 1,522 Loans held for sale81 16 
Total Loans (1)
Total Loans (1)
$7,042,205 $7,001,512 
Total Loans (1)
$7,251,145 $7,183,985 
(1) Excludes interest receivable of $19.9$29.7 million at June 30, 2022 compared to $18.7March 31, 2023 and $28.3 million at December 31, 2021.2022. Interest receivable is included in other assets in the Consolidated Balance Sheets.
Commercial and industrial loans, or C&I, included $11.7 millionModifications to Borrowers Experiencing Financial Difficulty
The following table presents the amortized cost of loans originated underto borrowers experiencing financial difficulty by portfolio segment and type of modification during the Paycheck Protection Program, or PPP, at June 30, 2022 compared to $88.3 million at December 31, 2021. On March 27, 2020,period presented:
Three Months Ended March 31, 2023
(dollars in thousands)Term ExtensionTerm Extension and Interest Rate ReductionTotal% of Portfolio Segment
Commercial real estate$15,849 $— $15,849 0.63 %
Commercial industrial594 — 594 0.04 %
Consumer real estate63 196 259 0.02 %
Total(1)
$16,506 $196 $16,702 0.23 %
(1) Excludes loans that were fully paid off or fully charged-off by period end.
The following table describes 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 requirementseffect 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 December 31, 2021. Business banking consists of commercial purpose loansloan modifications 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 consistedborrowers experiencing financial difficulty during the period presented:
Three Months Ended March 31, 2023
Weighted-Average Term Extension (in Months)Weighted-Average Interest Rate Reduction
Commercial real estate6
Commercial industrial72
Consumer real estate1682%

15

Table of $565.7 million of commercial real estate loans, $217.9 million of C&I loans of which $11.7 million are PPP loans, $15.1 million of commercial construction loans and $364.6 million of loans secured by consumer real estate at 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.Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 reviewingclosely monitor the relevant economic indicators and internal risk rating trends and through stress testingperformance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of the modification efforts. The following table presents the aging analysis of modifications to borrowers experiencing financial difficulty in these segmentsthe last 12 months as of the date presented:
March 31, 2023
(dollars in thousands)Current30-59 Days
Past Due
60-89 Days
Past Due
90+ Days Past DueNonaccrualTotal
Commercial real estate$15,849 $— $— $— $— $15,849 
Commercial and industrial594 — — — — 594 
Consumer real estate196 — — — 63 259 
Total$16,639 $ $ $ $63 $16,702 

There were no loans that had a payment default during the three months ended March 31, 2023 that were modified in the 12 months before default to determine ifborrowers experiencing financial difficulty. Additionally, we had no commitments to lend additional funds to borrowers experiencing financial difficulty that had a modification during the three months ended March 31, 2023.
The effect of modifications made to borrowers experiencing financial difficulty is already included in the ACL because of the measurement methodologies used to estimate the ACL, therefore, a change to the ACL is needed.Total commercial loans represented 75.2 percentgenerally not recorded upon modification. If principal forgiveness is provided, that portion of total portfolio loans at June 30, 2022 comparedthe loan will be charged-off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to 77.2 percent at December 31, 2021. Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised $3.6 billion, or 68.0 percent,ACL. An assessment of total commercial loans and 51.2 percentwhether the borrower is experiencing financial difficulty is made on the date of total portfolio loans at June 30, 2022 and $3.7 billion, or 68.0 percent,a modification.
Troubled Debt Restructurings
Prior to the adoption 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 ourASU 2022-02, we evaluated all substandard commercial and consumer loans are madethat had experienced a forbearance or modification of existing terms to businessesdetermine if they should be designated as troubled debt restructurings, or TDRs.
TDRs returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, was not in doubt and individuals in this geography, resulting inthere was a concentration. We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk. period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring. There was one $0.2 million TDR returned to accruing status during 2022.
The conditionsfollowing tables summarize TDRs as of the local and regional economies are monitored closely through publicly available data and information supplied by our customers. We also use subscription services for additional geographic and industry specific information. Our CRE and commercial construction portfolios have exposure outside of this geography of 6.4 percent of the combined portfolios and 3.3 percent of total portfolio loans at June 30, 2022. This compares to 5.7 percent of the combined portfolios and 3.0 percent of total portfolio loans at December 31, 2021.dates presented:
December 31, 2022
(dollars in thousands)Accruing
TDRs
Nonaccruing
TDRs
Total
TDRs
Commercial real estate$— $— $— 
Commercial and industrial626 — 626 
Commercial construction1,655 — 1,655 
Business banking438 1,087 1,525 
Consumer real estate6,168 1,798 7,966 
Other consumer13 
Total$8,891 $2,894 $11,785 

16

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

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued
We evaluate all substandard commercial, consumer and residential mortgage loans that have experienced a forbearance or change in terms 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:
June 30, 2022December 31, 2021
(dollars in thousands)Accruing
TDRs
Nonaccruing
TDRs
Total
TDRs
Accruing
TDRs
Nonaccruing
TDRs
Total
TDRs
Commercial real estate$— $16 $16 $— $1,697 $1,697 
Commercial and industrial690 — 690 748 14,889 15,637 
Commercial construction1,694 480 2,174 2,190 2,087 4,277 
Business banking680 1,325 2,005 858 1,696 2,554 
Consumer real estate6,269 2,189 8,458 6,122 1,405 7,527 
Other consumer— — 
Total$9,338 $4,010 $13,348 $9,921 $21,774 $31,695 

During the three months ended June 30, 2022, there were no TDRs that returned to accruing status compared to 4 TDRs totaling $0.5 million during the three months ended June 30, 2021. During the six months ended June 30, 2022, 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 type of concession for the periodsperiod presented:

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)
(dollars in thousands)
Bankruptcy(1)
OtherExtend
Maturity
Modify
Rate
Modify
Payments
Commercial real estate— $— $— $— $— $— $— $— 
Commercial industrial— — — — — — — — 
Commercial construction— — — — — — — — 
Business banking— — — — — — — — 
Consumer real estate286 — 139 — — 425 429 
Other consumer— — — — 
Total9 $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.

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

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued
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)
(dollars in thousands)
Bankruptcy(1)
OtherExtend
Maturity
Modify
Rate
Modify
Payments
Commercial real estate— $— $— $— $— $— $— $— 
Commercial industrial— — — — — — — — 
Commercial construction— — — — — — — — 
Business banking— — 1,130 — — 1,130 1,130 
Consumer real estate247 — — — — 247 254 
Other consumer— — — — — — — — 
Total8 $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.
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)
OtherExtend
Maturity
Modify
Rate
Modify
Payments
Commercial real estate— $— $— $— $— $— $— $— 
Commercial industrial— — — — — — — — 
Commercial construction— — — — — — — — 
Business banking— — — — — — — — 
Consumer real estate15 1,043 — 884 — — 1,927 2,357 
Other consumer— — — — 
Total16 $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, 2021Three Months Ended March 31, 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)
OtherExtend
Maturity
Modify
Rate
Modify
Payments
(dollars in thousands)
Bankruptcy(1)
OtherExtend
Maturity
Modify
Rate
Modify
Payments
Commercial real estateCommercial real estate— $— $— $— $— $— $— $— Commercial real estate— $— $— $— $— $— $— $— 
Commercial industrialCommercial industrial— — 796 5,433 — 6,229 6,304 Commercial industrial— — — — — — — — 
Commercial constructionCommercial construction— — — — — — — — Commercial construction— — — — — — — — 
Business bankingBusiness banking— 80 1,130 — — 1,210 1,210 Business banking— — — — — — — — 
Consumer real estateConsumer real estate13 573 — — — 147 720 739 Consumer real estate766 — 1,112 — — 1,878 1,928 
Other consumerOther consumer— — — — — — Other consumer— — — — — — — — 
TotalTotal21 $573 $80 $1,926 $5,433 $147 $8,159 $8,254 Total7 $766 $ $1,112 $ $ $1,878 $1,928 
(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.
As of June 30,December 31, 2022, we had 1316 commitments to lend an additional $0.3$0.4 million on TDRs compared to 14 commitments to lend an additional $0.7 million as of June 30, 2021. TDRs.
Defaulted TDRs arewere defined as loans having a payment default of 90 days or more after the restructuring takestook place that were restructured within the last 12 months prior to defaulting. There were no TDRs that defaulted during the three months ended June 30,2022 and 1 TDR for $0.1 million that defaulted during the six months ended June 30, 2022 and no TDRs that defaulted during the three and six months ended June 30, 2021.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued
2022.
The following table is a summary of nonperforming assets as of the dates presented:
Nonperforming AssetsNonperforming Assets
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021(dollars in thousands)March 31, 2023December 31, 2022
Nonperforming AssetsNonperforming AssetsNonperforming Assets
Nonaccrual loans$27,765 $44,517 
Nonaccrual TDRs4,010 21,774 
Total Nonaccrual Loans31,775 66,291 
Nonaccrual LoansNonaccrual Loans$24,644 $19,052 
OREOOREO7,046 13,313 OREO3,076 3,065 
Total Nonperforming AssetsTotal Nonperforming Assets$38,821 $79,604 Total Nonperforming Assets$27,720 $22,117 

