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, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-12508

______________________________________

S&T BANCORP INC.

(Exact name of registrant as specified in its charter)

______________________________________

Pennsylvania

25-1434426

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

800 Philadelphia Street

Indiana

15701

(Address of principal executive offices)

(zip code)

800-325-2265

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $2.50 par value	STBA	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $2.50 Par Value - ~~39,146,291~~38,967,075 shares as of ~~July 29, 2022~~April 28, 2023

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

INDEX

S&T BANCORP, INC. AND SUBSIDIARIES

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


		June 30, 2022			December 31, 2021				March 31, 2023			December 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)
ASSETS	ASSETS							ASSETS
Cash and due from banks, including interest-bearing deposits of $263,504 and $857,192 at June 30, 2022 and December 31, 2021			$	344,694		$	922,215
Cash and due from banks, including interest-bearing deposits of $151,209 and $138,149 at March 31, 2023 and December 31, 2022								Cash 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 value	Securities, at fair value		1,068,576			910,793		Securities, at fair value		998,708			1,002,778
Loans held for sale	Loans held for sale		1,311			1,522		Loans held for sale		81			16
Portfolio loans, net of unearned income	Portfolio loans, net of unearned income		7,040,894			6,999,990		Portfolio loans, net of unearned income		7,251,064			7,183,969
Allowance for credit losses	Allowance for credit losses		(98,095)			(98,576)		Allowance for credit losses		(108,113)			(101,340)
Portfolio loans, net	Portfolio loans, net		6,942,799			6,901,414		Portfolio loans, net		7,142,951			7,082,629
Bank owned life insurance	Bank owned life insurance		84,536			83,685		Bank owned life insurance		85,476			85,185
Premises and equipment, net	Premises and equipment, net		50,913			52,632		Premises and equipment, net		49,126			49,285
Federal Home Loan Bank and other restricted stock, at cost	Federal Home Loan Bank and other restricted stock, at cost		7,949			9,519		Federal Home Loan Bank and other restricted stock, at cost		30,262			23,035
Goodwill	Goodwill		373,424			373,424		Goodwill		373,424			373,424
Other intangible assets, net	Other intangible assets, net		6,120			6,895		Other intangible assets, net		5,039			5,378
Other assets	Other assets		223,492			226,430		Other assets		264,223			278,828
Total Assets	Total Assets		$	9,103,814		$	9,488,529	Total Assets		$	9,193,442		$	9,110,567
LIABILITIES	LIABILITIES							LIABILITIES
Deposits:	Deposits:							Deposits:
Noninterest-bearing demand	Noninterest-bearing demand		$	2,736,849		$	2,748,586	Noninterest-bearing demand		$	2,468,638		$	2,588,692
Interest-bearing demand	Interest-bearing demand		880,432			979,133		Interest-bearing demand		841,130			846,653
Money market	Money market		1,888,506			2,070,579		Money market		1,599,814			1,731,521
Savings	Savings		1,125,344			1,110,155		Savings		1,068,274			1,118,511
Certificates of deposit	Certificates of deposit		981,116			1,088,071		Certificates of deposit		1,175,238			934,593

Total Deposits	Total Deposits		7,612,247			7,996,524		Total Deposits		7,153,094			7,219,970
Securities sold under repurchase agreements			39,259			84,491

Short-term borrowings								Short-term borrowings		495,000			370,000
Long-term borrowings	Long-term borrowings		21,988			22,430		Long-term borrowings		14,628			14,741
Junior subordinated debt securities	Junior subordinated debt securities		54,423			54,393		Junior subordinated debt securities		54,468			54,453

Other liabilities	Other liabilities		197,539			124,237		Other liabilities		248,457			266,744
Total Liabilities	Total Liabilities		7,925,456			8,282,075		Total Liabilities		7,965,647			7,925,908
SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY							SHAREHOLDERS’ EQUITY
Common stock ($2.50 par value) Authorized—50,000,000 shares Issued—41,449,444 shares at June 30, 2022 and December 31, 2021 Outstanding—39,148,999 shares at June 30, 2022 and 39,351,194 shares at December 31, 2021			103,623			103,623
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 capital	Additional paid-in capital		404,841			403,095		Additional paid-in capital		407,113			406,283
Retained earnings	Retained earnings		809,644			773,659		Retained earnings		890,840			863,948
Accumulated other comprehensive loss	Accumulated 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 cost								Treasury 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’ Equity	Total Shareholders’ Equity		1,178,358			1,206,454		Total Shareholders’ Equity		1,227,795			1,184,659
Total Liabilities and Shareholders’ Equity	Total 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

Table of Contents

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) 2022 2021 2022 2021
INTEREST AND DIVIDEND INCOME
Loans, including fees $ 71,018 $ 66,942 $ 135,611 $ 137,174
Investment Securities:
Taxable 5,995 3,793 10,931 7,356
Tax-exempt 484 690 966 1,503
Dividends 102 152 200 325
Total Interest and Dividend Income 77,599 71,577 147,708 146,358
INTEREST EXPENSE
Deposits 1,790 2,652 3,643 6,133
Borrowings and junior subordinated debt securities 615 621 1,138 1,263
Total Interest Expense 2,405 3,273 4,781 7,396
NET INTEREST INCOME 75,194 68,304 142,927 138,962
Provision for credit losses 3,204 2,561 2,692 5,699
Net Interest Income After Provision for Credit Losses 71,990 65,743 140,235 133,263
NONINTEREST INCOME
Net gain on sale of securities — 29 — 29
Debit and credit card 4,756 4,744 9,819 8,906
Service charges on deposit accounts 4,181 3,642 8,155 7,116
Wealth management 3,247 3,167 6,489 6,111
Mortgage banking 466 1,734 1,481 6,044
Other (20) 2,108 1,912 4,541
Total Noninterest Income 12,630 15,424 27,856 32,747
NONINTEREST EXPENSE
Salaries and employee benefits 24,811 24,515 48,523 47,842
Data processing and information technology 4,104 3,787 8,539 8,012
Occupancy 3,634 3,434 7,516 7,261
Furniture, equipment and software 2,939 2,402 5,716 5,042
Other taxes 1,682 1,832 3,219 3,268
Professional services and legal 2,380 1,637 4,329 3,168
Marketing 1,524 996 2,885 2,318
FDIC insurance 882 924 1,819 1,970
Other 6,468 6,302 13,292 12,614
Total Noninterest Expense 48,424 45,829 95,838 91,495
Income Before Taxes 36,196 35,338 72,253 74,515
Income tax expense 7,338 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)	2023			2022
INTEREST AND DIVIDEND INCOME
Loans, including fees		$	102,724		$	64,593
Investment Securities:
Taxable		7,457			4,936
Tax-exempt		214			482
Dividends		508			98
Total Interest and Dividend Income		110,903			70,109
INTEREST EXPENSE
Deposits		14,903			1,853
Borrowings, junior subordinated debt securities and other		7,209			523
Total Interest Expense		22,112			2,376
NET INTEREST INCOME		88,791			67,733
Provision for credit losses		922			(512)
Net Interest Income After Provision for Credit Losses		87,869			68,245
NONINTEREST INCOME

Debit and credit card		4,373			5,063
Service charges on deposit accounts		4,076			3,974
Wealth management		2,948			3,242
Mortgage banking		301			1,015

Other		1,492			1,932
Total Noninterest Income		13,190			15,226
NONINTEREST EXPENSE
Salaries and employee benefits		27,601			23,712
Data processing and information technology		4,258			4,435
Occupancy		3,835			3,882
Furniture, equipment and software		2,861			2,777
Marketing		1,853			1,361
Professional services and legal		1,821			1,949
Other taxes		1,790			1,537

FDIC insurance		1,012			937

Other		6,668			6,824
Total Noninterest Expense		51,699			47,414
Income Before Taxes		49,360			36,057
Income tax expense		9,561			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