NOTE 6. ALLOWANCE FOR CREDIT LOSSESAllowance 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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.
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.
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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:
June 30, 2022
Risk Rating
(dollars in thousands)202220212020201920182017 and PriorRevolvingRevolving-TermTotal
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 Estate179,496 362,454 297,630 454,398 307,989 1,001,528 22,509  2,626,004 
Commercial and Industrial
Pass100,561 340,453 101,459 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 Industrial100,561 340,495 101,459 99,768 74,144 147,689 615,470  1,479,586 
Commercial Construction
Pass56,592 153,742 63,832 58,690 4,656 3,222 26,591 — 367,325 
Special mention— — — 19,077 — 4,389 — — 23,466 
Substandard— — 2,142 480 1,918 — — 4,544 
Doubtful         
Total Commercial Construction56,592 153,742 65,974 78,247 4,660 9,529 26,591  395,335 
Business Banking
Pass142,538 248,994 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 Banking142,538 249,086 99,139 127,057 97,886 335,210 108,632 1,242 1,160,790 
Consumer Real Estate
Pass146,031 148,128 96,856 78,335 32,192 207,827 510,231 21,874 1,241,474 
Special mention— — — — — 910 — — 910 
Substandard39 80 138 285 1,364 11,077 942 2,943 16,868 
Doubtful         
Total Consumer Real Estate146,070 148,208 96,994 78,620 33,556 219,814 511,173 24,817 1,259,252 
Other Consumer
Pass12,242 13,787 7,201 4,948 1,898 1,051 77,282 1,489 119,898 
Special mention— — — — — — — — — 
Substandard— 12 — — 10 29 
Doubtful— — — — — — — — — 
Total Other Consumer12,242 13,799 7,205 4,948 1,900 1,052 77,282 1,499 119,927 
Pass637,460 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 
Substandard39 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 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2021March 31, 2023
Risk RatingRisk Rating
(dollars in thousands)(dollars in thousands)202120202019201820172016 and PriorRevolvingRevolving-TermTotal(dollars in thousands)202320222021202020192018 and PriorRevolvingRevolving-TermTotal
Commercial Real EstateCommercial Real EstateCommercial Real Estate
PassPass$385,347 $316,003 $412,191 $314,303 $213,019 $698,992 $35,448 $— $2,375,303 Pass$59,710 $264,611 $379,447 $258,879 $409,858 $873,354 $21,283 $— $2,267,142 
Special mentionSpecial mention— — 37,786 6,401 40,445 75,938 — — 160,570 Special mention— — — 497 26,721 135,007 — — 162,225 
SubstandardSubstandard— 1,356 18,743 14,039 12,555 106,461 1,500 — 154,654 Substandard— — — 1,293 10,965 81,391 — — 93,649 
DoubtfulDoubtful— — — — — — — — — Doubtful— — — — — 418 — — 418 
Total Commercial Real EstateTotal Commercial Real Estate385,347 317,359 468,720 334,743 266,019 881,391 36,948  2,690,528 Total Commercial Real Estate59,710 264,611 379,447 260,669 447,544 1,090,170 21,283  2,523,434 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs— — — — — — — — — 
Commercial and IndustrialCommercial and IndustrialCommercial and Industrial
PassPass437,483 126,371 115,359 83,030 37,176 132,182 536,554 — 1,468,155 Pass27,936 249,713 241,929 81,722 58,291 193,317 535,107 — 1,388,015 
Special mentionSpecial mention46 — 3,060 2,546 72 832 8,887 — 15,443 Special mention— 4,325 24,761 2,336 4,740 8,156 31,111 — 75,429 
SubstandardSubstandard— — 14,221 1,336 4,174 3,456 4,961 — 28,148 Substandard— 353 — — 5,517 3,742 16,679 — 26,291 
DoubtfulDoubtful— — 1,777 — — — — — 1,777 Doubtful— — — — — 1,325 2,459 — 3,784 
Total Commercial and IndustrialTotal Commercial and Industrial437,529 126,371 134,417 86,912 41,422 136,470 550,402  1,513,523 Total Commercial and Industrial27,936 254,391 266,690 84,058 68,548 206,540 585,356  1,493,519 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs— — — — 3,412 — — — 3,412 
Commercial ConstructionCommercial ConstructionCommercial Construction
PassPass142,321 108,405 111,512 16,838 989 3,539 30,036 — 413,640 Pass5,249 142,639 153,978 25,115 3,703 4,728 25,985 — 361,397 
Special mentionSpecial mention— — — — — 4,458 — — 4,458 Special mention— — 5,444 — 8,153 — — — 13,597 
SubstandardSubstandard— 2,157 2,020 — — 2,480 — — 6,657 Substandard— — — — — 1,861 — — 1,861 
DoubtfulDoubtful         Doubtful         
Total Commercial ConstructionTotal Commercial Construction142,321 110,562 113,532 16,838 989 10,477 30,036  424,755 Total Commercial Construction5,249 142,639 159,422 25,115 11,856 6,589 25,985  376,855 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs— — — — — — — — — 
Business BankingBusiness BankingBusiness Banking
PassPass257,264 107,791 141,411 110,586 79,187 293,215 107,093 443 1,096,990 Pass68,827 282,541 228,739 92,571 104,156 351,271 104,495 631 1,233,231 
Special mentionSpecial mention104 151 1,986 1,365 1,057 5,929 160 111 10,863 Special mention— — 1,940 319 — 6,415 858 95 9,627 
SubstandardSubstandard41 106 1,579 3,277 1,645 19,591 977 625 27,841 Substandard— 18 3,064 3,301 11,938 114 549 18,984 
DoubtfulDoubtful         Doubtful— — — — — — — — — 
Total Business BankingTotal Business Banking257,409 108,048 144,976 115,228 81,889 318,735 108,230 1,179 1,135,693 Total Business Banking68,827 282,559 230,679 95,954 107,457 369,624 105,467 1,275 1,261,842 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs— 67 43 — 70 447 25 — 652 
Consumer Real EstateConsumer Real EstateConsumer Real Estate
PassPass137,465 100,995 91,981 48,531 39,029 231,861 442,530 23,391 1,115,783 Pass51,356 313,568 146,465 90,586 72,047 213,915 552,909 21,043 1,461,889 
Special mentionSpecial mention— — — — — 937 — — 937 Special mention— — — — — 867 — — 867 
SubstandardSubstandard— — 184 1,625 1,355 5,664 876 1,161 10,865 Substandard— 48 204 152 427 9,030 470 2,488 12,819 
DoubtfulDoubtful         Doubtful         
Total Consumer Real EstateTotal Consumer Real Estate137,465 100,995 92,165 50,156 40,384 238,462 443,406 24,552 1,127,585 Total Consumer Real Estate51,356 313,616 146,669 90,738 72,474 223,812 553,379 23,531 1,475,575 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs— — — — 25 — 49 77 
Other ConsumerOther ConsumerOther Consumer
PassPass19,976 9,396 7,120 2,878 613 2,037 57,702 1,130 100,852 Pass4,550 16,527 9,581 4,791 2,575 1,321 78,676 1,737 119,758 
Special mentionSpecial mention— — — — — — — — — Special mention— — — — — — — — — 
SubstandardSubstandard83 52 141 215 408 4,407 201 1,547 7,054 Substandard— — 22 26 21 — 11 81 
DoubtfulDoubtful         Doubtful— — — — — — — — — 
Total Other ConsumerTotal Other Consumer20,059 9,448 7,261 3,093 1,021 6,444 57,903 2,677 107,906 Total Other Consumer4,550 16,527 9,603 4,792 2,601 1,342 78,676 1,748 119,839 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs189 60 — 17 — 40 318 
PassPass1,379,856 768,961 879,574 576,166 370,013 1,361,826 1,209,363 24,964 6,570,723 Pass217,628 1,269,599 1,160,139 553,664 650,630 1,637,906 1,318,455 23,411 6,831,432 
Special Mention150 151 42,832 10,312 41,574 88,094 9,047 111 192,271 
Special mentionSpecial mention— 4,325 32,145 3,152 39,614 150,445 31,969 95 261,745 
SubstandardSubstandard124 3,671 36,888 20,492 20,137 142,059 8,515 3,333 235,219 Substandard— 419 226 4,510 20,236 107,983 17,263 3,048 153,685 
DoubtfulDoubtful— — 1,777 — — — — — 1,777 Doubtful— — — — — 1,743 2,459 — 4,202 
Total Loan BalanceTotal Loan Balance$1,380,130 $772,783 $961,071 $606,970 $431,724 $1,591,979 $1,226,925 $28,408 $6,999,990 Total Loan Balance$217,628 $1,274,343 $1,192,510 $561,326 $710,480 $1,898,077 $1,370,146 $26,554 $7,251,064 
Current Period Gross Charge-offsCurrent Period Gross Charge-offs$189 $76 $103 $3 $3,499 $475 $25 $89 $4,459 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ��� continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2022
Risk Rating
(dollars in thousands)202220212020201920182017 and PriorRevolvingRevolving-TermTotal
Commercial Real Estate
Pass$292,732 $360,423 $267,743 $422,872 $227,006 $704,600 $21,666 $— $2,297,042 
Special mention— — — 13,187 20,090 101,112 — — 134,389 
Substandard— — 1,306 13,434 14,845 77,823 — — 107,408 
Doubtful— — — — — — — — — 
Total Commercial Real Estate292,732 360,423 269,049 449,493 261,941 883,535 21,666  2,538,839 
Commercial and Industrial
Pass253,324 264,012 88,544 63,190 62,874 138,250 559,777 — 1,429,971 
Special mention— 25,436 — 5,103 1,885 7,132 19,280 — 58,836 
Substandard372 — — 5,705 1,152 1,891 12,465 — 21,585 
Doubtful— — — — — — — — — 
Total Commercial and Industrial253,696 289,448 88,544 73,998 65,911 147,273 591,522  1,510,392 
Commercial Construction
Pass120,655 159,737 40,762 6,338 3,953 2,297 27,284 — 361,026 
Special mention— 10,954 — 8,104 — — — — 19,058 
Substandard— — — — — 1,879 — — 1,879 
Doubtful         
Total Commercial Construction120,655 170,691 40,762 14,442 3,953 4,176 27,284  381,963 
Business Banking
Pass287,520 233,499 87,926 107,819 80,549 276,843 104,354 645 1,179,155 
Special mention— 157 146 — 2,790 3,945 793 95 7,926 
Substandard159 67 3,077 1,912 1,550 11,391 124 551 18,831 
Doubtful— — — — — 32 — — 32 
Total Business Banking287,679 233,723 91,149 109,731 84,889 292,211 105,271 1,291 1,205,944 
Consumer Real Estate
Pass296,900 148,790 91,477 74,155 30,658 191,228 552,994 21,547 1,407,749 
Special mention— — — — — 882 — — 882 
Substandard48 213 136 428 1,373 8,059 655 2,410 13,322 
Doubtful         
Total Consumer Real Estate296,948 149,003 91,613 74,583 32,031 200,169 553,649 23,957 1,421,953 
Other Consumer
Pass20,046 10,819 5,427 3,242 1,013 724 82,125 1,404 124,800 
Special mention— — — — — — — — — 
Substandard— — 28 21 — — 21 78 
Doubtful         
Total Other Consumer20,054 10,819 5,427 3,270 1,034 724 82,125 1,425 124,878 
Pass1,271,177 1,177,280 581,879 677,616 406,053 1,313,942 1,348,200 23,596 6,799,743 
Special Mention— 36,547 146 26,394 24,765 113,071 20,073 95 221,091 
Substandard587 280 4,519 21,507 18,941 101,043 13,244 2,982 163,103 
Doubtful— — — — — 32 — — 32 
Total Loan Balance$1,271,764 $1,214,107 $586,544 $725,517 $449,759 $1,528,088 $1,381,517 $26,673 $7,183,969 
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S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis. Loans are considered 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 nonperformingnonaccrual loans.
The following tables present loan balances by year of origination and performingaccrual and nonperformingnonaccrual status for our portfolio segments as of the dates presented:
June 30, 2022March 31, 2023
(dollars in thousands)(dollars in thousands)202220212020201920182017 and PriorRevolvingRevolving-TermTotal(dollars in thousands)202320222021202020192018 and PriorRevolvingRevolving-TermTotal
Commercial Real EstateCommercial Real EstateCommercial 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 
AccrualAccrual$59,710 $264,611 $379,447 $260,669 $447,544 $1,082,745 $21,283 $— $2,516,009 
NonaccrualNonaccrual— — — — — 7,425 — — 7,425 
Total Commercial Real EstateTotal Commercial Real Estate179,496 362,454 297,630 454,398 307,989 1,001,528 22,509  2,626,004 Total Commercial Real Estate59,710 264,611 379,447 260,669 447,544 1,090,170 21,283  2,523,434 
Commercial and IndustrialCommercial and IndustrialCommercial and Industrial
Performing100,561 340,495 101,459 99,768 74,087 147,634 615,240 — 1,479,244 
Nonperforming— — — — 57 55 230 — 342 
AccrualAccrual27,936 254,391 266,690 84,058 68,548 203,695 581,126 — 1,486,444 
NonaccrualNonaccrual— — — — — 2,845 4,230 — 7,075 
Total Commercial and IndustrialTotal Commercial and Industrial100,561 340,495 101,459 99,768 74,144 147,689 615,470  1,479,586 Total Commercial and Industrial27,936 254,391 266,690 84,058 68,548 206,540 585,356  1,493,519 
Commercial ConstructionCommercial ConstructionCommercial Construction
Performing56,592 153,742 65,974 77,767 4,660 9,145 26,591 — 394,471 
Nonperforming— — — 480 — 384 — — 864 
AccrualAccrual5,249 142,639 159,422 25,115 11,856 6,205 25,985 — 376,471 
NonaccrualNonaccrual— — — — — 384 — — 384 
Total Commercial ConstructionTotal Commercial Construction56,592 153,742 65,974 78,247 4,660 9,529 26,591  395,335 Total Commercial Construction5,249 142,639 159,422 25,115 11,856 6,589 25,985  376,855 
Business BankingBusiness BankingBusiness Banking
Performing142,538 249,086 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 
AccrualAccrual68,827 282,559 230,679 95,938 107,271 366,007 105,467 1,179 1,257,927 
NonaccrualNonaccrual— — — 16 186 3,617 — 96 3,915 
Total Business BankingTotal Business Banking142,538 249,086 99,139 127,057 97,886 335,210 108,632 1,242 1,160,790 Total Business Banking68,827 282,559 230,679 95,954 107,457 369,624 105,467 1,275 1,261,842 
Consumer Real EstateConsumer Real EstateConsumer Real Estate
Performing146,070 148,208 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 
AccrualAccrual51,356 313,451 146,543 90,682 71,834 220,441 553,135 22,604 1,470,046 
NonaccrualNonaccrual— 165 126 56 640 3,371 244 927 5,529 
Total Consumer Real EstateTotal Consumer Real Estate146,070 148,208 96,994 78,620 33,556 219,814 511,173 24,817 1,259,252 Total Consumer Real Estate51,356 313,616 146,669 90,738 72,474 223,812 553,379 23,531 1,475,575 
Other ConsumerOther ConsumerOther Consumer
Performing12,242 13,799 7,080 4,948 1,900 921 77,282 1,499 119,671 
Nonperforming— — 125 — — 131 — — 256 
AccrualAccrual4,550 16,519 9,584 4,634 2,601 1,211 78,676 1,748 119,523 
NonaccrualNonaccrual— 19 158 — 131 — — 316 
Total Other ConsumerTotal Other Consumer12,242 13,799 7,205 4,948 1,900 1,052 77,282 1,499 119,927 Total Other Consumer4,550 16,527 9,603 4,792 2,601 1,342 78,676 1,748 119,839 
Performing637,499 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 
AccrualAccrual217,628 1,274,170 1,192,365 561,096 709,654 1,880,304 1,365,672 25,531 7,226,420 
NonaccrualNonaccrual— 173 145 230 826 17,773 4,474 1,023 24,644 
Total Loan BalanceTotal Loan Balance$637,499 $1,267,784 $668,401 $843,038 $520,135 $1,714,822 $1,361,657 $27,558 $7,040,894 Total Loan Balance$217,628 $1,274,343 $1,192,510 $561,326 $710,480 $1,898,077 $1,370,146 $26,554 $7,251,064 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2021December 31, 2022
(dollars in thousands)(dollars in thousands)202120202019201820172016 and PriorRevolvingRevolving-TermTotal(dollars in thousands)202220212020201920182017 and PriorRevolvingRevolving-TermTotal
Commercial Real EstateCommercial Real EstateCommercial Real Estate
Performing$385,347 $317,359 $461,613 $332,482 $259,723 $865,567 $36,948 $— $2,659,039 
Nonperforming— 07,107 2,261 6,296 15,824 — — 31,488 
AccrualAccrual$292,732 $360,423 $269,049 $449,493 $261,941 $876,435 $21,666 $— $2,531,739 
NonaccrualNonaccrual— — — — — 7,100 — — 7,100 
Total Commercial Real EstateTotal Commercial Real Estate385,347 317,359 468,720 334,743 266,019 881,391 36,948  2,690,528 Total Commercial Real Estate292,732 360,423 269,049 449,493 261,941 883,535 21,666  2,538,839 
Commercial and IndustrialCommercial and IndustrialCommercial and Industrial
Performing437,529 126,371 123,944 86,852 38,540 136,427 548,622 — 1,498,285 
Nonperforming— — 10,473 60 2,882 43 1,780 — 15,239 
AccrualAccrual253,696 289,448 88,544 73,998 65,858 147,273 591,292 — 1,510,109 
NonaccrualNonaccrual— — — — 53 — 230 — 283 
Total Commercial and IndustrialTotal Commercial and Industrial437,529 126,371 134,417 86,912 41,422 136,470 550,402  1,513,523 Total Commercial and Industrial253,696 289,448 88,544 73,998 65,911 147,273 591,522  1,510,392 
Commercial ConstructionCommercial ConstructionCommercial Construction
Performing142,321 110,562 111,445 16,838 989 10,093 30,036 — 422,284 
Nonperforming— — 2,087 — — 384 — — 2,471 
AccrualAccrual120,655 170,691 40,762 14,442 3,953 3,792 27,284 — 381,579 
NonaccrualNonaccrual— — — — — 384 — — 384 
Total Commercial ConstructionTotal Commercial Construction142,321 110,562 113,532 16,838 989 10,477 30,036  424,755 Total Commercial Construction120,655 170,691 40,762 14,442 3,953 4,176 27,284  381,963 
Business BankingBusiness BankingBusiness Banking
Performing257,368 107,984 144,689 113,820 81,195 311,673 108,202 1,122 1,126,052 
Nonperforming41 64 287 1,408 694 7,062 28 57 9,641 
AccrualAccrual287,679 233,656 91,149 109,479 83,689 289,435 105,172 1,195 1,201,454 
NonaccrualNonaccrual— 67 — 252 1,200 2,776 99 96 4,490 
Total Business BankingTotal Business Banking257,409 108,048 144,976 115,228 81,889 318,735 108,230 1,179 1,135,693 Total Business Banking287,679 233,723 91,149 109,731 84,889 292,211 105,271 1,291 1,205,944 
Consumer Real EstateConsumer Real EstateConsumer Real Estate
Performing137,465 100,253 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 
AccrualAccrual296,948 148,868 91,085 73,947 31,646 196,384 553,441 23,108 1,415,427 
NonaccrualNonaccrual— 135 528 636 385 3,785 208 849 6,526 
Total Consumer Real EstateTotal Consumer Real Estate137,465 100,995 92,165 50,156 40,384 238,462 443,406 24,552 1,127,585 Total Consumer Real Estate296,948 149,003 91,613 74,583 32,031 200,169 553,649 23,957 1,421,953 
Other ConsumerOther ConsumerOther Consumer
Performing20,059 9,290 7,261 3,093 1,021 6,444 57,903 2,677 107,748 
Nonperforming— 158 — — — — — — 158 
AccrualAccrual20,054 10,819 5,303 3,270 1,034 593 82,125 1,411 124,609 
NonaccrualNonaccrual— — 124 — — 131 — 14 269 
Total Other ConsumerTotal Other Consumer20,059 9,448 7,261 3,093 1,021 6,444 57,903 2,677 107,906 Total Other Consumer20,054 10,819 5,427 3,270 1,034 724 82,125 1,425 124,878 
Performing1,380,089 771,819 940,641 602,938 421,125 1,564,501 1,224,949 27,638 6,933,699 
Nonperforming41 964 20,430 4,032 10,599 27,478 1,976 770 66,291 
AccrualAccrual1,271,764 1,213,905 585,892 724,629 448,121 1,513,912 1,380,980 25,714 7,164,917 
NonaccrualNonaccrual— 202 652 888 1,638 14,176 537 959 19,052 
Total Loan BalanceTotal Loan Balance$1,380,130 $772,783 $961,071 $606,970 $431,724 $1,591,979 $1,226,925 $28,408 $6,999,990 Total Loan Balance$1,271,764 $1,214,107 $586,544 $725,517 $449,759 $1,528,088 $1,381,517 $26,673 $7,183,969 
The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented:
June 30, 2022March 31, 2023
(dollars in thousands)(dollars in thousands)Current30-59 Days
Past Due
60-89 Days
Past Due
Non - performingTotal Past
Due Loans
Total Loans(dollars in thousands)Current30-59 Days
Past Due
60-89 Days
Past Due
NonaccrualTotal Past
Due Loans
Total Loans
Commercial real estateCommercial real estate$2,610,642 $— $340 $15,022 $15,362 $2,626,004 Commercial real estate$2,514,689 $— $1,320 $7,425 $8,745 $2,523,434 
Commercial and industrialCommercial and industrial1,478,546 698 — 342 1,040 1,479,586 Commercial and industrial1,486,444 — — 7,075 7,075 1,493,519 
Commercial constructionCommercial construction394,471 — — 864 864 395,335 Commercial construction376,471 — — 384 384 376,855 
Business bankingBusiness banking1,150,781 674 1,428 7,907 10,009 1,160,790 Business banking1,255,124 2,714 89 3,915 6,718 1,261,842 
Consumer real estateConsumer real estate1,250,221 1,050 597 7,384 9,031 1,259,252 Consumer real estate1,464,321 4,383 1,342 5,529 11,254 1,475,575 
Other consumerOther consumer119,370 225 76 256 557 119,927 Other consumer119,285 162 76 316 554 119,839 
TotalTotal$7,004,031 $2,647 $2,441 $31,775 $36,863 $7,040,894 Total$7,216,334 $7,259 $2,827 $24,644 $34,730 $7,251,064 

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S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued
December 31, 2021December 31, 2022
(dollars in thousands)(dollars in thousands)Current30-59 Days
Past Due
60-89 Days
Past Due
Non - performingTotal Past
Due Loans
Total Loans(dollars in thousands)Current30-59 Days
Past Due
60-89 Days
Past Due
NonaccrualTotal Past
Due Loans
Total Loans
Commercial real estateCommercial real estate$2,659,040 $— $— $31,488 $31,488 $2,690,528 Commercial real estate$2,523,315 $8,424 $— $7,100 $15,524 $2,538,839 
Commercial and industrialCommercial and industrial1,497,755 529 — 15,239 15,768 1,513,523 Commercial and industrial1,505,805 4,304 — 283 4,587 1,510,392 
Commercial constructionCommercial construction421,834 450 — 2,471 2,921 424,755 Commercial construction381,579 — — 384 384 381,963 
Business bankingBusiness banking1,124,748 813 491 9,641 10,945 1,135,693 Business banking1,199,586 1,583 285 4,490 6,358 1,205,944 
Consumer real estateConsumer real estate1,117,074 1,087 2,130 7,294 10,511 1,127,585 Consumer real estate1,409,907 3,617 1,903 6,526 12,046 1,421,953 
Other consumerOther consumer107,492 206 50 158 414 107,906 Other consumer124,384 165 60 269 494 124,878 
Total(1)
Total(1)
$6,927,943 $3,085 $2,671 $66,291 $72,047 $6,999,990 
Total(1)
$7,144,576 $18,093 $2,248 $19,052 $39,393 $7,183,969 
(1) We had 8 loans that were modified totaling $28.8 million under the CARES Act at December 31, 2021. 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:
June 30, 2022March 31, 2023
(dollars in thousands)(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related Allowance
Interest Income Recognized on Nonaccrual(1)
(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related Allowance
Interest Income Recognized on Nonaccrual(1)
Commercial real estateCommercial real estate$31,488 $15,022 $11,974 $557 Commercial real estate$7,100 $7,425 $5,442 $
Commercial and industrialCommercial and industrial15,239 342 — 84 Commercial and industrial283 7,075 — — 
Commercial constructionCommercial construction2,471 864 480 — Commercial construction384 384 — — 
Business bankingBusiness banking9,641 7,907 1,326 136 Business banking4,490 3,915 — 108 
Consumer real estateConsumer real estate7,294 7,384 — 132 Consumer real estate6,526 5,529 — 91 
Other consumerOther consumer158 256 — — Other consumer269 316 — 
TotalTotal$66,291 $31,775 $13,780 $909 Total$19,052 $24,644 $5,442 $201 
(1) Represents only cash payments received and applied to interest on nonaccrual loans for the six months ended June 30, 2022.loans.

December 31, 2021December 31, 2022
(dollars in thousands)(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related Allowance
Interest Income
Recognized
on Nonaccrual(1)
(dollars in thousands)Beginning of Period NonaccrualEnd of Period NonaccrualNonaccrual With No Related Allowance
Interest Income
Recognized
on Nonaccrual(1)
Commercial real estateCommercial real estate$101,070 $31,488 $28,046 $158 Commercial real estate$31,488 $7,100 $5,649 $580 
Commercial and industrialCommercial and industrial16,985 15,239 5,707 74 Commercial and industrial15,239 283 — 148 
Commercial constructionCommercial construction384 2,471 2,020 (28)Commercial construction2,471 384 — 171 
Business bankingBusiness banking17,122 9,641 1,696 427 Business banking9,641 4,490 933 228 
Consumer real estateConsumer real estate11,117 7,294 — 496 Consumer real estate7,294 6,526 — 257 
Other consumerOther consumer96 158 — Other consumer158 269 — 
TotalTotal$146,774 $66,291 $37,469 $1,128 Total$66,291 $19,052 $6,582 $1,385 
(1) Represents only cash payments received and applied to interest on nonaccrual loans for the twelve months ended December 31, 2021.

loans.
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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 loans as of the dates presented:
June 30, 2022March 31, 2023
Type of CollateralType of Collateral
(dollars in thousands)(dollars in thousands)Real EstateBusiness
Assets
Investment/CashOther(dollars in thousands)Real EstateBusiness
Assets
Investment/CashOther
Commercial real estateCommercial real estate$11,974 $— $16 $— Commercial real estate$5,442 $595 $— $— 
Commercial and industrialCommercial and industrial— 690 — — Commercial and industrial— 5,385 — — 
Commercial constructionCommercial construction1,695 — 480 — Commercial construction— — — — 
Business bankingBusiness banking795 1,210 — — Business banking— — — — 
Consumer real estateConsumer real estate598 — — — Consumer real estate— — — — 
TotalTotal$15,062 $1,900 $496 $ Total$5,442 $5,980 $ $ 
December 31, 2021December 31, 2022
Type of CollateralType of Collateral
(dollars in thousands)(dollars in thousands)Real EstateBusiness
Assets
Investment/CashOther(dollars in thousands)Real EstateBusiness
Assets
Investment/CashOther
Commercial real estateCommercial real estate$28,046$$$Commercial real estate$5,649$$$
Commercial and industrialCommercial and industrial2594,90510,473Commercial and industrial626
Commercial constructionCommercial construction4,210Commercial construction1,655
Business bankingBusiness banking9101,636Business banking2601,112154
Consumer real estateConsumer real estate1,031Consumer real estate561
TotalTotal$34,456$6,541$$10,473Total$8,125$1,738$$154
The following tables present activity in the ACL for the periods presented:
Three Months Ended June 30, 2022
(dollars in thousands)Commercial
Real Estate
Commercial and
Industrial
Commercial
Construction
Business BankingConsumer
Real Estate
Other
Consumer
Total
Loans
Allowance for credit losses on loans:
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)
Recoveries288 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 BankingConsumer
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)
Recoveries965 11 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 
Three Months Ended March 31, 2023
(dollars in thousands)Commercial
Real Estate
Commercial and
Industrial
Commercial
Construction
Business BankingConsumer
Real Estate
Other
Consumer
Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period$41,428 $25,710 $6,264 $12,547 $12,105 $3,286 $101,340 
Impact of ASU 2022-02— 75 215 251 278 (251)568 
Provision for credit losses on loans(1)
(1,011)(476)412 1,497 488 180 1,090 
Charge-offs— (3,412)— (652)(77)(318)(4,459)
Recoveries9,400 37 61 65 9,574 
Net Recoveries/(Charge-offs)9 5,988 2 (615)(16)(253)5,115 
Balance at End of Period$40,426 $31,297 $6,893 $13,680 $12,855 $2,962 $108,113 
(1) Excludes the provision for credits losses for unfunded commitments.
Three Months Ended March 31, 2022
(dollars in thousands)Commercial
Real Estate
Commercial and
Industrial
Commercial
Construction
Business BankingConsumer
Real Estate
Other
Consumer
Total
Loans
Allowance for credit losses on loans:
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)
Recoveries199 2,716 — 37 66 3,019 
Net (Charge-offs)/Recoveries199 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.






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S&T BANCORP, INC. AND SUBSIDIARIES
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 BankingConsumer
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)
Recoveries288 6,829 358 68 141 7,685 
Net (Charge-offs)/Recoveries89 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)
Recoveries965 148 213 234 423 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 $11.7 million of loans originated under the PPP program at June 30, 2022 compared to $336.1 million for the same period in 2021. The PPP loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL.
NOTE 7.6. 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).
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)
June 30, 2022December 31, 2021June 30, 2022December 31, 2021
(dollars in thousands)Notional
 Amount
Fair
Value
Notional AmountFair
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 loans2,062 56 12,148 401 — — — — 
Forward sales contracts - mortgage loans— — 8,436 645 — — 
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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S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued
Derivative Assets
(Included in Other Assets)
Derivative Liabilities
(Included in Other Liabilities)
March 31, 2023December 31, 2022March 31, 2023December 31, 2022
(dollars in thousands)Notional
 Amount
Fair
Value
Notional AmountFair
Value
Notional
 Amount
Fair
 Value
Notional
 Amount
Fair
 Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts - cash flow hedge$— $— $— $— $500,000 $15,288 $500,000 $21,368 
Total Derivatives Designated as Hedging Instruments$ $ $ $ $500,000 $15,288 $500,000 $21,368 
Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts - commercial loans$959,341 $67,397 $976,707 $83,449 $959,341 $67,397 $976,707 $83,449 
Interest rate lock commitments - mortgage loans146 126 — — — — 
Forward sales contracts - mortgage loans— — 130 — — — — 
Total Derivatives Not Designated as Hedging Instruments$959,487 $67,403 $976,963 $83,456 $959,341 $67,397 $976,707 $83,449 
Total Derivatives$959,487 $67,403 $976,963 $83,456 $1,459,341 $82,685 $1,476,707 $104,817 
The following table indicates the gross amounts of interest rate swap derivative assets and derivative liabilities, the amounts offset and the carrying values in the Consolidated Balance Sheets at the dates presented:

Derivatives (included
in Other Assets)
Derivatives (included
in Other Liabilities)
(dollars in thousands)June 30, 2022December 31, 2021June 30, 2022December 31, 2021
Gross amounts recognized$52,493 $37,289 $58,192 $37,392 
Gross amounts offset(1,028)(3,761)(1,053)(3,761)
Net amounts presented in the Consolidated Balance Sheets51,465 33,528 57,139 33,631 
Cash collateral received/pledged(1)
(43,543)— — (33,631)
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.

Derivatives (included
in Other Assets)
Derivatives (included
in Other Liabilities)
(dollars in thousands)March 31, 2023December 31, 2022March 31, 2023December 31, 2022
Gross amounts recognized$67,397 $83,449 $82,685 $104,817 
Gross amounts offset— — — — 
Net amounts presented in the Consolidated Balance Sheets67,397 83,449 82,685 104,817 
Netting adjustments (1)
(11,434)(15,196)(11,434)(15,196)
Cash collateral (2)
(55,301)(65,065)(4,901)(6,307)
Net Amount$662 $3,188 $66,350 $83,314 
(1) Netting adjustments represent the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.
(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the cash collateral cannot reduce the net derivative position below zero. Therefore, excess cash collateral, if any, is not reflected above.
The following table presents the effect of the cash flow hedges on OCI and on the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three month periods presented:
Amount of Gain or (Loss) Recognized in Other Comprehensive IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest IncomeAmount of Gain or (Loss) Recognized in Other Comprehensive IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income
(dollars in thousands)(dollars in thousands)June 30, 2022June 30, 2021June 30, 2022June 30, 2021(dollars in thousands)March 31, 2023March 31, 2022March 31, 2023March 31, 2022
Derivatives in Cash Flow Hedging Relationships:Derivatives in Cash Flow Hedging Relationships:Derivatives in Cash Flow Hedging Relationships:
Interest rate swap contracts - cash flow hedgeInterest rate swap contracts - cash flow hedge$(3,271)$— $786 $— Interest rate swap contracts - cash flow hedge$4,782 $(2,044)$(1,849)$107 
TotalTotal$(3,271)$ $786 $ Total$4,782 $(2,044)$(1,849)$107 
The following table presents the effect
25

Table of the cash flow hedges on OCI and on the Condensed Consolidated Statements of Comprehensive Income (Loss) for the six month periods presented:
Amount of Gain or (Loss) Recognized in Other Comprehensive IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income
(dollars in thousands)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Derivatives in Cash Flow Hedging Relationships:
Interest rate swap contracts - cash flow hedge$(5,872)$— $922 $— 
Total$(5,872)$ $922 $ 
Contents

S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amounts reported in OCI related to derivatives that are designated as hedging instruments are reclassified to interest income as interest payments are received on variable rate assets. During the next twelve months, we estimate that an additional $10.2 million will be reclassified as a decrease to interest income.
The following table indicates the gain or loss recognized in income on derivatives not designated as hedging instruments for the periods presented:
Three months ended June 30,Six months ended June 30,
(dollars in thousands)2022202120222021
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loans$(61)$$$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)
29
Three months ended March 31,
(dollars in thousands)20232022
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loans$— $68 
Interest rate lock commitments—mortgage loans(217)
Forward sale contracts—mortgage loans(2)188 
Total Derivatives (Loss) Gain$(1)$39 