Table of Contents

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

~~Table of Contents~~

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

~~CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY~~

~~(Unaudited)~~

Six months ended June 30, 2021
(dollars in thousands, except share and per share data) Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive Income (Loss) Treasury
Stock Total
Balance at January 1, 2021 $ 103,623 $ 400,668 $ 710,061 $ 8,971 $ (68,612) $ 1,154,711
Net income for the six months ended June 30, 2021 — — 60,268 — — 60,268
Other comprehensive loss, net of tax — — — (5,366) — (5,366)
Cash dividends declared ($0.56 per share) — — (21,963) — — (21,963)
Treasury stock issued for restricted stock awards (99,711 shares) — — (3,177) — 3,177 —
Forfeitures of restricted stock awards (51,999 shares) — — 1,283 — (1,585) (302)
Recognition of restricted stock compensation expense — 1,385 — — — 1,385
Balance at June 30, 2021 $ 103,623 $ 402,053 $ 746,472 $ 3,605 $ (67,020) $ 1,188,733
See Notes to Consolidated Financial Statements
Six months ended June 30, 2022
(dollars in thousands, except share and per share data) Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive Loss Treasury
Stock Total
Balance at January 1, 2022 $ 103,623 $ 403,095 $ 773,659 $ (7,090) $ (66,833) $ 1,206,454
Net income for the six months ended June 30, 2022 — — 58,001 — — 58,001
Other comprehensive loss, net of tax — — — (60,081) — (60,081)
Cash dividends declared ($0.59 per share) — — (23,175) — — (23,175)
Treasury stock issued for restricted stock awards (4,250 shares) — — (135) — 135 —
Forfeitures of restricted stock awards (55,225 shares) — — 1,294 — (1,728) (434)
Repurchase of S&T Stock (151,220 shares) — — — — (4,153) (4,153)
Recognition of restricted stock compensation expense — 1,746 — — — 1,746
Balance at June 30, 2022 $ 103,623 $ 404,841 $ 809,644 $ (67,171) $ (72,579) $ 1,178,358

~~See Notes to Consolidated Financial Statements~~

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Six months ended June 30,						Three months ended March 31,
(dollars in thousands)	(dollars in thousands)		2022		2021		(dollars in thousands)		2023		2022
OPERATING ACTIVITIES

Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities		$	153,301	$	128,043	Net Cash Provided by Operating Activities		$	41,904	$	86,596
INVESTING ACTIVITIES	INVESTING ACTIVITIES						INVESTING ACTIVITIES
Purchases of securities	Purchases of securities		(311,969)		(153,587)		Purchases of securities		(11,226)		(211,265)
Proceeds from maturities, prepayments and calls of securities	Proceeds from maturities, prepayments and calls of securities		79,759		72,951		Proceeds from maturities, prepayments and calls of securities		28,140		44,025
Proceeds from sales of securities			—		1,917

Proceeds from redemption of Federal Home Loan Bank stock	Proceeds from redemption of Federal Home Loan Bank stock		11,465		13,137		Proceeds from redemption of Federal Home Loan Bank stock		15,174		5,818
Purchases of Federal Home Loan Bank stock	Purchases 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 loans	Net (increase) decrease in loans		(45,440)		201,545		Net (increase) decrease in loans		(63,646)		38,449
Proceeds from sale of portfolio loans	Proceeds from sale of portfolio loans		4,326		3,438		Proceeds from sale of portfolio loans		1,947		—

Proceeds from sale of other real estate owned							Proceeds from sale of other real estate owned		—		6,285
Purchases of premises and equipment	Purchases of premises and equipment		(1,556)		(1,926)		Purchases of premises and equipment		(1,439)		(660)
Proceeds from the sale of premises and equipment	Proceeds from the sale of premises and equipment		131		74		Proceeds from the sale of premises and equipment		57		56

Net Cash (Used in) Provided by Investing Activities			(273,179)		127,336
Net Cash Used in Investing Activities							Net Cash Used in Investing Activities		(53,394)		(122,940)
FINANCING ACTIVITIES	FINANCING ACTIVITIES						FINANCING ACTIVITIES
Net (decrease) increase in core deposits	Net (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 deposit							Net increase (decrease) in certificates of deposit		240,664		(49,465)

Net increase (decrease) in short-term borrowings							Net increase (decrease) in short-term borrowings		125,000		(14,379)

Repayments on long-term borrowings	Repayments on long-term borrowings		(442)		(712)		Repayments on long-term borrowings		(113)		(259)

Repurchase of shares for taxes on restricted stock	Repurchase of shares for taxes on restricted stock		(434)		(302)		Repurchase of shares for taxes on restricted stock		(19)		(56)

Cash dividends paid to common shareholders	Cash 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 Activities							Net Cash Provided by (Used in) Financing Activities		45,633		(62,114)
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents		34,143		(98,458)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period		922,215		229,666		Cash and cash equivalents at beginning of period		210,009		922,215
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period		$	344,694	$	985,278	Cash and Cash Equivalents at End of Period		$	244,152	$	823,757

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

Right of use assets obtained in exchange for lease obligations							Right of use assets obtained in exchange for lease obligations		$	1,270	$	—
Cash paid for interest	Cash paid for interest		$	5,028	$	9,114	Cash paid for interest		$	18,095	$	2,507
Cash paid for income taxes, net of refunds	Cash 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 owned	Transfers of loans to other real estate owned		$	18	$	90	Transfers of loans to other real estate owned		$	11	$	—

See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Principles of Consolidation

The interim Consolidated Financial Statements include the accounts of S&T Bancorp, Inc., or S&T, and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Investments of 20 percent to 50 percent of the outstanding common stock of investees are accounted for using the equity method of accounting.

Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements of S&T have been prepared in accordance with generally accepted accounting principles, or GAAP, in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the Securities and Exchange Commission, or SEC, on February ~~28, 2022 (2021~~24, 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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~~S&T BANCORP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 1. BASIS OF PRESENTATION - continued~~

Recently Adopted Accounting Standards Updates, or ASU or Updated

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

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments provide optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. The optional guidance generally allows for the modified contract to be accounted for as a continuation of the existing contract and does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Addendum (Topic 848) which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. We adopted ASU 2020-04 and ASU 2021-01 on January 1, 2022. We are utilizing the LIBOR transition relief as contract modifications are made during the course of the reference rate reform transition period. ASU 2020-04 and ASU 2021-01 did not have a material impact on our consolidated financial statements.

~~Accounting Standards Issued But Not Yet Adopted~~

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 ~~310-205~~310-20 (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. ~~Early~~We 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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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 we~~it 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 ~~impact~~effect on our consolidated financial statements.

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– continued~~

NOTE 2. EARNINGS PER SHARE

Diluted earnings per share is calculated using both the two-class and the treasury stock methods with the more dilutive method used to determine diluted earnings per share. The 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) 2022 2021 2022 2021
Numerator for Earnings per Share—Basic and Diluted:
Net income $ 28,858 $ 28,367 $ 58,001 $ 60,268
Less: Income allocated to participating shares 74 141 185 283
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—Basic 39,083,429 39,048,971 39,077,305 39,039,007
Add: Average participating shares outstanding 16,202 — 18,411 —
Denominator for Two-Class Method—Diluted 39,099,631 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 shares 1,500 25 94 424


	Three months ended March 31,
(in thousands, except share and per share data)	2023			2022



Numerator for Earnings per Share—Basic and Diluted
Net income		$	39,799		$	29,143
Less: Income allocated to participating shares		45			109
Net Income Allocated to Shareholders		$	39,754		$	29,034












Denominator for Earnings per Share—Basic:
Weighted Average Shares Outstanding—Basic		38,865,669			39,073,754

Denominator for Earnings per Share—Treasury Stock Method—Diluted:
Weighted Average Shares Outstanding—Basic		38,865,669			39,073,754
Add: Potentially dilutive shares		166,393			112,268
Denominator for Treasury Stock Method—Diluted		39,032,062			39,186,022

Denominator for Earnings per Share—Two Class Method —Diluted:
Weighted Average Shares Outstanding—Basic		38,865,669			39,073,754
Add: Average participating shares outstanding		108,991			16,179
Denominator for Two-Class Method—Diluted		38,974,660			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 shares		1,133			—

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 ~~assets~~financial 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 3. FAIR VALUE MEASUREMENTS - continued~~

There have been no changes in our valuation methodologies during the three ~~and six~~ months ended ~~June 30, 2022.~~March 31, 2023. Refer to Note 1 of the Notes to Consolidated Financial Statements in our ~~2021~~2022 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 1 Level 2 Level 3 Total
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 Securities 136,282 931,210 — 1,067,492
Marketable equity securities 1,015 69 — 1,084
Total Securities 137,297 931,279 — 1,068,576
Securities held in a deferred compensation plan 7,678 — — 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 — — 2 2
Interest rate swaps - cash flow hedge — 5,946 — 5,946
Total Liabilities $ — $ 57,139 $ 2 $ 57,141


	March 31, 2023
(dollars in thousands)	Level 1		Level 2		Level 3		Total
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 Securities	133,704		863,998		—		997,702
Marketable equity securities	953		53		—		1,006
Total Securities	134,657		864,051		—		998,708
Securities held in a deferred compensation plan	7,790		—		—		7,790
Derivative financial assets:
Interest rate swaps - commercial loans	—		67,397		—		67,397
Interest rate lock commitments	—		—		6		6


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

109

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– continued~~

~~NOTE 3. FAIR VALUE MEASUREMENTS - continued~~


		December 31, 2021									December 31, 2022
(dollars in thousands)	(dollars in thousands)	Level 1		Level 2		Level 3		Total		(dollars in thousands)	Level 1		Level 2		Level 3		Total
ASSETS	ASSETS									ASSETS
Available-for-sale debt securities:	Available-for-sale debt securities:									Available-for-sale debt securities:
U.S. Treasury securities	U.S. Treasury securities	$	95,327	$	—	$	—	$	95,327	U.S. Treasury securities	$	131,695	$	—	$	—	$	131,695
Obligations of U.S. government corporations and agencies	Obligations 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 agencies	Collateralized 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 agencies	Residential 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 agencies	Commercial 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 obligations	Corporate obligations	—		500		—		500		Corporate obligations	—		500		—		500
Obligations of states and political subdivisions	Obligations of states and political subdivisions	—		75,089		—		75,089		Obligations of states and political subdivisions	—		30,471		—		30,471
Total Available-for-sale Debt Securities	Total Available-for-sale Debt Securities	95,327		814,324		—		909,651		Total Available-for-sale Debt Securities	131,695		870,089		—		1,001,784
Marketable equity securities	Marketable equity securities	1,061		81		—		1,142		Marketable equity securities	952		42		—		994
Total Securities	Total Securities	96,388		814,405		—		910,793		Total Securities	132,647		870,131		—		1,002,778
Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	10,230		—		—		10,230		Securities held in a deferred compensation plan	8,087		—		—		8,087
Derivative financial assets:	Derivative financial assets:									Derivative financial assets:
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	—		33,528		—		33,528		Interest rate swaps - commercial loans	—		83,449		—		83,449
Interest rate lock commitments	Interest rate lock commitments	—		—		401		401		Interest rate lock commitments	—		—		5		5
Forward sale contracts - mortgage loans	Forward sale contracts - mortgage loans	—		—		4		4		Forward sale contracts - mortgage loans	—		—		2		2

Interest rate swaps - cash flow hedge		—		—		—		—

Total Assets	Total Assets	$	106,618	$	847,933	$	405	$	954,956	Total Assets	$	140,734	$	953,580	$	7	$	1,094,321
LIABILITIES	LIABILITIES									LIABILITIES
Derivative financial liabilities:	Derivative financial liabilities:									Derivative financial liabilities:
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	$	—	$	33,631	$	—	$	33,631	Interest rate swaps - commercial loans	$	—	$	83,449	$	—	$	83,449

Interest rate swaps - cash flow hedge										Interest rate swaps - cash flow hedge	—		21,368		—		21,368
Total Liabilities	Total 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, 2022~~March 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, ~~2021~~2022 were as follows:

June 30, 2022 Valuation Technique Significant Unobservable Inputs Range
Weighted Average
(1)
(dollars in thousands)
Loans individually evaluated $ 6 Collateral method Appraisal adjustment 10% 10.00%
Total Assets $ 6
(1) Weighted averages for loans individually evaluated were weighted by loan amounts.

December 31, 2021 Valuation Technique Significant Unobservable Inputs Range
Weighted Average
(1) (2)
(dollars in thousands)
Loans individually evaluated $ 7,268 Collateral method Appraisal adjustment 0% - 20% 4.48%
Other real estate owned 1,011 Collateral method Appraisal adjustment 2.53% 2.53%
Total Assets $ 8,279
(1) Weighted averages for loans individually evaluated were weighted by loan amounts.
(2) Weighted averages for other real estate owned were weighted by OREO balances.

December 31, 2022

Valuation Technique

Significant Unobservable Inputs

Range

Weighted Average

(dollars in thousands)

Other real estate owned

3,060

Collateral method

Discount rate

13.00%

1110

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– continued~~

~~NOTE 3. FAIR VALUE MEASUREMENTS - continued~~

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


		Carrying Value(1)		Fair Value Measurements at June 30, 2022									Carrying Value(1)		Fair Value Measurements at March 31, 2023
(dollars in thousands)	(dollars in thousands)			Total		Level 1		Level 2		Level 3		(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS	ASSETS											ASSETS
Cash and due from banks, including interest-bearing deposits	Cash and due from banks, including interest-bearing deposits	$	344,694	$	344,694	$	344,694	$	—	$	—	Cash and due from banks, including interest-bearing deposits	$	244,152	$	244,152	$	244,152	$	—	$	—
Securities	Securities	1,068,576		1,068,576		137,297		931,279		—		Securities	998,708		998,708		134,657		864,051
Loans held for sale	Loans held for sale	1,311		1,326		—		—		1,326		Loans held for sale	81		81		—		81		—
Portfolio loans, net	Portfolio loans, net	6,942,799		6,784,189		—		—		6,784,189		Portfolio loans, net	7,142,951		6,883,297		—		—		6,883,297

Collateral receivable												Collateral receivable	4,901		4,901		4,901		—		—
Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	7,678		7,678		7,678		—		—		Securities held in a deferred compensation plan	7,790		7,790		7,790		—		—
Mortgage servicing rights	Mortgage servicing rights	7,575		9,996		—		—		9,996		Mortgage servicing rights	6,935		9,335		—		—		9,335
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	51,097		51,097		—		51,097		—		Interest rate swaps - commercial loans	67,397		67,397		—		67,397		—
Interest rate swaps - cash flow hedge		368		368		—		368		—

Interest rate lock commitments	Interest rate lock commitments	56		56		—		—		56		Interest rate lock commitments	6		6		—		—		6

LIABILITIES	LIABILITIES											LIABILITIES
Deposits	Deposits	$	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 payable	Collateral payable	52,709		52,709		52,709		—		—		Collateral payable	55,301		55,301		55,301		—		—
Securities sold under repurchase agreements		39,259		39,259		39,259		—		—

Short-term borrowings	Short-term borrowings	—		—		—		—		—		Short-term borrowings	495,000		495,000		—		495,000		—
Long-term borrowings	Long-term borrowings	21,988		21,634		4,196		17,438		—		Long-term borrowings	14,628		14,162		—		14,162		—
Junior subordinated debt securities	Junior subordinated debt securities	54,423		54,423		54,423		—		—		Junior subordinated debt securities	54,468		54,468		—		54,468		—
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	51,193		51,193		—		51,193		—		Interest rate swaps - commercial loans	67,397		67,397		—		67,397		—
Interest rate swaps - cash flow hedge	Interest rate swaps - cash flow hedge	5,946		5,946		—		5,946		—		Interest rate swaps - cash flow hedge	15,288		15,288		—		15,288		—
Forward sale contracts - mortgage loans		2		2		—		—		2

(1) As reported in the Consolidated Balance Sheets	(1) As reported in the Consolidated Balance Sheets											(1) As reported in the Consolidated Balance Sheets


		Carrying Value(1)		Fair Value Measurements at December 31, 2021									Carrying Value(1)		Fair Value Measurements at December 31, 2022
(dollars in thousands)	(dollars in thousands)			Total		Level 1		Level 2		Level 3		(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS	ASSETS											ASSETS
Cash and due from banks, including interest-bearing deposits	Cash and due from banks, including interest-bearing deposits	$	922,215	$	922,215	$	922,215	$	—	$	—	Cash and due from banks, including interest-bearing deposits	$	210,009	$	210,009	$	210,009	$	—	$	—
Securities	Securities	910,793		910,793		96,388		814,405		—		Securities	1,002,778		1,002,778		132,647		870,131		—
Loans held for sale	Loans held for sale	1,522		1,522		—		—		1,522		Loans held for sale	16		16		—		16		—
Portfolio loans, net	Portfolio loans, net	6,901,414		6,815,468		—		—		6,815,468		Portfolio loans, net	7,082,629		6,815,167		—		—		6,815,167
Collateral receivable	Collateral receivable	37,363		37,363		37,363		—		—		Collateral receivable	6,307		6,307		6,307		—		—
Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	10,230		10,230		10,230		—		—		Securities held in a deferred compensation plan	8,087		8,087		8,087		—		—
Mortgage servicing rights	Mortgage servicing rights	7,677		7,677		—		—		7,677		Mortgage servicing rights	7,147		9,994		—		—		9,994
Interest rate swaps		33,528		33,528		—		33,528		—
Interest rate swaps - commercial loans												Interest rate swaps - commercial loans	83,449		83,449		—		83,449		—
Interest rate lock commitments	Interest rate lock commitments	401		401		—		—		401		Interest rate lock commitments	5		5		—		—		5
Forward sale contracts	Forward sale contracts	4		4		—		—		4		Forward sale contracts	2		2		—		—		2
LIABILITIES	LIABILITIES											LIABILITIES
Deposits	Deposits	$	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 payable												Collateral payable	65,065		65,065		65,065		—		—