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S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 8.7. 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)June 30, 2022December 31, 2021(dollars in thousands)March 31, 2023December 31, 2022
Commitments to extend creditCommitments to extend credit$2,600,322 $2,583,957 Commitments to extend credit$2,661,977 $2,713,586 
Standby letters of creditStandby letters of credit80,665 87,335 Standby letters of credit65,676 64,356 
TotalTotal$2,680,987 $2,671,292 Total$2,727,653 $2,777,942 
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 offor the datesperiods presented:
Three months ended June 30,Six months ended June 30,Three months ended March 31,
(dollars in thousands)(dollars in thousands)2022202120222021(dollars in thousands)20232022
Balance at beginning of periodBalance at beginning of period$5,375 $4,303 $5,189 $4,467 Balance at beginning of period$8,196 $5,189 
Provision for credit lossesProvision for credit losses2,012 555 2,198 391 Provision for credit losses(168)186 
TotalTotal$7,387 $4,858 $7,387 $4,858 Total$8,028 $5,375 
Litigation
In the normal course of business, we are subject to various legal and administrative proceedings and claims. While any type of litigation contains a level of uncertainty, we believe that the outcome of such proceedings or claims pending will not have a material adverse effect on our consolidated financial position or results of operations.
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S&T BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued
NOTE 9.8. OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the change in components of other comprehensive income (loss) for the periods presented, net of tax effects.
Three Months Ended June 30, 2022Three Months Ended June 30, 2021
(dollars in thousands)Pre-Tax
Amount
Tax
Benefit
(Expense)
Net of Tax
Amount
Pre-Tax
Amount
Tax
Benefit
(Expense)
Net of Tax
Amount
Change in net unrealized gains (losses) on available-for-sale debt securities$(23,009)$4,872 $(18,137)$324 $(69)$255 
Change in interest rate swap(3,271)696 (2,575)— — — 
Adjustment to funded status of employee benefit plans (1)
766 (182)584 2,910 (621)2,289 
Other Comprehensive Income (Loss)$(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 $0.2 million for the three months ended June 30, 2021 immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.
Six Months Ended June 30, 2022Six Months Ended June 30, 2021
(dollars in thousands)Pre-Tax
Amount
Tax
Benefit
(Expense)
Net of Tax
Amount
Pre-Tax
Amount
Tax
Benefit
(Expense)
Net of Tax
Amount
Change in net unrealized losses on available-for-sale debt securities$(71,270)$15,204 $(56,066)$(9,388)$2,003 $(7,385)
Change in interest rate swap(5,872)1,253 (4,619)— — — 
Adjustment to funded status of employee benefit plans (1)
754 (150)604 2,567 (548)2,019 
Other Comprehensive Loss$(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.
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.

Three Months Ended March 31, 2023Three Months Ended March 31, 2022
(dollars in thousands)Pre-Tax
Amount
Tax
Benefit
Net of Tax
Amount
Pre-Tax
Amount
Tax
Benefit
Net of Tax
Amount
Change in net unrealized gains (losses) on available-for-sale debt securities$14,060 $(3,001)$11,059 $(48,261)$10,332 $(37,929)
Change in interest rate swap6,080 (1,298)4,782 (2,601)557 (2,044)
Adjustment to funded status of employee benefit plans(475)101 (374)(12)32 20 
Other Comprehensive Income (Loss)$19,665 $(4,198)$15,467 $(50,874)$10,921 $(39,953)
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S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, represents an overview of our consolidated results of operations and financial condition and highlights material changes in our financial condition and results of operations for the three and six months ended June 30, 2022March 31, 2023 and 2021.2022. 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 lookingForward-looking statements are typically identified by words or phrases such as “will likely result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “comfortable,” “current,” “position,” “maintain,” “sustain,” “seek,” “achieve”“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 securitycyber-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; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; changes in accounting policies, practices or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; climate changedevelopments affecting the industry and related legislativethe soundness of financial institutions and regulatory initiatives;further disruption to the economy and U.S. banking system; 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;employees; general economic or business conditions, including the strength of regional economic conditions in our market area; macroeconomic conditionsenvironmental, social and governance practices and disclosures, including inflation and economic uncertainty; climate change, hiring practices, the duration and severitydiversity of the coronavirus, or COVID-19 pandemic, both in our principal area of operationswork force, and nationally, including the ultimate impact of the pandemic on the economy generallyracial and on our operations; our participation in the Paycheck Protection Program;social justice issues; 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 20212022 Form 10-K, including Part II,I, Item 1A, Risk Factors and any of our subsequent filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made. 
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S&T BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
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 June 30, 2022March 31, 2023 remained unchanged from the disclosures presented in our 20212022 Form 10-K 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 $9.1$9.2 billion at June 30, 2022.March 31, 2023. We operate in five markets including Western Pennsylvania Eastern Pennsylvania, Northeast Ohio, Central Ohio and Upstate New York.Ohio. 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 asOur purpose is building a better future together through people-forward banking. We believe that all banking should be personal. We cultivate relationships rooted in trust, strengthened by going above and beyond and renewed with every interaction. Our strategic priorities for 2023 and beyond will be focused on our new chief executive officer. He brings over 34 yearsdeposit franchise, core profitability, asset quality and talent and engagement.
During the first quarter of proven2023, the banking leadershipindustry experienced significant volatility with several high-profile bank failures and industry wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding consumer confidence in the banking system. Despite these negative industry developments, our liquidity position and balance sheet remain strong. We have a well-diversified deposit base with a track recordbalance mix of growth59 percent personal and transformation of commercial, consumer and wealth businesses. Additionally, we have elevated proven internal leaders and attracted external talent from larger banking institutions41 percent business accounts. Our total deposits decreased by less than 1 percent compared to position us for future growth. Our priorities forDecember 31, 2022 and beyond include pursuing high impact growth initiatives, ensuring rigorous credit riskcan be attributed to normal deposit fluctuations and enterprise governance practices, advancing strategic infrastructure and platform investments, including enhancing our digital platform, investingcompetition in organization talent and performance and promoting strategic clarity and effective communications. Organic 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 areashigher interest rate environment. We have total uninsured deposits of $2.4 billion, or 33 percent of our businesstotal deposit base. We have a strong liquidity position. In addition to our deposit base, we had remaining borrowing availability of $2.3 billion with the FHLB of Pittsburgh, $794 million from the Federal Reserve Borrower-In-Custody program and focuses on satisfying each customer’s individual financial objectives. We also actively evaluate acquisition opportunities that align$731 million from the Federal Reserve Bank Term Funding Program at March 31, 2023. Furthermore, our capital remains strong with our strategic objectives as another sourcea Common Equity Tier 1 Ratio of growth.13.10 percent and a total capital ratio of 15.09 percent at March 31, 2023.
Earnings Summary
The following table presents a summary of key profitability metrics for the periods presented:
Three months ended June 30,Six months ended June 30,Three Months Ended March 31,
2022202120222021
Net Income$28,858 $28,367 $58,001 $60,268 
Earnings Per Share - Diluted$0.74 $0.72 $1.48 $1.54 
(dollars in thousands)(dollars in thousands)20232022
Net incomeNet income$39,799 $29,143 
Earnings per share - dilutedEarnings per share - diluted$1.02 $0.74 
Return on average assetsReturn on average assets1.25 %1.21 %1.25 %1.31 %Return on average assets1.77 %1.25 %
Return on average shareholders' equityReturn on average shareholders' equity9.83 %9.65 %9.85 %10.39 %Return on average shareholders' equity13.38 %9.88 %
Return on average tangible shareholders' equity (non-GAAP)Return on average tangible shareholders' equity (non-GAAP)14.63 %14.41 %14.62 %15.57 %Return on average tangible shareholders' equity (non-GAAP)19.61 %14.61 %

We recognized net income of $39.8 million, or $1.02 per diluted share, for the three months ended March 31, 2023 compared to net income of $29.1 million, or $0.74 per diluted share for the same period in 2022. Net income increased $0.5$10.7 million for the three months ended June 30, 2022March 31, 2023 compared to the same period in 20212022 primarily due to an increase in net interest income of $6.9$21.1 million offset by a decrease in noninterest income of $2.8$2.0 million, and an increase in noninterest expenseprovision for credit losses of $2.6 million. Net income decreased $2.3$1.4 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 byand an increase in net interest income tax expense of $4.0 million and a decrease in our provision for credit losses of $3.0$2.7 million.
Net interest income increased $6.9 million and $4.0$21.1 million for the three and six months ended June 30, 2022March 31, 2023 compared to the same periodsperiod in 2021.2022. Interest and dividend income increased $40.8 million for the three months ended March 31, 2023. Interest expense increased $19.7 million for the three months ended March 31, 2023. The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 40 and 4116 basis points to 4.32% for the three and six months ended June 30, 2022March 31, 2023 compared to 3.16% for the same periodsperiod in 2021.2022. The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2022.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The provision for credit losses increased $0.6 million and decreased $3.0 millionduring 2023. NIM is reconciled to $3.2 million and $2.7 million fornet interest margin adjusted to an FTE basis (non-GAAP) below in 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"Explanation of Use of Non-GAAP Financial Measures" section of this MD&A.
The increase in the provision for credit losses for the three months ended June 30, 2022March 31, 2023 compared to the same period in 20212022 was primarily due to an increase of $1.4 million in our provision for unfunded commitments related to higher construction commitmentsa $4.2 million specific reserve for a C&I relationship and expected loss ratesa $1.8 million increase in our construction portfolio. The decreasequalitative reserve related to the macro environment. Offsetting the increase in the provision for credit losses during the three months ended March 31, 2023 was a $9.3 million recovery from a customer fraud that occurred in 2020.
Noninterest income decreased $2.0 million to $13.2 million for the sixthree months ended June 30, 2022March 31, 2023 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.
Noninterest2022. Mortgage banking 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, 2022March 31, 2023 due to a decline in loan sale activity caused by rising interest rates and $1.2a shift to holding originated mortgage loans. Debit and credit card income decreased $0.7 million for the sixthree months ended June 30, 2022March 31, 2023 due to decreased debit card incentive income and timing of referral merchant revenue.
Noninterest expense increased consulting engagements$4.3 million to $51.7 million for the three months ended March 31, 2023 compared to the same periodsperiod in 2021. Furniture, equipment2022. Salaries and softwareemployee benefits increased $3.9 million for the three months ended March 31, 2023 due to decreases in the fair market value of assets in a nonqualified defined benefit plan, incentives, base rate increases and higher medical costs. Marketing costs increased $0.5 million for the three months ended June 30, 2022 and increased $0.7 million for the six month ended June 30, 2022March 31, 2023 due to new software implementation costs. Salariesincreased marketing efforts 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 the fair valuetiming of the liability in a nonqualified benefit plan.various promotions.
The provision for income taxes increased $0.3$2.7 million to $7.3$9.6 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, 2022March 31, 2023 compared to $7.0 million and $14.2$6.9 million for the same periodsperiod in 2021.2022. Our effective tax rate was 20.3 percent and 19.719.4 percent for the three months and six months ended June 30, 2022March 31, 2023 compared to 19.7 percent and 19.119.2 percent for the three and six months ended June 30, 2021.March 31, 2022. The increasesincrease in our effective tax ratesrate for the three and six month periodsperiod ended June 30, 2022 wereMarch 31, 2023 was primarily due to a $0.5 million decreasean increase in lowpretax income housing tax credits compared to the same periodsperiod in 2021.2022.
Explanation of Use of Non-GAAP Financial Measures
In addition to the results of operationstraditional financial measures presented in accordance with generally accepted accounting principles, or GAAP, in the United States,our management uses, and this quarterly report contains or references, net interest income and net interest margin, each on a fully taxable equivalent, or FTE, basis. Management also uses return on average tangible shareholders' equity, or ROTE to evaluate and measure performance. These metrics arecertain non-GAAP financial measures. Management believesmeasures discussed below. We believe these performance metricsnon-GAAP financial measures 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 believeswe believe 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.
The interest income on interest-earning assets, net interest income and net interest margin are presented on an FTE basis (non-GAAP). The FTE basis (non-GAAP) 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 presentationpreferred 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 and dividend income and net interest income per the Condensed Consolidated Statements of Comprehensive Income (Loss) to interest income, net interest income and net interest margin on an FTE basis ensures(non-GAAP) for 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 June 30, 2022 Compared to Three and Six Months Ended June 30, 2021 - Net Interest Income" section of this MD&A.

periods presented:
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Average
Three Months Ended March 31,
(dollars in thousands)20232022
Total interest and dividend income per Condensed Consolidated Statements of Comprehensive Income (Loss)$110,903 $70,109 
Adjustment to FTE basis555 493 
Interest Income on an FTE Basis (Non-GAAP)$111,458 $70,602 
Total interest and dividend income per Condensed Consolidated Statements of Comprehensive Income (Loss)$110,903 $70,109 
Total interest expense22,112 2,376 
Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)88,791 67,733 
Adjustment to FTE basis555 493 
Net Interest Income on an FTE Basis (Non-GAAP)$89,346 $68,226 
Net interest margin4.29 %3.14 %
Adjustment to FTE basis0.03 %0.02 %
Net Interest Margin on an FTE Basis (Non-GAAP)4.32 %3.16 %

Return on average tangible shareholders' equity (non-GAAP) is a key profitability metric used by management to measure financial performance. The following table provides a reconciliation of return on average tangible shareholders' equity (non-GAAP) by reconciling net income (GAAP) per the 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,Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)2022202120222021(dollars in thousands)20232022
Net income (annualized)Net income (annualized)$115,750 $113,778 $116,964 $121,535 Net income (annualized)$161,407 $118,192 
Plus: amortization of intangibles (annualized), net of taxPlus: amortization of intangibles (annualized), net of tax1,197 1,395 1,236 1,429 Plus: amortization of intangibles (annualized), net of tax1,085 1,276 
Net income before amortization of intangibles (annualized)Net income before amortization of intangibles (annualized)$116,947 $115,173 $118,200 $122,964 Net income before amortization of intangibles (annualized)$162,492 $119,468 
Average shareholders' equityAverage shareholders' equity$1,177,550 $1,179,002 $1,187,069 $1,169,620 Average shareholders' equity$1,206,358 $1,196,694 
Less: average goodwill and other intangible assets, net of deferred tax liabilityLess: average goodwill and other intangible assets, net of deferred tax liability(378,453)(379,784)(378,606)(379,963)Less: average goodwill and other intangible assets, net of deferred tax liability(377,576)(378,761)
Average tangible shareholders' equityAverage tangible shareholders' equity$799,097 $799,218 $808,463 $789,657 Average tangible shareholders' equity$828,782 $817,933 
Return on average tangible shareholders' equity (non-GAAP)14.63 %14.41 %14.62 %15.57 %
Return on Average Tangible Shareholders' Equity (non-GAAP)Return on Average Tangible Shareholders' Equity (non-GAAP)19.61 %14.61 %





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RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2022March 31, 2023 Compared to
Three and Six Months Ended June 30, 2021March 31, 2022
Net Interest Income
Our principal source of revenue is net interest income. Net interest income represents the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is affected by changes in the average balance of interest-earning assets and interest-bearing liabilities and changes in interest rates and 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 June 30,Six Months Ended June 30,
(dollars in thousands)2022202120222021
Total interest and dividend income$77,599 $71,577 $147,708 $146,358 
Total interest expense2,405 3,273 4,781 7,396 
Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)75,194 68,304 142,927 138,962 
Adjustment to FTE basis506 585 999 1,249 
Net Interest Income on an FTE Basis (Non-GAAP)$75,700 $68,889 $143,926 $140,211 
Net interest margin3.53 %3.13 %3.33 %3.28 %
Adjustment to FTE basis0.03 %0.03 %0.02 %0.03 %
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) (non-GAAP)
The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets and the average balances, interest and rates paid on interest-bearing liabilities for the periods presented:
 
Three Months Ended June 30, 2022Three Months Ended June 30, 2021
(dollars in thousands)Average BalanceInterestRateAverage BalanceInterestRate
ASSETS
Interest-bearing deposits with banks$528,413 $1,029 0.78 %$785,465 $175 0.09 %
Securities, at fair value(1)(2)
1,024,106 5,601 2.19 %826,861 4,529 2.19 %
Loans held for sale1,406 14 3.95 %4,353 33 3.01 %
Commercial real estate3,197,406 32,978 4.14 %3,251,894 29,930 3.69 %
Commercial and industrial1,685,728 18,119 4.31 %1,890,538 18,363 3.90 %
Commercial construction404,856 3,812 3.78 %462,928 3,854 3.34 %
Total Commercial Loans5,287,990 54,909 4.16 %5,605,359 52,147 3.73 %
Residential mortgage939,756 9,337 3.98 %863,254 8,996 4.17 %
Home equity594,529 5,282 3.56 %535,933 4,682 3.50 %
Installment and other consumer119,041 1,590 5.36 %84,259 1,271 6.05 %
Consumer construction31,204 261 3.36 %13,264 211 6.39 %
Total Consumer Loans1,684,530 16,470 3.92 %1,496,710 15,160 4.06 %
Total Portfolio Loans6,972,520 71,379 4.11 %7,102,069 67,307 3.80 %
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 stock8,939 82 3.69 %10,529 119 4.51 %
Total Interest-earning Assets8,535,384 78,105 3.67 %8,729,277 72,162 3.31 %
Noninterest-earning assets690,207 704,635 
Total Assets$9,225,591 $9,433,911 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand$979,514 $176 0.07 %$998,134 $230 0.09 %
Money market1,930,852 709 0.15 %2,037,976 894 0.18 %
Savings1,118,346 128 0.05 %1,044,899 70 0.03 %
Certificates of deposit1,001,775 778 0.31 %1,291,194 1,458 0.45 %
Total Interest-bearing Deposits5,030,487 1,790 0.14 %5,372,203 2,652 0.20 %
Securities sold under repurchase agreements50,037 13 0.10 %67,838 17 0.10 %
Long-term borrowings22,072 111 2.01 %23,113 116 2.01 %
Junior subordinated debt securities54,413 492 3.62 %64,103 488 3.06 %
Total Borrowings126,522 615 1.95 %155,054 621 1.61 %
Total Interest-bearing Liabilities5,157,009 2,405 0.19 %5,527,256 3,273 0.24 %
Noninterest-bearing liabilities2,891,032 2,727,653 
Shareholders' equity1,177,550 1,179,002 
Total Liabilities and Shareholders' Equity$9,225,591 $9,433,911 
Net Interest Income (1)(2)
$75,700 $68,889 
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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Six Months Ended June 30, 2022Six Months Ended June 30, 2021Three Months Ended March 31, 2023Three Months Ended March 31, 2022
(dollars in thousands)(dollars in thousands)Average BalanceInterestRateAverage BalanceInterestRate(dollars in thousands)Average BalanceInterestRateAverage BalanceInterestRate
ASSETSASSETSASSETS
Interest-bearing deposits with banksInterest-bearing deposits with banks$641,648 $1,332 0.42 %$545,177 $240 0.09 %Interest-bearing deposits with banks$140,499 $1,482 4.22 %$756,141 $303 0.16 %
Securities, at fair value(1)(2)
Securities, at fair value(1)(2)
1,013,219 10,866 2.14 %804,613 9,095 2.26 %
Securities, at fair value(1)(2)
1,000,609 6,269 2.51 %1,002,212 5,265 2.10 %
Loans held for saleLoans held for sale1,475 27 3.72 %5,351 78 2.90 %Loans held for sale126 6.39 %1,545 14 3.51 %
Commercial real estateCommercial real estate3,227,156 62,323 3.89 %3,252,763 60,066 3.72 %Commercial real estate3,132,382 42,104 5.45 %3,257,238 29,345 3.65 %
Commercial and industrialCommercial and industrial1,699,222 34,946 4.15 %1,923,813 39,180 4.10 %Commercial and industrial1,711,113 28,515 6.76 %1,712,865 16,827 3.98 %
Commercial constructionCommercial construction407,048 7,141 3.54 %474,037 7,887 3.36 %Commercial construction388,795 6,932 7.23 %409,264 3,329 3.30 %
Total Commercial LoansTotal Commercial Loans5,333,426 104,410 3.95 %5,650,613 107,134 3.82 %Total Commercial Loans5,232,290 77,551 6.01 %5,379,367 49,501 3.73 %
Residential mortgageResidential mortgage918,132 18,299 4.00 %880,246 18,412 4.20 %Residential mortgage1,144,821 12,613 4.43 %896,268 8,962 4.02 %
Home equityHome equity582,721 10,105 3.50 %534,329 9,473 3.58 %Home equity650,385 10,067 6.28 %570,781 4,823 3.43 %
Installment and other consumerInstallment and other consumer114,531 3,065 5.40 %82,095 2,518 6.19 %Installment and other consumer122,873 2,364 7.80 %109,972 1,475 5.44 %
Consumer constructionConsumer construction26,544 443 3.36 %14,578 399 5.52 %Consumer construction45,870 528 4.67 %21,833 181 3.37 %
Total Consumer LoansTotal Consumer Loans1,641,928 31,911 3.91 %1,511,249 30,803 4.10 %Total Consumer Loans1,963,949 25,572 5.26 %1,598,854 15,441 3.90 %
Total Portfolio LoansTotal Portfolio Loans6,975,354 136,321 3.94 %7,161,862 137,936 3.88 %Total Portfolio Loans7,196,239 103,123 5.81 %6,978,221 64,942 3.77 %
Total Loans(1)(3)
Total Loans(1)(3)
6,976,829 136,348 3.94 %7,167,213 138,014 3.88 %
Total Loans(1)(3)
7,196,365 103,125 5.81 %6,979,765 64,955 3.77 %
Federal Home Loan Bank and other restricted stock9,108 161 3.54 %10,884 257 4.73 %
Total other earning assetsTotal other earning assets34,720 581 6.71 %9,280 79 3.40 %
Total Interest-earning AssetsTotal Interest-earning Assets8,640,804 148,708 3.47 %8,527,887 147,607 3.49 %Total Interest-earning Assets8,372,193 111,458 5.39 %8,747,398 70,602 3.27 %
Noninterest-earning assetsNoninterest-earning assets699,097 730,117 Noninterest-earning assets754,677 709,246 
Total AssetsTotal Assets$9,339,901 $9,258,003 Total Assets$9,126,870 $9,456,644 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demandInterest-bearing demand$983,057 $361 0.07 %$947,295 $452 0.10 %Interest-bearing demand$824,623 $673 0.33 %$986,639 $185 0.08 %
Money marketMoney market1,993,009 1,455 0.15 %2,003,569 1,837 0.18 %Money market1,670,988 7,748 1.88 %2,055,857 746 0.15 %
SavingsSavings1,113,723 206 0.04 %1,020,201 221 0.04 %Savings1,090,137 806 0.30 %1,109,048 78 0.03 %
Certificates of depositCertificates of deposit1,035,793 1,621 0.32 %1,317,751 3,623 0.55 %Certificates of deposit1,052,460 5,676 2.19 %1,070,189 844 0.32 %
Total Interest-bearing DepositsTotal Interest-bearing Deposits5,125,582 3,644 0.14 %5,288,816 6,133 0.23 %Total Interest-bearing Deposits4,638,208 14,903 1.30 %5,221,733 1,853 0.14 %
Securities sold under repurchase agreementsSecurities sold under repurchase agreements65,826 33 0.10 %66,254 42 0.13 %Securities sold under repurchase agreements— — — %81,790 20 0.10 %
Short-term borrowingsShort-term borrowings— — — %12,707 12 0.19 %Short-term borrowings451,668 5,487 4.93 %— — — %
Long-term borrowingsLong-term borrowings22,190 218 1.98 %23,291 232 2.01 %Long-term borrowings14,689 98 2.71 %22,310 107 1.95 %
Junior subordinated debt securitiesJunior subordinated debt securities54,406 887 3.29 %64,095 977 3.07 %Junior subordinated debt securities54,458 1,007 7.50 %54,398 395 2.95 %
Total BorrowingsTotal Borrowings142,422 1,138 1.61 %166,348 1,262 1.53 %Total Borrowings520,815 6,592 5.13 %158,498 523 1.34 %
Other interest-bearing liabilitiesOther interest-bearing liabilities54,669 617 4.58 %— — — %
Total Interest-bearing LiabilitiesTotal Interest-bearing Liabilities5,268,004 4,781 0.18 %5,455,164 7,396 0.27 %Total Interest-bearing Liabilities5,213,692 22,112 1.72 %5,380,231 2,376 0.18 %
Noninterest-bearing liabilitiesNoninterest-bearing liabilities2,884,828 2,633,219 Noninterest-bearing liabilities2,706,820 2,879,718 
Shareholders' equityShareholders' equity1,187,069 1,169,620 Shareholders' equity1,206,358 1,196,694 
Total Liabilities and Shareholders' EquityTotal Liabilities and Shareholders' Equity$9,339,901 $9,258,003 Total Liabilities and Shareholders' Equity$9,126,870 $9,456,644 
Net Interest Income (1)(2)
Net Interest Income (1)(2)
$143,926 $140,211 
Net Interest Income (1)(2)
$89,345 $68,226 
Net Interest Margin (1)(2)
Net Interest Margin (1)(2)
3.35 %3.31 %
Net Interest Margin (1)(2)
4.32 %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.