Securities sold under repurchase agreements		84,491		84,491		84,491		—		—
Short-term borrowings	Short-term borrowings	—		—		—		—		—		Short-term borrowings	370,000		370,000		—		370,000		—
Long-term borrowings	Long-term borrowings	22,430		22,678		4,300		18,378		—		Long-term borrowings	14,741		14,174		—		14,174		—
Junior subordinated debt securities	Junior subordinated debt securities	54,393		54,393		54,393		—		—		Junior subordinated debt securities	54,453		54,453		—		54,453		—
Interest rate swaps - commercial loans	Interest rate swaps - commercial loans	33,631		33,631		—		33,631		—		Interest rate swaps - commercial loans	83,449		83,449		—		83,449		—
Interest rate swaps - cash flow hedge												Interest rate swaps - cash flow hedge	21,368		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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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– continued~~

NOTE 4. SECURITIES

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

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

~~Available-for-Sale Debt Securities~~


(dollars in thousands)	March 31, 2023		December 31, 2022
Available-for-sale debt securities	$	997,702	$	1,001,784
Marketable equity securities	1,006		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, 2022												December 31, 2021													March 31, 2023												December 31, 2022
(dollars in thousands)	(dollars in thousands)	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			(dollars in thousands)	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
U.S. Treasury securities	U.S. Treasury securities		$	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 agencies	Obligations of U.S. government corporations and agencies		53,542			7			(734)			52,815			68,599			1,749			—			70,348		Obligations of U.S. government corporations and agencies		43,445			—			(1,350)			42,095			43,479			—			(1,668)			41,811
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies		456,889			312			(29,566)			427,635			270,696			2,408			(2,810)			270,294		Collateralized mortgage obligations of U.S. government corporations and agencies		479,804			309			(47,374)			432,739			482,039			203			(53,835)			428,407
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies		52,289			19			(5,892)			46,416			57,029			392			(628)			56,793		Residential mortgage-backed securities of U.S. government corporations and agencies		48,273			5			(7,108)			41,170			49,418			3			(7,834)			41,587
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies		350,432			263			(16,701)			333,994			336,918			5,969			(1,587)			341,300		Commercial mortgage-backed securities of U.S. government corporations and agencies		338,646			115			(21,662)			317,099			352,465			—			(25,152)			327,313
Corporate obligations	Corporate obligations		500			—			—			500			500			—			—			500		Corporate obligations		—			—			—			—			500			—			—			500
Obligations of states and political subdivisions	Obligations of states and political subdivisions		69,874			455			(479)			69,850			70,539			4,550			—			75,089		Obligations of states and political subdivisions		30,656			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, 2022~~March 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, 2022																March 31, 2023
		Less Than 12 Months					12 Months or More					Total						Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	12	$	116,707	$	(9,693)	—	$	—	$	—	12	$	116,707	$	(9,693)	U.S. Treasury securities	1	$	9,413	$	(112)	12	$	114,151	$	(11,342)	13	$	123,564	$	(11,454)
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	7	47,817		(734)		—	—		—		7	47,817		(734)		Obligations of U.S. government corporations and agencies	4	27,382		(618)		2	14,713		(732)		6	42,095		(1,350)
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	48	352,393		(24,035)		4	34,282		(5,531)		52	386,675		(29,566)		Collateralized mortgage obligations of U.S. government corporations and agencies	16	130,667		(3,867)		43	283,266		(43,507)		59	413,933		(47,374)
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	12	9,479		(527)		2	36,366		(5,365)		14	45,845		(5,892)		Residential mortgage-backed securities of U.S. government corporations and agencies	3	1,487		(69)		12	39,280		(7,039)		15	40,767		(7,108)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	36	323,896		(16,701)		—	—		—		36	323,896		(16,701)		Commercial mortgage-backed securities of U.S. government corporations and agencies	9	63,174		(1,607)		25	243,481		(20,055)		34	306,655		(21,662)
Corporate obligations		1	500		—		—	—		—		1	500		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	2	20,198		(479)		—	—		—		2	20,198		(479)		Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—

Total	Total	118	$	870,990	$	(52,169)	6	$	70,648	$	(10,896)	124	$	941,638	$	(63,065)	Total	33	$	232,123	$	(6,273)	94	$	694,891	$	(82,675)	127	$	927,014	$	(88,948)


		December 31, 2021																December 31, 2022
		Less Than 12 Months					12 Months or More					Total						Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	8	$	85,221	$	(742)	—	$	—	$	—	8	$	85,221	$	(742)	U.S. Treasury securities	6	$	57,057	$	(3,363)	8	$	74,638	$	(10,358)	14	$	131,695	$	(13,721)
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	—	—		—		—	—		—		—	—		—		Obligations of U.S. government corporations and agencies	6	41,811		(1,668)		—	—		—		6	41,811		(1,668)
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	12	141,204		(2,436)		1	8,933		(374)		13	150,137		(2,810)		Collateralized mortgage obligations of U.S. government corporations and agencies	47	296,509		(28,153)		13	112,902		(25,682)		60	409,411		(53,835)
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	3	46,042		(628)		—	—		—		3	46,042		(628)		Residential mortgage-backed securities of U.S. government corporations and agencies	25	7,143		(589)		3	34,223		(7,245)		28	41,366		(7,834)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	7	100,032		(1,587)		—	—		—		7	100,032		(1,587)		Commercial mortgage-backed securities of U.S. government corporations and agencies	30	241,009		(11,975)		7	86,304		(13,177)		37	327,313		(25,152)
Corporate obligations		—	—		—		—	—		—		—	—		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—		Obligations of states and political subdivisions	2	20,127		(372)		—	—		—		2	20,127		(372)

Total	Total	30	$	372,499	$	(5,393)	1	$	8,933	$	(374)	31	$	381,432	$	(5,767)	Total	116	$	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 ~~losses~~impairment or other factors. We do not believe any individual unrealized loss as of March 31, 2023 represents a credit impairment. There were ~~124~~127 debt securities in an unrealized loss position at ~~June 30, 2022~~March 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, 2022						December 31, 2021							March 31, 2023						December 31, 2022
(dollars in thousands)	(dollars in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Losses		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains		(dollars in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Losses		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Losses
Total unrealized gains (losses) on available-for-sale debt securities	Total 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) benefit	Income 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, 2022~~March 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, 2022					March 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 subdivisions	Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions					Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions
Due in one year or less	Due in one year or less	$	35,648	$	35,760	Due in one year or less	$	9,988	$	9,827
Due after one year through five years	Due after one year through five years	117,273		113,923		Due after one year through five years	159,631		149,422
Due after five years through ten years	Due after five years through ten years	104,696		97,991		Due after five years through ten years	38,147		35,922
Due after ten years	Due after ten years	11,619		11,273		Due after ten years	11,474		11,523
Available-for-Sale Debt Securities With Fixed Maturities	Available-for-Sale Debt Securities With Fixed Maturities	269,236		258,947		Available-for-Sale Debt Securities With Fixed Maturities	219,240		206,694
Debt Securities without a single maturity date	Debt Securities without a single maturity date					Debt Securities without a single maturity date
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	456,889		427,635		Collateralized mortgage obligations of U.S. government corporations and agencies	479,804		432,739
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	52,289		46,416		Residential mortgage-backed securities of U.S. government corporations and agencies	48,273		41,170
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	350,432		333,994		Commercial mortgage-backed securities of U.S. government corporations and agencies	338,646		317,099
Corporate obligations		500		500