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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six
Net interest income on an FTE basis (non-GAAP) increased $21.1 million, or 31.0%, for the three months ended June 30, 2022March 31, 2023 compared to the same periodsperiod in 20212022. The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 116 basis points for the three months ended March 31, 2023 compared to the same period in 2022. The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2023.
Interest income on an FTE basis (non-GAAP) increased $40.9 million for the three months ended March 31, 2023 compared to the same period in 2022. The increase in interest income on an FTE basis (non-GAAP) was primarily due to higher interest rates. Average loan balances increased $216.6 million for the three months ended March 31, 2023 compared to the same period in 2022. The average yield on loans increased 204 basis points for the three months ended March 31, 2023 compared to the same period in 2022 due to increased interest rates. Average securities increased $197.2 million and $208.6 million for the three and six months ended June 30, 2022 compared to the same periods 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 $96.5$615.6 million for the three and six months ended June 30, 2022 compared to the same periods in 2021. Overall, the FTE rate on interest-earning assets (non-GAAP) increased 36 basis points and decreased 2 basis points for the three and six months ended June 30, 2022March 31, 2023 compared to the same period in 2021.2022 due to decreased deposit balances and increased loans. Overall, the FTE rate (non-GAAP) on interest-earning assets increased 212 basis points for the three months ended March 31, 2023 compared to the same period in 2022.
Interest expense decreased $0.9 million and $2.6increased $19.7 million for the three and six months ended June 30, 2022March 31, 2023 compared to the same periodsperiod in 2021.2022. The decreasesincrease in interest expense werewas primarily due to lower average rates paid onhigher interest rates. Average interest-bearing deposits decreased $583.5 million for the three months ended March 31, 2023 compared to the same periodsperiod in 2021. Average interest-bearing deposits decreased $341.7 million and $163.2 million for the three and six months ended June 30, 2022 compared2022. The decrease was due to the same periods in 2021. The decreases were concentrated in higher-balance, rate sensitive accounts. Additionally, we discontinued a moneycompetitive market product during the first quarter of 2022 that was indexed to the Federal Funds rate which caused declines in money market balances.driven by rising interest rates. The average rate paid on interest-bearing deposits decreased 6 and 9increased 116 basis points for the three and six months ended June 30, 2022March 31, 2023 compared to the same periodsperiod in 20212022. Average borrowings increased $362.3 million and the average rate paid on borrowings increased 379 basis points for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to decreased deposit balances in rate sensitive accounts and the maturities of higher costing certificates of deposit. Average demand deposits increased $137.4 million and $254.2 million for the three and six months ended June 30, 2022 compared to the same periods in 2021. We experienced demand deposit growth throughout 2021 due to customer PPP loans and stimulus payments along with customers' liquidity preferences. Average total borrowings decreased $28.5 million and $23.9 million for the three and six months ended June 30, 2022 compared to the same periods in 2021 due to the payoff of a subordinated debt and lower customer repo balances.loans. Overall, the cost of interest-bearing liabilities decreased 5 and 9increased 154 basis points for the three and six months ended June 30, 2022March 31, 2023 compared to the same periodsperiod in 2021.2022.
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The following table sets forth for the periods presented a summary of the changes in interest earned and interest paid resulting from changes in volume and changes in rates:
Three Months Ended June 31, 2022 Compared to June 31, 2021Six Months Ended June 31, 2022 Compared to June 31, 2021Three Months Ended March 31, 2023 Compared to March 31, 2022
(dollars in thousands)(dollars in thousands)
Volume (4)
Rate (4)
Total
Volume (4)
Rate (4)
Total(dollars in thousands)
Volume (4)
Rate (4)
Total
Interest earned on:Interest earned on:Interest earned on:
Interest-bearing deposits with banksInterest-bearing deposits with banks$(57)$912 $855 $42 $1,050 $1,093 Interest-bearing deposits with banks$(247)$1,426 $1,179 
Securities, at fair value(1)(2)
Securities, at fair value(1)(2)
1,080 (9)1,071 2,358 (588)1,770 
Securities, at fair value(1)(2)
(8)1,012 1,004 
Loans held for saleLoans held for sale(22)(19)(56)(50)Loans held for sale(12)(12)
Commercial real estateCommercial real estate(502)3,549 3,048 (473)2,729 2,256 Commercial real estate(1,125)13,884 12,759 
Commercial and industrialCommercial and industrial(1,989)1,746 (244)(4,574)340 (4,234)Commercial and industrial(17)11,705 11,688 
Commercial constructionCommercial construction(483)441 (42)(1,115)368 (746)Commercial construction(167)3,770 3,603 
Total Commercial LoansTotal Commercial Loans(2,974)5,736 2,762 (6,161)3,437 (2,724)Total Commercial Loans(1,309)29,359 28,050 
Residential mortgageResidential mortgage797 (456)341 792 (905)(113)Residential mortgage2,485 1,165 3,651 
Home equityHome equity512 88 600 858 (227)631 Home equity673 4,571 5,244 
Installment and other consumerInstallment and other consumer525 (205)319 995 (448)547 Installment and other consumer173 716 889 
Consumer constructionConsumer construction286 (236)50 328 (285)43 Consumer construction200 148 347 
Total Consumer LoansTotal Consumer Loans2,120 (810)1,310 2,973 (1,865)1,108 Total Consumer Loans3,531 6,600 10,131 
Total Portfolio LoansTotal Portfolio Loans(855)4,927 4,072 (3,188)1,573 (1,616)Total Portfolio Loans2,222 35,959 38,181 
Total Loans (1)(3)
Total Loans (1)(3)
(877)4,930 4,053 (3,245)1,579 (1,666)
Total Loans (1)(3)
2,210 35,960 38,169 
Federal Home Loan Bank and other restricted stock(18)(18)(36)(42)(54)(96)
Total other earning assetsTotal other earning assets216 286 502 
Change in Interest Earned on Interest-earning AssetsChange in Interest Earned on Interest-earning Assets$129 $5,815 $5,943 $(886)$1,987 $1,101 Change in Interest Earned on Interest-earning Assets$2,171 $38,684 $40,854 
Interest paid on:Interest paid on:Interest paid on:
Interest-bearing demandInterest-bearing demand$(4)$(50)$(54)$17 $(108)$(90)Interest-bearing demand$(30)$518 $487 
Money marketMoney market(47)(138)(185)(10)(373)(382)Money market(140)7,141 7,002 
SavingsSavings54 58 20 (36)(15)Savings(1)730 728 
Certificates of depositCertificates of deposit(327)(354)(680)(775)(1,226)(2,001)Certificates of deposit(14)4,846 4,832 
Total Interest-bearing DepositsTotal Interest-bearing Deposits(373)(488)(861)(747)(1,742)(2,490)Total Interest-bearing Deposits(185)13,235 13,049 
Securities sold under repurchase agreementsSecurities sold under repurchase agreements(4)— (4)— (8)(9)Securities sold under repurchase agreements(20)— (20)
Short-term borrowingsShort-term borrowings— — — (12)— (12)Short-term borrowings5,487 — 5,487 
Long-term borrowingsLong-term borrowings(5)— (5)(11)(3)(14)Long-term borrowings(37)28 (9)
Junior subordinated debt securitiesJunior subordinated debt securities(74)77 (148)58 (90)Junior subordinated debt securities— 611 611 
Total BorrowingsTotal Borrowings(84)77 (6)(171)46 (125)Total Borrowings5,430 639 6,069 
Change in Interest Paid on Interest-bearing LiabilitiesChange in Interest Paid on Interest-bearing Liabilities(457)(411)$(868)(918)(1,696)(2,614)Change in Interest Paid on Interest-bearing Liabilities5,862 13,874 19,735 
Change in Net Interest IncomeChange in Net Interest Income$585 $6,226 $6,811 $32 $3,683 $3,715 Change in Net Interest Income$(3,691)$24,810 $21,119 
(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 expectedcommitments. The provision for credit losses fluctuates based on changes in loan balances, risk ratings, net loan charge-offs/recoveries, the portfolio at the balance sheet date.macro environment and our CECL forecast. The provision for credit losses increased $0.6 million and decreased $3.0$1.4 million to $3.2 million and $2.7$0.9 million for the three and six months ended June 30, 2022March 31, 2023 compared to $2.6 million and $5.7a negative $0.5 million for the same periodsperiod in 2021.2022. The provision for credit losses included $2.0 million and $2.2a negative $0.2 million for the reserve for unfunded commitments for the three and six months ended June 30, 2022March 31, 2023 compared to $0.6 million and $0.4$0.2 million for the same periodsperiod in 2021.2022.
The increase in the provision for credit losses of $0.6for the three months ended March 31, 2023 compared to the same period in 2022 was primarily related to a $4.2 million specific reserve for a C&I relationship and a $1.8 million increase in qualitative reserve related to the macro environment. Offsetting the increase in the provision for credit losses during the three months ended March 31, 2023 was a $9.3 million recovery from a customer fraud in 2020.
Net loan recoveries were $5.1 million for the three months ended June 30, 2022March 31, 2023 compared to $2.0 million for the same period in 20212022. The net recovery was primarily due to an increase of $1.4the $9.3 million in our provision for unfunded commitmentsrecovery mentioned above. Total gross charge-offs were $4.5 million primarily related to higher construction commitments and expected loss rates in our construction portfolio. The decrease in the provision for credit lossesa $3.4 million charge-off related to a strategic note sale of $3.0 million for the six months ended June 30, 2022 compared to the same period in 2021 was due primarily to two largea 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.relationship.
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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 second 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,Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)20222021$ Change% Change20222021$ Change% Change(dollars in thousands)20232022$ Change% Change
Net gain on sale of securities$— $29 $(29)NM$— $29 $(29)NM
Debit and credit cardDebit and credit card4,756 4,744 12 0.3 %9,819 8,906 913 10.3 %Debit and credit card$4,373 $5,063 $(690)(13.6)%
Service charges on deposit accountsService charges on deposit accounts4,181 3,642 539 14.8 %8,155 7,116 1,039 14.6 %Service charges on deposit accounts4,076 3,974 102 2.6 %
Wealth managementWealth management3,247 3,167 80 2.5 %6,489 6,111 378 6.2 %Wealth management2,948 3,242 (294)(9.1)%
Mortgage bankingMortgage banking466 1,734 (1,268)(73.1)%1,481 6,044 (4,563)(75.5)%Mortgage banking301 1,015 (714)(70.3)%
OtherOther(20)2,108 (2,128)(100.9)%1,912 4,541 (2,629)(57.9)%Other1,492 1,932 (440)(22.8)%
Total Noninterest IncomeTotal Noninterest Income$12,630 $15,424 $(2,794)(18.1)%$27,856 $32,747 $(4,891)(14.9)%Total Noninterest Income$13,190 $15,226 $(2,036)(13.4)%
NM - not meaningful
Noninterest income decreased $2.8$2.0 million to $12.6$13.2 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, 2022March 31, 2023 compared to the same periodsperiod in 2021.2022. 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 $2.6 million for the six months ended June 30, 2022 primarily due to the decline in the fair value of the assets in a nonqualified benefit plan which has a corresponding offset in salaries and benefits resulting in no impact to net income. Service charges on deposit accounts and debit and credit card fees increased for the three and six months ended June 30, 2022 due to an improving economic environment which drove higher customer activity.
Noninterest Expense
Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)20222021$ Change% Change20222021$ Change% Change
Salaries and employee benefits$24,811 $24,515 $296 1.2 %$48,523 $47,842 $681 1.4 %
Data processing and information technology4,104 3,787 317 8.4 %8,539 8,012 527 6.6 %
Occupancy3,634 3,434 200 5.8 %7,516 7,261 255 3.5 %
Furniture, equipment and software2,939 2,402 537 22.3 %5,716 5,042 674 13.4 %
Other taxes1,682 1,832 (150)(8.2)%3,219 3,268 (49)(1.5)%
Professional services and legal2,380 1,637 743 45.4 %4,329 3,168 1,161 36.6 %
Marketing1,524 996 528 53.0 %2,885 2,318 567 24.5 %
FDIC insurance882 924 (42)(4.5)%1,819 1,970 (151)(7.7)%
Other6,468 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, 2022March 31, 2023 due to increased consulting engagements compareda decline in loan sale activity caused by rising interest rates and a shift to the same periods in 2021. Furniture, equipmentholding originated mortgage loans on our balance sheet. Debit and software increased $0.5credit card income decreased $0.7 million for the three months ended June 30, 2022March 31, 2023 due to decreased debit card incentive income and increased $0.7timing of referral merchant revenue. Wealth management income decreased $0.3 million due to lower assets under management primarily related to declines in the stock market compared to the three months ended March 31, 2022. Other noninterest income decreased $0.4 million for the six monththree months ended June 30, 2022March 31, 2023 primarily due to new software implementationa net gain on sale of OREO in 2022.
Noninterest Expense
Three Months Ended March 31,
(dollars in thousands)20232022$ Change% Change
Salaries and employee benefits$27,601 $23,712 $3,889 16.4 %
Data processing and information technology4,258 4,435 (177)(4.0)%
Occupancy3,835 3,882 (47)(1.2)%
Furniture, equipment and software2,861 2,777 84 3.0 %
Professional services and legal1,821 1,949 (128)(6.6)%
Other taxes1,790 1,537 253 16.5 %
Marketing1,853 1,361 492 36.1 %
FDIC insurance1,012 937 75 8.0 %
Other6,668 6,824 (156)(2.3)%
Total Noninterest Expense$51,699 $47,414 $4,285 9.0 %
Noninterest expense increased $4.3 million to $51.7 million for the three months ended March 31, 2023 compared to the same period in 2022. Salaries and employee benefits increased $3.9 million for the three months ended March 31, 2023 due to increases in the fair market value of assets in a nonqualified defined benefit plan, incentives, base rate increases and higher medical 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, 2022March 31, 2023 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 valuetiming 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.various promotions.
Provision for Income Taxes
The provision for income taxes increased $0.3$2.7 million to $7.3$9.6 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, 2022March 31, 2023 compared to $7.0 million and $14.2$6.9 million for the same periodsperiod in 2021.2022. Our effective tax rate was 20.3 percent and 19.719.4 percent for the three months and six months ended June 30, 2022March 31, 2023 compared to 19.7 percent and 19.119.2 percent for the three and six months ended June 30, 2021.March 31, 2022. The increasesincrease in our effective tax ratesrate for the three and six month periodsperiod ended June 30, 2022 wereMarch 31, 2023 was primarily due to a $0.5 million decreasean increase in lowpretax income housing tax credits compared to the same periodsperiod 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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Financial Condition as of March 31, 2023
Total assets increased $82.9 million to $9.2 billion at March 31, 2023 compared to $9.1 billion at December 31, 2022. Cash and due from banks increased $34.2 million to $244.2 million at March 31, 2023 compared to $210.0 million at December 31, 2022. Total portfolio loans increased $67.1 million to $7.3 billion at March 31, 2023 compared to $7.2 billion at December 31, 2022. The increase in loans primarily related to consumer loan growth of $65.3 million with an increase in consumer real estate of $70.3 million compared to December 31, 2022.
Securities remained relatively unchanged at $998.7 million at March 31, 2023 from $1.0 billion at December 31, 2022. The bond portfolio was in a net unrealized loss position of $88.3 million at March 31, 2023 compared to a net unrealized loss position of $102.3 million at December 31, 2022.
Our deposits decreased $66.9 million to $7.2 billion at March 31, 2023 compared to December 31, 2022. Certificates of deposit increased $240.6 million mainly due to migration from other deposit categories. Noninterest-bearing demand deposits decreased $120.1 million, money market decreased $131.7 million and savings decreased $50.2 million compared to December 31, 2022. The decreases were primarily attributed to normal deposit fluctuations and competition in a higher interest rate environment.
Total borrowings increased $124.9 million to $564.1 million at March 31, 2023 compared to $439.2 million at December 31, 2022 primarily due to loan growth and lower deposit levels.
Total shareholders’ equity increased by $43.1 million to $1.2 billion at March 31, 2023 compared to December 31, 2022. The increase was primarily due to net income of $39.8 million, other comprehensive income of $15.5 million offset by dividends of $12.5 million.
Securities Activity
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021$ Change(dollars in thousands)March 31, 2023December 31, 2022$ Change
U.S. Treasury securitiesU.S. Treasury securities$136,282 $95,327 $40,955 U.S. Treasury securities$133,704 $131,695 $2,009 
Obligations of U.S. government corporations and agenciesObligations of U.S. government corporations and agencies52,815 70,348 (17,533)Obligations of U.S. government corporations and agencies42,095 41,811 284 
Collateralized mortgage obligations of U.S. government corporations and agenciesCollateralized mortgage obligations of U.S. government corporations and agencies427,635 270,294 157,341 Collateralized mortgage obligations of U.S. government corporations and agencies432,739 428,407 4,332 
Residential mortgage-backed securities of U.S. government corporations and agenciesResidential mortgage-backed securities of U.S. government corporations and agencies46,416 56,793 (10,377)Residential mortgage-backed securities of U.S. government corporations and agencies41,170 41,587 (417)
Commercial mortgage-backed securities of U.S. government corporations and agenciesCommercial mortgage-backed securities of U.S. government corporations and agencies333,994 341,300 (7,306)Commercial mortgage-backed securities of U.S. government corporations and agencies317,099 327,313 (10,214)
Corporate obligationsCorporate obligations500 500 — Corporate obligations— 500 (500)
Obligations of states and political subdivisionsObligations of states and political subdivisions69,850 75,089 (5,239)Obligations of states and political subdivisions30,895 30,471 424 
Available-for-Sale Debt SecuritiesAvailable-for-Sale Debt Securities1,067,492 909,651 157,841 Available-for-Sale Debt Securities997,702 1,001,784 (4,082)
Marketable equity securitiesMarketable equity securities1,084 1,142 (58)Marketable equity securities1,006 994 12 
Total SecuritiesTotal Securities$1,068,576 $910,793 $157,783 Total Securities$998,708 $1,002,778 $(4,070)
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 $157.8remained relatively unchanged at $998.7 million at March 31, 2023 compared to $1.1$1.0 billion at June 30, 2022 from $910.8 million at December 31, 2021. The increase in securities was primarily due to investing interest-bearing deposits with banks into higher yielding assets.2022.
At June 30, 2022,March 31, 2023, our bond portfolio was in a net unrealized loss position of $61.9$88.3 million compared to a net unrealized gainloss position of $9.4$102.3 million at December 31, 2021.2022. The decline in our net unrealized losses was due to a decrease in long term interest rates since December 31, 2022. At June 30, 2022, totalMarch 31, 2023, our bond portfolio had gross unrealized gains in the bond portfolio were $1.2losses of $88.9 million offset by gross unrealized lossesgains of $63.1$0.6 million compared to December 31, 2021,2022, when total gross unrealized gainslosses were $15.2$102.6 million offset by gross unrealized lossesgains of $5.8$0.3 million. The decrease in the net unrealized gain position was primarily due to an increase in interest rates from December 31, 2021 to June 30, 2022.
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Loan Composition
June 30, 2022December 31, 2021March 31, 2023December 31, 2022
(dollars in thousands)(dollars in thousands)Amount% of LoansAmount% of Loans$ Change% Change(dollars in thousands)Amount% of LoansAmount% of Loans$ Change% Change
CommercialCommercialCommercial
Commercial real estateCommercial real estate$3,191,670 45.3 %$3,236,653 46.2 %$(44,983)(1.4)%Commercial real estate$3,145,079 43.4 %$3,128,187 43.5 %$16,892 0.5 %
Commercial and industrialCommercial and industrial1,695,031 24.1 %1,728,969 24.7 %(33,938)(2.0)%Commercial and industrial1,709,612 23.6 %1,718,976 23.9 %(9,364)(0.5)%
Commercial constructionCommercial construction410,425 5.8 %440,962 6.3 %(30,537)(6.9)%Commercial construction393,658 5.4 %399,371 5.6 %(5,713)(1.4)%
Total Commercial LoansTotal Commercial Loans5,297,126 75.2 %5,406,584 77.2 %(109,458)(2.0)%Total Commercial Loans5,248,349 72.4 %5,246,534 73.0 %1,815  %
ConsumerConsumerConsumer
Consumer real estateConsumer real estate1,623,830 23.1 %1,485,478 21.2 %138,352 9.3 %Consumer real estate1,882,872 26.0 %1,812,539 25.2 %70,333 3.9 %
Other consumerOther consumer119,938 1.7 %107,928 1.5 %12,010 11.1 %Other consumer119,843 1.6 %124,896 1.8 %(5,053)(4.0)%
Total Consumer LoansTotal Consumer Loans1,743,768 24.8 %1,593,406 22.8 %150,362 9.4 %Total Consumer Loans2,002,715 27.6 %1,937,435 27.0 %65,280 3.4 %
Total Portfolio LoansTotal Portfolio Loans7,040,894 100.0 %6,999,990 100.0 %40,904 0.6 %Total Portfolio Loans7,251,064 100.0 %7,183,969 100.0 %67,095 0.9 %
Loans held for saleLoans held for sale1,311 1,522 (211)(13.9)%Loans held for sale81 16 65 406.3 %
Total LoansTotal Loans$7,042,205 $7,001,512 $40,693 0.6 %Total Loans$7,251,145 $7,183,985 $67,160 0.9 %
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 increased $40.9$67.1 million, or 0.9 percent, to remain relatively stable at $7.0$7.3 billion at June 30, 2022March 31, 2023 compared to $7.2 billion at December 31, 2021. P2022.
ortfolio loans excluding PPP loans increased $117.5 million compared to December 31, 2021. As of June 30, 2022, 74March 31, 2023, 71.0 percent of our total loans arewere variable rate loans and 2629.0 percent arewere fixed rate loans.
Commercial loans, including CRE, C&I and commercial construction, comprised 75.272.4 percent of total portfolio loans at June 30, 2022March 31, 2023 and 77.273.0 percent at December 31, 2021.2022. The commercial loan portfolio decreased $109.5increased $1.8 million at June 30, 2022March 31, 2023 compared to December 31, 2021.2022 due to an increase in CRE loans of $16.9 million, which was related to growth in business banking loans. C&I loans decreased $33.9$9.4 million at June 30, 2022 which mainly relatedand construction decreased $5.7 million compared to a PPP loan decline of $76.6 million since December 31, 2021.
We had $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, ifpay-offs and lower origination volume due to the proceeds are usedcurrent macro environment.
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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 24.827.6 percent of our total portfolio loans at June 30, 2022March 31, 2023 and 22.827.0 percent at December 31, 2021.2022. The consumer loan portfolio increased $150.4$65.3 million at June 30, 2022 with increasesMarch 31, 2023 due to growth in our consumer real estate portfolio of $138.4$70.3 million and other consumer of $12.0 million compared to December 31, 2021. Portfolio2022. Consistent with 2022, we continue to retain consumer real estate loans increasedon our balance sheet as portfolio loans versus selling these loans in 2022the secondary market due to a shift from mortgage loans sold to loans held in the portfolio due to increasedhigher volume of jumbo loans and the pricing of loans in the secondary market.

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. Refer to Part 1. Financial Information, Note 6.5. Loans and Allowance for Credit Losses for details on our portfolio segments.
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 BankingConsumer
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)
Recoveries288 6,829 358 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, 2022December 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 loans1.39 %1.41 %
Allowance for credit losses as a percentage of total portfolio loans - excluding PPP loans1.40 %1.43 %
Allowance for credit losses to nonperforming loans309 %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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The following table presents activity in the ACL for the periods presented:
Three Months Ended March 31, 2023
(dollars in thousands)Commercial
Real Estate
Commercial and
Industrial
Commercial
Construction
Business BankingConsumer
Real Estate
Other
Consumer
Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period$41,428 $25,710 $6,264 $12,547 $12,105 $3,286 $101,340 
Impact of ASU 2022-02— 75 215 251 278 (251)568 
Provision for credit losses on loans(1)
(1,011)(476)412 1,497 488 180 1,090 
Charge-offs— (3,412)— (652)(77)(318)(4,459)
Recoveries9,400 37 61 65 9,574 
Net Recoveries/(Charge-offs)9 5,988 2 (615)(16)(253)5,115 
Balance at End of Period$40,426 $31,297 $6,893 $13,680 $12,855 $2,962 $108,113 
(1) Excludes the provision for credit losses for unfunded commitments.
The following table presents key ACL ratios for the periods presented:
March 31, 2023December 31, 2022
Ratio of net (recoveries) charge-offs to average loans outstanding(1)
(0.29)%0.04 %
Allowance for credit losses as a percentage of total portfolio loans1.49 %1.41 %
Allowance for credit losses to nonaccrual loans439 %532 %
(1) Year-to-date net charge-offs annualized
The ACL was $108.1 million, or 1.49 percent of total portfolio loans, at March 31, 2023 compared to $101.3 million, or 1.41 percent of total portfolio loans, at December 31, 2022. The increase in the ACL of $6.8 million was related to increases in our qualitative reserve, specific reserves on loans individually assessed and loan payoffs.growth. The qualitative reserve increased $1.8 million due to a $2.2 million increase in qualitative factors related to the macro environment, which was partially offset by a $0.5 million reduction in qualitative segment specific reserves primarily due to improvement in our hotel portfolio. Specific reserves on loans individually assessed increased $4.2 million, related to a $6.8 million C&I relationship, compared to December 31, 2022.
Net loan recoveries were $5.1 million, or negative 0.29 percent of average loans, for the three months ended March 31, 2023. Refer to the "Provision for Credit Losses" section of this MD&A for further details.
Substandard loans decreased $9.5 million to $153.6 million at March 31, 2023 compared to $163.1 million at December 31, 2022. The decrease in substandard loans was partially offset by the addition of a $28.5 million C&I relationship, which was downgraded to substandardprimarily due to financial deterioration that led to cash flow shortfalls during the second quarter of 2022.loan payoffs. Special mention loans decreased $9.3increased $40.7 million to $183.0$261.7 million at June 30, 2022March 31, 2023 compared to $192.3$221.0 million at December 31, 2021.2022. The decreaseincrease in special mention loans was due primarily due to loan upgrades$27.9 million of downgrades in our hotel portfolio.
Troubled debt restructurings, or TDRs, decreased $18.4CRE and $15.2 million to $13.3 million at June 30, 2022 compared to $31.7 million at December 31, 2021. The decrease in TDRs was primarily due to the payoff of two C&I relationships totaling $14.1 million and a CRE relationship totaling $5.7 million. Total TDRs of $13.3 million included $9.3 million, or 70.0 percent, that were accruing and $4.0 million, or 30.0 percent, that were nonaccruing at June 30, 2022.&I.
Our allowance for credit losses on unfunded commercial lendingloan 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 $2.2decreased $0.2 million to $7.4$8.0 million at June 30, 2022March 31, 2023 compared to $5.2$8.2 million at December 31, 2021.2022. This change was primarily related to higher constructionlower unused commitments and expected loss rates in our construction portfolio. The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.
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Nonperforming assets, or NPA's, consist of nonaccrual loans nonaccrual TDRs and OREO. The following table summarizes nonperforming assets forrepresents NPA's as of the dates presented:
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021$ Change(dollars in thousands)March 31, 2023December 31, 2022$ Change
Nonperforming Loans (Excluding TDRs)
Nonaccrual LoansNonaccrual Loans
Commercial real estateCommercial real estate$15,006 $29,791 $(14,785)Commercial real estate$7,931 $7,323 $608 
Commercial and industrialCommercial and industrial342 350 (8)Commercial and industrial9,348 2,974 6,374 
Commercial constructionCommercial construction384 384 — Commercial construction384 384 — 
Business banking6,582 7,945 (1,363)
Consumer real estateConsumer real estate5,195 5,889 (694)Consumer real estate6,664 8,093 (1,429)
Other ConsumerOther Consumer256 158 98 Other Consumer317 278 39 
Total Nonperforming Loans (Excluding TDRs)27,765 44,517 (16,752)
Nonperforming Troubled Debt Restructurings
Commercial real estate16 1,697 (1,681)
Commercial and industrial— 14,889 (14,889)
Commercial construction480 2,087 (1,607)
Business banking1,325 1,696 (371)
Consumer real estate2,189 1,405 784 
Other Consumer— — — 
Total Nonperforming Troubled Debt Restructurings4,010 21,774 (17,764)
Total Nonperforming Loans31,775 66,291 (34,516)
Total Nonaccrual LoansTotal Nonaccrual Loans24,644 19,052 5,592 
OREOOREO7,046 13,313 (6,267)OREO3,076 3,065 11 
Total Nonperforming AssetsTotal Nonperforming Assets$38,821 $79,604 $(40,783)Total Nonperforming Assets$27,720 $22,117 $5,603 
Asset Quality Ratios:Asset Quality Ratios:Asset Quality Ratios:
Nonperforming loans as a percent of total portfolio loans0.45 %0.95 %
Nonaccrual loans as a percent of total portfolio loansNonaccrual loans as a percent of total portfolio loans0.34 %0.27 %
Nonperforming assets as a percent of total portfolio loans plus OREONonperforming assets as a percent of total portfolio loans plus OREO0.55 %1.13 %Nonperforming assets as a percent of total portfolio loans plus OREO0.38 %0.31 %


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. NonperformingNonaccrual loans decreased $34.5increased $5.6 million, or 52.029.4 percent, to $31.8$24.6 million at June 30, 2022March 31, 2023 compared to $66.3$19.0 million at December 31, 2021.2022. The significant decreaseincrease in nonperformingnonaccrual loans primarily related to the payoffaddition of twothe $6.8 million C&I relationships totaling $14.1relationship.
Deposits
Deposits are our primary source of funds. We have a well-diversified deposit base with a balance mix of 59 percent personal, 36 percent business and 5 percent public funds.
(dollars in thousands)March 31, 2023%December 31, 2022%$ Change%
Personal$4,205,608 58.8 %$4,171,701 57.8 %$33,907 0.8 %
Business2,584,246 36.1 %2,666,995 36.9 %(82,749)(3.1)%
Public funds363,240 5.1 %381,274 5.3 %(18,034)(4.7)%
Total Deposits$7,153,094 100.0 %$7,219,970 100.0 %$(66,876)(0.9)%
The following table presents the composition of deposits for the periods presented:
(dollars in thousands)March 31, 2023December 31, 2022$ Change
Noninterest-bearing demand$2,468,638 $2,588,692 $(120,054)
Interest-bearing demand841,130 846,653 (5,523)
Money market1,599,814 1,731,521 (131,707)
Savings1,068,274 1,118,511 (50,237)
Certificates of deposit1,175,238 934,593 240,645 
Total Deposits$7,153,094 $7,219,970 $(66,876)

Our total deposits decreased by less than 1 percent compared to December 31, 2022 and can be attributed to normal deposit fluctuations and competition in a higher interest rate environment. Certificates of deposit increased $240.6 million and a CRE relationship totaling $5.7 million. Additionally, four hotel loans were returnedcompared to performing status totaling $6.7 million during the six months ended June 30, 2022. The decrease in OREO relatedDecember 31, 2022 mainly due to the salemigration of a property for $6.3$153.0 million during the first quarterfrom other deposit categories as customers seek higher interest rates. We have total uninsured deposits of $2.4 billion, or 33 percent, of our total deposit base compared to $2.5 billion, or 34 percent at December 31, 2022.

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Deposits
(dollars in thousands)June 30, 2022December 31, 2021$ Change
Noninterest-bearing demand$2,736,849 $2,748,586 $(11,737)
Interest-bearing demand880,432 979,133 (98,701)
Money market1,888,506 2,070,579 (182,073)
Savings1,125,344 1,110,155 15,189 
Certificates of deposit981,116 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 $107.0 million due to maturities compared to December 31, 2021.
Borrowings
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021$ Change(dollars in thousands)March 31, 2023December 31, 2022$ Change
Securities sold under repurchase agreements$39,259 $84,491 $(45,232)
Short-term borrowingsShort-term borrowings$495,000 $370,000 $125,000 
Long-term borrowingsLong-term borrowings21,988 22,430 (442)Long-term borrowings14,628 14,741 (113)
Junior subordinated debt securitiesJunior subordinated debt securities54,423 54,393 30 Junior subordinated debt securities54,468 54,453 15 
Total BorrowingsTotal Borrowings$115,670 $161,314 $(45,644)Total Borrowings$564,096 $439,194 $124,902 