Total Available-for-Sale Debt Securities	Total 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, 2022~~March 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, 2022~~March 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) 2022 2021 2022 2021
Marketable Equity Securities
Net market gains (losses) recognized $ (53) $ 28 $ (58) $ 143
Less: Net gains recognized for equity securities sold — 3 — 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 HELD~~ALLOWANCE FOR ~~SALE~~CREDIT LOSSES

Loans and Loans Held for Sale

Loans are presented net of unearned income. Unearned income consisted of ~~$8.5~~net deferred loan fees and costs of $7.4 million at ~~June 30, 2022~~March 31, 2023 and ~~$14.1~~$7.5 million at December 31, ~~2021~~2022 and ~~net of~~ a discount related to purchase accounting fair value adjustments of ~~$5.3~~$4.4 million at ~~June 30, 2022~~March 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, 2022		December 31, 2021		(dollars in thousands)	March 31, 2023		December 31, 2022
Commercial
Commercial real estate	Commercial real estate	$	3,191,670	$	3,236,653	Commercial real estate	$	2,523,434	$	2,538,839
Commercial and industrial	Commercial and industrial	1,695,031		1,728,969		Commercial and industrial	1,493,519		1,510,392
Commercial construction	Commercial construction	410,425		440,962		Commercial construction	376,855		381,963
Total Commercial Loans		5,297,126		5,406,584
Consumer
Business banking						Business banking	1,261,842		1,205,944
Consumer real estate	Consumer real estate	1,623,830		1,485,478		Consumer real estate	1,475,575		1,421,953
Other consumer	Other consumer	119,938		107,928		Other consumer	119,839		124,878
Total Consumer Loans		1,743,768		1,593,406
Total Portfolio Loans	Total Portfolio Loans	7,040,894		6,999,990		Total Portfolio Loans	$	7,251,064	$	7,183,969
Loans held for sale	Loans held for sale	1,311		1,522		Loans held for sale	81		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 $18.7~~March 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 million~~Modifications to Borrowers Experiencing Financial Difficulty

The following table presents the amortized cost of loans ~~originated under~~to 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 Extension		Term Extension and Interest Rate Reduction		Total		% of Portfolio Segment
Commercial real estate	$	15,849	$	—	$	15,849	0.63	%
Commercial industrial	594		—		594		0.04	%


Consumer real estate	63		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 loans~~loan 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 estate	6	—
Commercial industrial	72	—


Consumer real estate	168	2%

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 reviewing~~closely monitor the ~~relevant economic indicators and internal risk rating trends and through stress testing~~performance 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 segments~~the last 12 months as of the date presented:


	March 31, 2023
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Nonaccrual		Total
Commercial real estate	$	15,849	$	—	$	—	$	—	$	—	$	15,849
Commercial and industrial	594		—		—		—		—		594


Consumer real estate	196		—		—		—		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 if~~borrowers 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 percent~~generally not recorded upon modification. If principal forgiveness is provided, that portion of ~~total portfolio loans at June 30, 2022 compared~~the 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 percent~~whether 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 our~~ASU 2022-02, we evaluated all substandard commercial and consumer loans ~~are made~~that had experienced a forbearance or modification of existing terms to ~~businesses~~determine 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 in~~there 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 ~~conditions~~following 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 industrial	626		—		626
Commercial construction	1,655		—		1,655
Business banking	438		1,087		1,525
Consumer real estate	6,168		1,798		7,966
Other consumer	4		9		13
Total	$	8,891	$	2,894	$	11,785

Table of Contents

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, 2022 December 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 industrial 690 — 690 748 14,889 15,637
Commercial construction 1,694 480 2,174 2,190 2,087 4,277
Business banking 680 1,325 2,005 858 1,696 2,554
Consumer real estate 6,269 2,189 8,458 6,122 1,405 7,527
Other consumer 5 — 5 3 — 3
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 ~~periods~~period 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)
Other Extend
Maturity Modify
Rate Modify
Payments
Commercial real estate — $ — $ — $ — $ — $ — $ — $ —
Commercial industrial — — — — — — — —
Commercial construction — — — — — — — —
Business banking — — — — — — — —
Consumer real estate 8 286 — 139 — — 425 429
Other consumer 1 2 — — — — 2 3
Total 9 $ 288 $ — $ 139 $ — $ — $ 427 $ 432
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.

~~Table of Contents~~

~~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)
Other Extend
Maturity Modify
Rate Modify
Payments
Commercial real estate — $ — $ — $ — $ — $ — $ — $ —
Commercial industrial — — — — — — — —
Commercial construction — — — — — — — —
Business banking 4 — — 1,130 — — 1,130 1,130
Consumer real estate 4 247 — — — — 247 254
Other consumer — — — — — — — —
Total 8 $ 247 $ — $ 1,130 $ — $ — $ 1,377 $ 1,384
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.

Six Months Ended June 30, 2022
Number
of
Contracts Type of Modification
Total
Post-Modification Outstanding Recorded Investment(2)
Total
Pre-Modification Outstanding Recorded Investment(2)
(dollars in thousands)
Bankruptcy(1)
Other Extend
Maturity Modify
Rate Modify
Payments
Commercial real estate — $ — $ — $ — $ — $ — $ — $ —
Commercial industrial — — — — — — — —
Commercial construction — — — — — — — —
Business banking — — — — — — — —
Consumer real estate 15 1,043 — 884 — — 1,927 2,357
Other consumer 1 3 — — — — 3 3
Total 16 $ 1,046 $ — $ 884 $ — $ — $ 1,930 $ 2,360
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.


		Six Months Ended June 30, 2021																Three 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)		Other		Extend Maturity		Modify Rate		Modify Payments						(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments
Commercial real estate	Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial industrial	Commercial industrial	2	—		—		796		5,433		—		6,229		6,304		Commercial industrial	—	—		—		—		—		—		—		—
Commercial construction	Commercial construction	—	—		—		—		—		—		—		—		Commercial construction	—	—		—		—		—		—		—		—
Business banking	Business banking	5	—		80		1,130		—		—		1,210		1,210		Business banking	—	—		—		—		—		—		—		—
Consumer real estate	Consumer real estate	13	573		—		—		—		147		720		739		Consumer real estate	7	766		—		1,112		—		—		1,878		1,928
Other consumer	Other consumer	1	—		—		—		—		—		—		1		Other consumer	—	—		—		—		—		—		—		—
Total	Total	21	$	573	$	80	$	1,926	$	5,433	$	147	$	8,159	$	8,254	Total	7	$	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 ~~are~~were defined as loans having a payment default of 90 days or more after the restructuring ~~takes~~took 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.

~~Table of Contents~~

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

~~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 Assets							Nonperforming Assets
(dollars in thousands)	(dollars in thousands)	June 30, 2022			December 31, 2021			(dollars in thousands)	March 31, 2023			December 31, 2022
Nonperforming Assets	Nonperforming Assets							Nonperforming Assets
Nonaccrual loans			$	27,765		$	44,517
Nonaccrual TDRs			4,010			21,774
Total Nonaccrual Loans			31,775			66,291
Nonaccrual Loans								Nonaccrual Loans		$	24,644		$	19,052
OREO	OREO		7,046			13,313		OREO		3,076			3,065
Total Nonperforming Assets	Total Nonperforming Assets		$	38,821		$	79,604	Total Nonperforming Assets		$	27,720		$	22,117

~~NOTE 6. ALLOWANCE FOR CREDIT LOSSES~~Allowance for Credit Losses

We maintain an ACL at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. We develop and document a systematic ACL methodology based on the following portfolio segments: 1) Commercial Real Estate, or CRE, 2) Commercial and Industrial, or C&I, 3) Commercial Construction, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer.

The following are key risks within each portfolio segment:

CRE—Loans secured by commercial purpose real estate, including both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. Operations of the individual projects and global cash flows of the debtors are the primary sources of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee, if the project is not owner-occupied.

C&I—Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the company is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. Collateral for these types of loans often does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.

Commercial Construction—Loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction/development period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

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S&T BANCORP, INC. AND SUBSIDIARIES

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.

~~Table of Contents~~

~~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.