Borrowings are an additional source of funding for us. Total borrowings decreased $45.6increased $124.9 million to $564.1 million compared to $439.2 million at December 31, 2021 related2022 primarily due to a decrease in securities sold under repurchase agreements. We no longer offer repurchase agreements as a product for our customersloan growth and the remaining balance of $39.3 million is in process of being transferred to other deposit products.
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declines.
Information pertaining to short-term borrowings is summarized in the table below for the sixthree months ended June 30, 2022March 31, 2023 and for the twelve months ended December 31, 2021.2022.
Securities Sold Under Repurchase AgreementsShort-Term Borrowings
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021(dollars in thousands)March 31, 2023December 31, 2022
Balance at the period endBalance at the period end$39,259 $84,491 Balance at the period end$495,000 $370,000 
Average balance during the periodAverage balance during the period$65,826 $69,964 Average balance during the period$451,668 $40,013 
Average interest rate during the periodAverage interest rate during the period0.10 %0.11 %Average interest rate during the period4.93 %4.15 %
Maximum month-end balance during the periodMaximum month-end balance during the period$89,366 $84,491 Maximum month-end balance during the period$495,000 $370,000 
Average interest rate at the period endAverage interest rate at the period end0.10 %0.10 %Average interest rate at the period end5.11 %4.49 %
Information pertaining to long-term borrowings is summarized in the tables below for the sixthree months ended June 30, 2022March 31, 2023 and for the twelve months ended December 31, 2021.2022.
Long-Term BorrowingsLong-Term Borrowings
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021(dollars in thousands)March 31, 2023December 31, 2022
Balance at the period endBalance at the period end$21,988 $22,430 Balance at the period end$14,628 $14,741 
Average balance during the periodAverage balance during the period$22,190 $22,995 Average balance during the period$14,689 $19,090 
Average interest rate during the periodAverage interest rate during the period1.98 %1.99 %Average interest rate during the period2.71 %2.15 %
Maximum month-end balance during the periodMaximum month-end balance during the period$22,344 $23,549 Maximum month-end balance during the period$14,704 $22,344 
Average interest rate at the period endAverage interest rate at the period end2.03 %1.94 %Average interest rate at the period end2.70 %2.61 %
Junior Subordinated Debt SecuritiesJunior Subordinated Debt Securities
(dollars in thousands)(dollars in thousands)June 30, 2022December 31, 2021(dollars in thousands)March 31, 2023December 31, 2022
Balance at the period endBalance at the period end$54,423 $54,393 Balance at the period end$54,468 $54,453 
Average balance during the periodAverage balance during the period$54,406 $61,653 Average balance during the period$54,458 $54,421 
Average interest rate during the periodAverage interest rate during the period3.29 %2.99 %Average interest rate during the period7.50 %4.40 %
Maximum month-end balance during the periodMaximum month-end balance during the period$54,423 $64,128 Maximum month-end balance during the period$54,468 $54,453 
Average interest rate at the period endAverage interest rate at the period end4.17 %2.69 %Average interest rate at the period end7.34 %7.09 %
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
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Condition as of June 30, 2022March 31, 2023 - 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.program and the Bank Term Funding Program.
In response to recent bank failures, the Federal Reserve authorized additional funding availability to eligible depository institutions through the Bank Term Funding Program. The program is intended to help assure depositors that their institutions have an additional source of liquidity to meet their needs. Under the program, any collateral eligible for purchase by the Federal Reserve Banks in open market operations can be pledged including U.S. Treasuries, U.S. Agencies, U.S. Agency mortgage-backed securities. Collateral advances will be equal to 100% of the par value of the collateral pledged with a term of up to one year. Interest is charged at a fixed rate equal to the one-year overnight index swap rate plus 10 basis points with no prepayment penalty. As of March 31, 2023, we have $731 million of collateral available to pledge under the program and no outstanding balance.
The following table summarizes funding sources available as of the dates presented:

March 31, 2023December 31, 2022
(dollars in thousands)Borrowing CapacityBalanceAvailableBorrowing CapacityBalanceAvailable
FHLB$2,964,932 $624,079 $2,340,853 $2,925,614 $491,288 $2,434,326 
Federal Reserve Window794,393 — 794,393 839,836 — 839,836 
Federal Reserve BTLF730,500 — 730,500 — — — 
Total$4,489,825 $624,079 $3,865,746 $3,765,450 $491,288 $3,274,162 
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 20212022 Form 10-K for more information on these future cash outflows.
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deposit increased $240.6 million to $1.2 billion at March 31, 2023 compared to December 31, 2022. Short-term borrowings increased $125.0 million to $495.0 million at March 31, 2023 compared to December 31, 2022. Other than these changes, there have been no material changes to the contractual obligations previously disclosed in our 2022 Form 10-K,
An important component of our ability to effectively respond to potential liquidity stress events is maintaining a cushion of highly liquid assets. Highly liquid assets are those that can be converted to cash quickly, with little or no loss in value, to meet financial obligations. ALCO policy guidelines define a ratio of highly liquid assets to total assets by graduated risk tolerance levels of minimal, moderate and high. At June 30, 2022,March 31, 2023, S&T Bank had $991.2$917.9 million in highly liquid assets which consisted of $263.0$150.7 million in interest-bearing deposits with banks $726.9and $767.1 million in unpledged securities and $1.3 million in loans held for sale.securities. This resulted in a highly liquid assets to total assets ratio of 10.910.0 percent at June 30, 2022. Highly liquid assets have declined by $309.8 million when comparing June 30, 2022 to DecemberMarch 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 $2.8 billion with the FHLB of Pittsburgh. For more information regarding our outstanding borrowings refer to the "Financial Condition as of June 30, 2022 - Borrowings" section of this MD&A for more details.2023.
We continue to maintain a strong capital position with our leverage ratio at 10.2511.15 percent at June 30, 2022March 31, 2023 compared to 9.7411.06 percent at December 31, 2021,2022, 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 12.3413.10 percent at June 30, 2022March 31, 2023 compared to 12.0312.81 percent at December 31, 2021,2022, both in excess of the regulatory guideline of 6.50 percent to be well-capitalized.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
June 30, 2022December 31, 2021(dollars in thousands)Adequately
Capitalized
Well-
Capitalized
March 31, 2023December 31, 2022
AmountRatioAmountRatioAmountRatioAmountRatio
S&T Bancorp, Inc.S&T Bancorp, Inc.S&T Bancorp, Inc.
Tier 1 leverageTier 1 leverage4.00 %5.00 %$915,985 10.25 %$889,785 9.74 %Tier 1 leverage4.00 %5.00 %$989,316 11.15 %$967,708 11.06 %
Common equity tier 1 to risk-weighted assetsCommon equity tier 1 to risk-weighted assets4.50 %6.50 %886,985 12.34 %860,785 12.03 %Common equity tier 1 to risk-weighted assets4.50 %6.50 %960,316 13.10 %938,708 12.81 %
Tier 1 capital to risk-weighted assetsTier 1 capital to risk-weighted assets6.00 %8.00 %915,985 12.74 %889,785 12.43 %Tier 1 capital to risk-weighted assets6.00 %8.00 %989,316 13.50 %967,708 13.21 %
Total capital to risk-weighted assetsTotal capital to risk-weighted assets8.00 %10.00 %1,023,119 14.23 %987,420 13.79 %Total capital to risk-weighted assets8.00 %10.00 %1,106,039 15.09 %1,078,897 14.73 %
S&T BankS&T BankS&T Bank
Tier 1 leverageTier 1 leverage4.00 %5.00 %$890,488 9.97 %$864,127 9.46 %Tier 1 leverage4.00 %5.00 %$957,491 10.80 %$938,377 10.73 %
Common equity tier 1 to risk-weighted assetsCommon equity tier 1 to risk-weighted assets4.50 %6.50 %890,488 12.39 %864,127 12.09 %Common equity tier 1 to risk-weighted assets4.50 %6.50 %957,491 13.07 %938,377 12.81 %
Tier 1 capital to risk-weighted assetsTier 1 capital to risk-weighted assets6.00 %8.00 %890,488 12.39 %864,127 12.09 %Tier 1 capital to risk-weighted assets6.00 %8.00 %957,491 13.07 %938,377 12.81 %
Total capital to risk-weighted assetsTotal capital to risk-weighted assets8.00 %10.00 %997,622 13.89 %961,762 13.45 %Total capital to risk-weighted assets8.00 %10.00 %1,074,177 14.66 %1,049,566 14.33 %
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 June 30, 2022,March 31, 2023, we had not issued any securities pursuant to this shelf registration statement.
S&T is monitoring and will continue to monitor the impact of the 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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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.
June 30, 2022December 31, 2021March 31, 2023December 31, 2022
1 - 12 Months13 - 24 Months% Change in EVE1 - 12 Months13 - 24 Months% Change in EVE1 - 12 Months13 - 24 Months% Change in EVE1 - 12 Months13 - 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
40040030.1 36.4 (4.0)30.4 40.3 18.4 40014.0 19.6 (13.6)14.6 22.0 (13.2)
30030022.6 27.5 1.1 22.5 30.0 19.9 30010.4 14.5 (9.1)11.0 16.6 (8.5)
20020015.2 18.5 4.0 14.9 20.2 18.4 2006.8 9.5 (5.1)7.4 11.2 (4.6)
1001007.6 9.4 3.9 7.0 9.9 11.9 1003.4 4.8 (1.8)3.7 5.7 (1.5)
-100-100(9.2)(11.8)(10.5)(4.6)(8.4)(26.3)-100(5.7)(8.2)(2.5)(6.1)(8.8)(2.6)
-200-200(9.6)(13.3)(8.0)(10.2)(14.8)(7.7)
-300-300(13.5)(19.0)(18.5)(14.1)(21.0)(17.0)
-400-400(19.5)(25.7)(33.1)(21.1)(30.1)(32.7)
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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 less improvement in the percentage change in pretax net interest income in the rates up scenarios and a larger declinewhen comparing March 31, 2023 to December 31, 2022 primarily because we have more short-term borrowings. The percentage change in pretax net interest income in the rates down scenario shows an improvement when comparing June 30, 2022March 31, 2023 to December 31, 2021. We benefit less in the increasing rate scenarios2022 because of our increased ability to cut liability costs as deposit rates have increased and we have less excess cash. We have a larger decline in the decreasing rate scenario because the higher rate environment has increased our asset yields while our liability costs have remain unchanged to date. A decline in interest rates would result in less interest income with limited interest expense reduction.more short-term borrowings. Our EVE analyses show a decline in the percentage change in EVE in the rates up scenarios and an improvement in the rates down scenarioscenarios when comparing June 30, 2022March 31, 2023 to December 31, 2021. The EVE changes are2022 due to the impact of interest rates on the value of 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 June 30, 2022.March 31, 2023. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods required by the Securities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to S&T’s management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Based on and as of the date of such evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls and procedures were effective in all material respects, as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2022,March 31, 2023, 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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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 20212022 Form 10-K for the year ended December 31, 2021,2022, as filed with the SEC on February 28, 202224, 2023 other than the risks described below.
Russia’s invasion
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Difficult market conditions, including rapidly rising interest rates and several bank receiverships may adversely affect our business, results of operations, liquidity and stock price. Further adverse developments affecting the financial services industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system may adversely affect our business, results of operations, liquidity and stock price.
The rapid rise in interest rates during 2022, the resulting industry-wide reduction in the fair value of securities portfolios, and the related bank runs resulting in the takeover by the FDIC of two banks placed in receivership in March 2023, have caused a current state of volatility in the financial services industry and uncertainty with respect to liquidity and the health of the U.S. banking system. Although we were not directly affected by these bank receiverships, this news caused fear among depositors, which caused them to withdraw or attempt to withdraw their funds from these and other financial institutions. Uncertainty may be compounded by the reach and depth of media attention, including social media, and its ability to disseminate concerns or rumors about any events of these kinds or other similar risks, and have in the past and may in the future lead to market-wide liquidity problems. Additionally, the stock prices of many financial institutions dropped and became volatile. While the FDIC resolution of these two banks was done in a manner that fully protects depositors, it is uncertain whether the steps taken by the government will be sufficient to calm the financial markets, alleviate concerns with respect to the U.S. banking system, reduce the risk of significant economicdepositor withdrawals at other financial institutions and thereby reduce the risk of additional banks becoming insolvent, particularly in light of an additional bank being placed in receivership in the second quarter of 2023. Furthermore, financial disruptionsservices institutions are interrelated as a result of trading, clearing, counterparty, or other relationships, which may expose us to credit risk and uncertainties,losses in the event of a default by a counterparty or client. As a result of these recent events, we face the potential for reputational risk, deposit outflows and increased credit risk which, individually or in the aggregate, could adversely affecthave a material adverse effect on our business, financial condition and results of operations and liquidity.
In late February 2022, Russia launched a large-scale military attack on Ukraine. InFurthermore, if such levels of financial market and economic disruption and volatility continue, if actual events or concerns or rumors involving limited liquidity, defaults, or other adverse developments, or if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting 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 economybanking system and financial markets, our ability to access our existing cash, cash equivalents and leadinvestments may be threatened due to instabilitymarket-wide liquidity problems. While we maintain liquidity primarily through customer deposits and lack ofthrough access to other short-term funding sources, including advances from the Federal Home Loan Bank (FHLB), our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated increase or reductions 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 durationour liquidity, particularly in light of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions,increased interest rates on the market disruptions and volatility and the resultvalue of any diplomatic negotiations remains uncertain, these consequences, including those we cannot yet predict, may causeinvestment securities. This situation could have a material adverse impact on our business, financial condition, results of operations and financial condition.
Additionally, regulatory pressures and potential additional regulation of the pricefinancial institutions as a result of the industry developments could have material adverse effects on our common stock to be adversely affected.business, results of operations, financial condition and growth prospects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities
The following table is a summary of our purchases of common stock during the secondfirst quarter of 2022:2023:
PeriodTotal number of shares purchasedAverage price paid per share
Total number of shares purchased as part of publicly announced plan(1)
Approximate dollar value of shares that may yet be purchased under the plan
$37,441,683 
04/01/2022 - 04/30/2022— $— — 37,441,683 
05/01/2022 - 05/31/2022— — — 37,441,683 
06/01/2022 - 06/30/2022151,220 27.4611 151,220 33,289,015 
Total151,220 $27.4611 151,220 $33,289,015 
PeriodTotal number of shares purchasedAverage price paid per share
Total number of shares purchased as part of publicly announced plan(1)
Approximate dollar value of shares that may yet be purchased under the plan
$29,805,161 
01/01/2023 - 01/31/2023— $— — 29,805,161 
02/01/2023 - 02/28/2023— — — 29,805,161 
03/01/2023 - 03/31/2023— — — 29,805,161 
Total$—$29,805,161
(1) (1)On March 21, 2022,January 25, 2023, our Board of Directors authorized an extension of theits $50 million share repurchase plan, which was set to expire March 31, 2022.2023. This authorization extended the expiration date of the repurchase plan through March 31, 2023.2024. The plan permits S&T to repurchase from time to timeshares up to the previously authorized $50 million in aggregate value of shares of S&T's common stock with $33.3 million of capacity remaining at 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 any repurchases from cash on hand and internally generated funds. Share repurchases will not occur unless permissible under applicable laws.
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Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
None
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Item 6. Exhibits
Agreement and Plan of Merger, dated June 5, 2019, by and between DNB Financial Corporation and S&T Bancorp, Inc. Filed as Exhibit 2.1 to S&T Bancorp, Inc. Current Report on Form 8-K filed on June 5, 2019, and incorporated herein by reference.
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.*
Form of Restricted Stock Unit Award Agreement - LTIP.*Filed herewith.
Form of Restricted Stock Unit Award Agreement - Non-LTIP.*Filed herewith.
Form of Restricted Stock Unit Award Agreement - Directors.*Filed herewith.
Rule 13a-14(a) Certification of the Chief Executive Officer.Officer
Rule 13a-14(a) Certification of the Chief Financial Officer.Officer
Rule 13a-14(b) Certification of the Chief Executive Officer and Chief Financial Officer.Officer
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.DEFXBRL Taxonomy Extension Definition Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)
* Management Contract or Compensatory Plan or Arrangement




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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)
August 3, 2022May 4, 2023/s/ Mark Kochvar
Mark Kochvar
Senior Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and Duly Authorized Signatory)
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