~~Table of Contents~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

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

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

June 30, 2022
Risk Rating
(dollars in thousands) 2022 2021 2020 2019 2018 2017 and Prior Revolving Revolving-Term Total
Commercial Real Estate
Pass $ 179,496 $ 359,214 $ 296,299 $ 432,058 $ 284,614 $ 804,236 $ 22,509 $ — $ 2,378,426
Special mention — — — 8,569 7,391 116,973 — — 132,933
Substandard — 3,240 1,331 13,771 15,984 80,309 — — 114,635
Doubtful — — — — — 10 — — 10
Total Commercial Real Estate 179,496 362,454 297,630 454,398 307,989 1,001,528 22,509 — 2,626,004
Commercial and Industrial
Pass 100,561 340,453 101,459 81,813 70,673 145,354 589,993 — 1,430,306
Special mention — 42 — 3,898 2,185 215 7,721 — 14,061
Substandard — — — 14,057 1,286 2,120 17,756 — 35,219
Doubtful — — — — — — — — —
Total Commercial and Industrial 100,561 340,495 101,459 99,768 74,144 147,689 615,470 — 1,479,586
Commercial Construction
Pass 56,592 153,742 63,832 58,690 4,656 3,222 26,591 — 367,325
Special mention — — — 19,077 — 4,389 — — 23,466
Substandard — — 2,142 480 4 1,918 — — 4,544
Doubtful — — — — — — — — —
Total Commercial Construction 56,592 153,742 65,974 78,247 4,660 9,529 26,591 — 395,335
Business Banking
Pass 142,538 248,994 96,053 121,959 91,817 311,935 108,301 538 1,122,135
Special mention — 92 250 2,904 2,972 5,144 179 110 11,651
Substandard — — 2,836 2,194 3,097 18,131 152 594 27,004
Doubtful — — — — — — — — —
Total Business Banking 142,538 249,086 99,139 127,057 97,886 335,210 108,632 1,242 1,160,790
Consumer Real Estate
Pass 146,031 148,128 96,856 78,335 32,192 207,827 510,231 21,874 1,241,474
Special mention — — — — — 910 — — 910
Substandard 39 80 138 285 1,364 11,077 942 2,943 16,868
Doubtful — — — — — — — — —
Total Consumer Real Estate 146,070 148,208 96,994 78,620 33,556 219,814 511,173 24,817 1,259,252
Other Consumer
Pass 12,242 13,787 7,201 4,948 1,898 1,051 77,282 1,489 119,898
Special mention — — — — — — — — —
Substandard — 12 4 — 2 1 — 10 29
Doubtful — — — — — — — — —
Total Other Consumer 12,242 13,799 7,205 4,948 1,900 1,052 77,282 1,499 119,927
Pass 637,460 1,264,318 661,700 777,803 485,850 1,473,625 1,334,907 23,901 6,659,564
Special mention — 134 250 34,448 12,548 127,631 7,900 110 183,021
Substandard 39 3,332 6,451 30,787 21,737 113,556 18,850 3,547 198,299
Doubtful — — — — — 10 — — 10
Total Loan Balance $ 637,499 $ 1,267,784 $ 668,401 $ 843,038 $ 520,135 $ 1,714,822 $ 1,361,657 $ 27,558 $ 7,040,894

2118

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– continued~~

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


		December 31, 2021																			March 31, 2023
		Risk Rating																			Risk Rating
(dollars in thousands)	(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total		(dollars in thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate	Commercial Real Estate																			Commercial Real Estate
Pass	Pass	$	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 mention	Special mention	—		—		37,786		6,401		40,445		75,938		—		—		160,570		Special mention	—		—		—		497		26,721		135,007		—		—		162,225
Substandard	Substandard	—		1,356		18,743		14,039		12,555		106,461		1,500		—		154,654		Substandard	—		—		—		1,293		10,965		81,391		—		—		93,649
Doubtful	Doubtful	—		—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		418		—		—		418
Total Commercial Real Estate	Total Commercial Real Estate	385,347		317,359		468,720		334,743		266,019		881,391		36,948		—		2,690,528		Total Commercial Real Estate	59,710		264,611		379,447		260,669		447,544		1,090,170		21,283		—		2,523,434
Current Period Gross Charge-offs																				Current Period Gross Charge-offs	—		—		—		—		—		—		—		—		—

Commercial and Industrial	Commercial and Industrial																			Commercial and Industrial
Pass	Pass	437,483		126,371		115,359		83,030		37,176		132,182		536,554		—		1,468,155		Pass	27,936		249,713		241,929		81,722		58,291		193,317		535,107		—		1,388,015
Special mention	Special mention	46		—		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
Substandard	Substandard	—		—		14,221		1,336		4,174		3,456		4,961		—		28,148		Substandard	—		353		—		—		5,517		3,742		16,679		—		26,291
Doubtful	Doubtful	—		—		1,777		—		—		—		—		—		1,777		Doubtful	—		—		—		—		—		1,325		2,459		—		3,784
Total Commercial and Industrial	Total Commercial and Industrial	437,529		126,371		134,417		86,912		41,422		136,470		550,402		—		1,513,523		Total Commercial and Industrial	27,936		254,391		266,690		84,058		68,548		206,540		585,356		—		1,493,519
Current Period Gross Charge-offs																				Current Period Gross Charge-offs	—		—		—		—		3,412		—		—		—		3,412

Commercial Construction	Commercial Construction																			Commercial Construction
Pass	Pass	142,321		108,405		111,512		16,838		989		3,539		30,036		—		413,640		Pass	5,249		142,639		153,978		25,115		3,703		4,728		25,985		—		361,397
Special mention	Special mention	—		—		—		—		—		4,458		—		—		4,458		Special mention	—		—		5,444		—		8,153		—		—		—		13,597
Substandard	Substandard	—		2,157		2,020		—		—		2,480		—		—		6,657		Substandard	—		—		—		—		—		1,861		—		—		1,861
Doubtful	Doubtful	—		—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial Construction	Total Commercial Construction	142,321		110,562		113,532		16,838		989		10,477		30,036		—		424,755		Total Commercial Construction	5,249		142,639		159,422		25,115		11,856		6,589		25,985		—		376,855
Current Period Gross Charge-offs																				Current Period Gross Charge-offs	—		—		—		—		—		—		—		—		—

Business Banking	Business Banking																			Business Banking
Pass	Pass	257,264		107,791		141,411		110,586		79,187		293,215		107,093		443		1,096,990		Pass	68,827		282,541		228,739		92,571		104,156		351,271		104,495		631		1,233,231
Special mention	Special mention	104		151		1,986		1,365		1,057		5,929		160		111		10,863		Special mention	—		—		1,940		319		—		6,415		858		95		9,627
Substandard	Substandard	41		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
Doubtful	Doubtful	—		—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—		—
Total Business Banking	Total Business Banking	257,409		108,048		144,976		115,228		81,889		318,735		108,230		1,179		1,135,693		Total Business Banking	68,827		282,559		230,679		95,954		107,457		369,624		105,467		1,275		1,261,842
Current Period Gross Charge-offs																				Current Period Gross Charge-offs	—		67		43		—		70		447		25		—		652

Consumer Real Estate	Consumer Real Estate																			Consumer Real Estate
Pass	Pass	137,465		100,995		91,981		48,531		39,029		231,861		442,530		23,391		1,115,783		Pass	51,356		313,568		146,465		90,586		72,047		213,915		552,909		21,043		1,461,889
Special mention	Special mention	—		—		—		—		—		937		—		—		937		Special mention	—		—		—		—		—		867		—		—		867
Substandard	Substandard	—		—		184		1,625		1,355		5,664		876		1,161		10,865		Substandard	—		48		204		152		427		9,030		470		2,488		12,819
Doubtful	Doubtful	—		—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—		—
Total Consumer Real Estate	Total Consumer Real Estate	137,465		100,995		92,165		50,156		40,384		238,462		443,406		24,552		1,127,585		Total Consumer Real Estate	51,356		313,616		146,669		90,738		72,474		223,812		553,379		23,531		1,475,575
Current Period Gross Charge-offs																				Current Period Gross Charge-offs	—		—		—		3		—		25		—		49		77

Other Consumer	Other Consumer																			Other Consumer
Pass	Pass	19,976		9,396		7,120		2,878		613		2,037		57,702		1,130		100,852		Pass	4,550		16,527		9,581		4,791		2,575		1,321		78,676		1,737		119,758
Special mention	Special mention	—		—		—		—		—		—		—		—		—		Special mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	83		52		141		215		408		4,407		201		1,547		7,054		Substandard	—		—		22		1		26		21		—		11		81
Doubtful	Doubtful	—		—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—		—
Total Other Consumer	Total Other Consumer	20,059		9,448		7,261		3,093		1,021		6,444		57,903		2,677		107,906		Total Other Consumer	4,550		16,527		9,603		4,792		2,601		1,342		78,676		1,748		119,839

Current Period Gross Charge-offs																				Current Period Gross Charge-offs	189		9		60		—		17		3		—		40		318

Pass	Pass	1,379,856		768,961		879,574		576,166		370,013		1,361,826		1,209,363		24,964		6,570,723		Pass	217,628		1,269,599		1,160,139		553,664		650,630		1,637,906		1,318,455		23,411		6,831,432
Special Mention		150		151		42,832		10,312		41,574		88,094		9,047		111		192,271
Special mention																				Special mention	—		4,325		32,145		3,152		39,614		150,445		31,969		95		261,745
Substandard	Substandard	124		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
Doubtful	Doubtful	—		—		1,777		—		—		—		—		—		1,777		Doubtful	—		—		—		—		—		1,743		2,459		—		4,202
Total Loan Balance	Total Loan Balance	$	1,380,130	$	772,783	$	961,071	$	606,970	$	431,724	$	1,591,979	$	1,226,925	$	28,408	$	6,999,990	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-offs																				Current Period Gross Charge-offs	$	189	$	76	$	103	$	3	$	3,499	$	475	$	25	$	89	$	4,459

2219

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

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 Estate	292,732		360,423		269,049		449,493		261,941		883,535		21,666		—		2,538,839

Commercial and Industrial
Pass	253,324		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
Substandard	372		—		—		5,705		1,152		1,891		12,465		—		21,585
Doubtful	—		—		—		—		—		—		—		—		—
Total Commercial and Industrial	253,696		289,448		88,544		73,998		65,911		147,273		591,522		—		1,510,392

Commercial Construction
Pass	120,655		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 Construction	120,655		170,691		40,762		14,442		3,953		4,176		27,284		—		381,963

Business Banking
Pass	287,520		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
Substandard	159		67		3,077		1,912		1,550		11,391		124		551		18,831
Doubtful	—		—		—		—		—		32		—		—		32
Total Business Banking	287,679		233,723		91,149		109,731		84,889		292,211		105,271		1,291		1,205,944

Consumer Real Estate
Pass	296,900		148,790		91,477		74,155		30,658		191,228		552,994		21,547		1,407,749
Special mention	—		—		—		—		—		882		—		—		882
Substandard	48		213		136		428		1,373		8,059		655		2,410		13,322
Doubtful	—		—		—		—		—		—		—		—		—
Total Consumer Real Estate	296,948		149,003		91,613		74,583		32,031		200,169		553,649		23,957		1,421,953

Other Consumer
Pass	20,046		10,819		5,427		3,242		1,013		724		82,125		1,404		124,800
Special mention	—		—		—		—		—		—		—		—		—
Substandard	8		—		—		28		21		—		—		21		78
Doubtful	—		—		—		—		—		—		—		—		—
Total Other Consumer	20,054		10,819		5,427		3,270		1,034		724		82,125		1,425		124,878


Pass	1,271,177		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
Substandard	587		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

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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


		June 30, 2022																			March 31, 2023
(dollars in thousands)	(dollars in thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total		(dollars in thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate	Commercial Real Estate																			Commercial Real Estate
Performing		$	179,496	$	362,454	$	297,630	$	451,998	$	307,380	$	989,515	$	22,509	$	—	$	2,610,982
Nonperforming		—		—		—		2,400		609		12,013		—		—		15,022
Accrual																				Accrual	$	59,710	$	264,611	$	379,447	$	260,669	$	447,544	$	1,082,745	$	21,283	$	—	$	2,516,009
Nonaccrual																				Nonaccrual	—		—		—		—		—		7,425		—		—		7,425
Total Commercial Real Estate	Total Commercial Real Estate	179,496		362,454		297,630		454,398		307,989		1,001,528		22,509		—		2,626,004		Total Commercial Real Estate	59,710		264,611		379,447		260,669		447,544		1,090,170		21,283		—		2,523,434

Commercial and Industrial	Commercial and Industrial																			Commercial and Industrial
Performing		100,561		340,495		101,459		99,768		74,087		147,634		615,240		—		1,479,244
Nonperforming		—		—		—		—		57		55		230		—		342
Accrual																				Accrual	27,936		254,391		266,690		84,058		68,548		203,695		581,126		—		1,486,444
Nonaccrual																				Nonaccrual	—		—		—		—		—		2,845		4,230		—		7,075
Total Commercial and Industrial	Total Commercial and Industrial	100,561		340,495		101,459		99,768		74,144		147,689		615,470		—		1,479,586		Total Commercial and Industrial	27,936		254,391		266,690		84,058		68,548		206,540		585,356		—		1,493,519

Commercial Construction	Commercial Construction																			Commercial Construction
Performing		56,592		153,742		65,974		77,767		4,660		9,145		26,591		—		394,471
Nonperforming		—		—		—		480		—		384		—		—		864
Accrual																				Accrual	5,249		142,639		159,422		25,115		11,856		6,205		25,985		—		376,471
Nonaccrual																				Nonaccrual	—		—		—		—		—		384		—		—		384
Total Commercial Construction	Total Commercial Construction	56,592		153,742		65,974		78,247		4,660		9,529		26,591		—		395,335		Total Commercial Construction	5,249		142,639		159,422		25,115		11,856		6,589		25,985		—		376,855

Business Banking	Business Banking																			Business Banking
Performing		142,538		249,086		99,139		126,702		96,028		329,746		108,530		1,114		1,152,883
Nonperforming		—		—		—		355		1,858		5,464		102		128		7,907
Accrual																				Accrual	68,827		282,559		230,679		95,938		107,271		366,007		105,467		1,179		1,257,927
Nonaccrual																				Nonaccrual	—		—		—		16		186		3,617		—		96		3,915
Total Business Banking	Total Business Banking	142,538		249,086		99,139		127,057		97,886		335,210		108,632		1,242		1,160,790		Total Business Banking	68,827		282,559		230,679		95,954		107,457		369,624		105,467		1,275		1,261,842

Consumer Real Estate	Consumer Real Estate																			Consumer Real Estate
Performing		146,070		148,208		96,073		78,369		33,317		214,842		511,065		23,924		1,251,868
Nonperforming		—		—		921		251		239		4,972		108		893		7,384
Accrual																				Accrual	51,356		313,451		146,543		90,682		71,834		220,441		553,135		22,604		1,470,046
Nonaccrual																				Nonaccrual	—		165		126		56		640		3,371		244		927		5,529
Total Consumer Real Estate	Total Consumer Real Estate	146,070		148,208		96,994		78,620		33,556		219,814		511,173		24,817		1,259,252		Total Consumer Real Estate	51,356		313,616		146,669		90,738		72,474		223,812		553,379		23,531		1,475,575

Other Consumer	Other Consumer																			Other Consumer
Performing		12,242		13,799		7,080		4,948		1,900		921		77,282		1,499		119,671
Nonperforming		—		—		125		—		—		131		—		—		256
Accrual																				Accrual	4,550		16,519		9,584		4,634		2,601		1,211		78,676		1,748		119,523
Nonaccrual																				Nonaccrual	—		8		19		158		—		131		—		—		316
Total Other Consumer	Total Other Consumer	12,242		13,799		7,205		4,948		1,900		1,052		77,282		1,499		119,927		Total Other Consumer	4,550		16,527		9,603		4,792		2,601		1,342		78,676		1,748		119,839

Performing		637,499		1,267,784		667,355		839,552		517,372		1,691,803		1,361,217		26,537		7,009,119
Nonperforming		—		—		1,046		3,486		2,763		23,019		440		1,021		31,775
Accrual																				Accrual	217,628		1,274,170		1,192,365		561,096		709,654		1,880,304		1,365,672		25,531		7,226,420
Nonaccrual																				Nonaccrual	—		173		145		230		826		17,773		4,474		1,023		24,644
Total Loan Balance	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	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

2321

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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, 2021																			December 31, 2022
(dollars in thousands)	(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total		(dollars in thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total

Commercial Real Estate	Commercial Real Estate																			Commercial Real Estate
Performing		$	385,347	$	317,359	$	461,613	$	332,482	$	259,723	$	865,567	$	36,948	$	—	$	2,659,039
Nonperforming		—		0		7,107		2,261		6,296		15,824		—		—		31,488
Accrual																				Accrual	$	292,732	$	360,423	$	269,049	$	449,493	$	261,941	$	876,435	$	21,666	$	—	$	2,531,739
Nonaccrual																				Nonaccrual	—		—		—		—		—		7,100		—		—		7,100
Total Commercial Real Estate	Total Commercial Real Estate	385,347		317,359		468,720		334,743		266,019		881,391		36,948		—		2,690,528		Total Commercial Real Estate	292,732		360,423		269,049		449,493		261,941		883,535		21,666		—		2,538,839

Commercial and Industrial	Commercial and Industrial																			Commercial and Industrial
Performing		437,529		126,371		123,944		86,852		38,540		136,427		548,622		—		1,498,285
Nonperforming		—		—		10,473		60		2,882		43		1,780		—		15,239
Accrual																				Accrual	253,696		289,448		88,544		73,998		65,858		147,273		591,292		—		1,510,109
Nonaccrual																				Nonaccrual	—		—		—		—		53		—		230		—		283
Total Commercial and Industrial	Total Commercial and Industrial	437,529		126,371		134,417		86,912		41,422		136,470		550,402		—		1,513,523		Total Commercial and Industrial	253,696		289,448		88,544		73,998		65,911		147,273		591,522		—		1,510,392

Commercial Construction	Commercial Construction																			Commercial Construction
Performing		142,321		110,562		111,445		16,838		989		10,093		30,036		—		422,284
Nonperforming		—		—		2,087		—		—		384		—		—		2,471
Accrual																				Accrual	120,655		170,691		40,762		14,442		3,953		3,792		27,284		—		381,579
Nonaccrual																				Nonaccrual	—		—		—		—		—		384		—		—		384
Total Commercial Construction	Total Commercial Construction	142,321		110,562		113,532		16,838		989		10,477		30,036		—		424,755		Total Commercial Construction	120,655		170,691		40,762		14,442		3,953		4,176		27,284		—		381,963

Business Banking	Business Banking																			Business Banking
Performing		257,368		107,984		144,689		113,820		81,195		311,673		108,202		1,122		1,126,052
Nonperforming		41		64		287		1,408		694		7,062		28		57		9,641
Accrual																				Accrual	287,679		233,656		91,149		109,479		83,689		289,435		105,172		1,195		1,201,454
Nonaccrual																				Nonaccrual	—		67		—		252		1,200		2,776		99		96		4,490
Total Business Banking	Total Business Banking	257,409		108,048		144,976		115,228		81,889		318,735		108,230		1,179		1,135,693		Total Business Banking	287,679		233,723		91,149		109,731		84,889		292,211		105,271		1,291		1,205,944

Consumer Real Estate	Consumer Real Estate																			Consumer Real Estate
Performing		137,465		100,253		91,689		49,853		39,657		234,297		443,238		23,839		1,120,291
Nonperforming		—		742		476		303		727		4,165		168		713		7,294
Accrual																				Accrual	296,948		148,868		91,085		73,947		31,646		196,384		553,441		23,108		1,415,427
Nonaccrual																				Nonaccrual	—		135		528		636		385		3,785		208		849		6,526
Total Consumer Real Estate	Total Consumer Real Estate	137,465		100,995		92,165		50,156		40,384		238,462		443,406		24,552		1,127,585		Total Consumer Real Estate	296,948		149,003		91,613		74,583		32,031		200,169		553,649		23,957		1,421,953

Other Consumer	Other Consumer																			Other Consumer
Performing		20,059		9,290		7,261		3,093		1,021		6,444		57,903		2,677		107,748
Nonperforming		—		158		—		—		—		—		—		—		158
Accrual																				Accrual	20,054		10,819		5,303		3,270		1,034		593		82,125		1,411		124,609
Nonaccrual																				Nonaccrual	—		—		124		—		—		131		—		14		269
Total Other Consumer	Total Other Consumer	20,059		9,448		7,261		3,093		1,021		6,444		57,903		2,677		107,906		Total Other Consumer	20,054		10,819		5,427		3,270		1,034		724		82,125		1,425		124,878

Performing		1,380,089		771,819		940,641		602,938		421,125		1,564,501		1,224,949		27,638		6,933,699
Nonperforming		41		964		20,430		4,032		10,599		27,478		1,976		770		66,291
Accrual																				Accrual	1,271,764		1,213,905		585,892		724,629		448,121		1,513,912		1,380,980		25,714		7,164,917
Nonaccrual																				Nonaccrual	—		202		652		888		1,638		14,176		537		959		19,052
Total Loan Balance	Total Loan Balance	$	1,380,130	$	772,783	$	961,071	$	606,970	$	431,724	$	1,591,979	$	1,226,925	$	28,408	$	6,999,990	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, 2022								March 31, 2023
(dollars in thousands)	(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Non - performing			Total Past Due Loans		Total Loans		(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Nonaccrual		Total Past Due Loans		Total Loans
Commercial real estate	Commercial 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 industrial	Commercial and industrial	1,478,546		698		—		342			1,040		1,479,586		Commercial and industrial	1,486,444		—		—		7,075		7,075		1,493,519
Commercial construction	Commercial construction	394,471		—		—		864			864		395,335		Commercial construction	376,471		—		—		384		384		376,855
Business banking	Business banking	1,150,781		674		1,428		7,907			10,009		1,160,790		Business banking	1,255,124		2,714		89		3,915		6,718		1,261,842
Consumer real estate	Consumer real estate	1,250,221		1,050		597		7,384			9,031		1,259,252		Consumer real estate	1,464,321		4,383		1,342		5,529		11,254		1,475,575
Other consumer	Other consumer	119,370		225		76		256			557		119,927		Other consumer	119,285		162		76		316		554		119,839
Total	Total	$	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

2422

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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, 2021										December 31, 2022
(dollars in thousands)	(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Non - performing		Total Past Due Loans			Total Loans		(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Nonaccrual		Total Past Due Loans		Total Loans
Commercial real estate	Commercial 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 industrial	Commercial and industrial	1,497,755		529		—		15,239		15,768			1,513,523		Commercial and industrial	1,505,805		4,304		—		283		4,587		1,510,392
Commercial construction	Commercial construction	421,834		450		—		2,471		2,921			424,755		Commercial construction	381,579		—		—		384		384		381,963
Business banking	Business banking	1,124,748		813		491		9,641		10,945			1,135,693		Business banking	1,199,586		1,583		285		4,490		6,358		1,205,944
Consumer real estate	Consumer real estate	1,117,074		1,087		2,130		7,294		10,511			1,127,585		Consumer real estate	1,409,907		3,617		1,903		6,526		12,046		1,421,953
Other consumer	Other consumer	107,492		206		50		158		414			107,906		Other consumer	124,384		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, 2022								March 31, 2023
(dollars in thousands)	(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Interest Income Recognized on Nonaccrual(1)			(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Interest Income Recognized on Nonaccrual(1)
Commercial real estate	Commercial real estate	$	31,488	$	15,022	$	11,974	$	557		Commercial real estate	$	7,100	$	7,425	$	5,442	$	1
Commercial and industrial	Commercial and industrial	15,239		342		—		84			Commercial and industrial	283		7,075		—		—
Commercial construction	Commercial construction	2,471		864		480		—			Commercial construction	384		384		—		—
Business banking	Business banking	9,641		7,907		1,326		136			Business banking	4,490		3,915		—		108
Consumer real estate	Consumer real estate	7,294		7,384		—		132			Consumer real estate	6,526		5,529		—		91
Other consumer	Other consumer	158		256		—		—			Other consumer	269		316		—		1
Total	Total	$	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, 2021								December 31, 2022
(dollars in thousands)	(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Interest Income Recognized on Nonaccrual(1)			(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Interest Income Recognized on Nonaccrual(1)
Commercial real estate	Commercial real estate	$	101,070	$	31,488	$	28,046	$	158		Commercial real estate	$	31,488	$	7,100	$	5,649	$	580
Commercial and industrial	Commercial and industrial	16,985		15,239		5,707		74			Commercial and industrial	15,239		283		—		148
Commercial construction	Commercial construction	384		2,471		2,020		(28)			Commercial construction	2,471		384		—		171
Business banking	Business banking	17,122		9,641		1,696		427			Business banking	9,641		4,490		933		228
Consumer real estate	Consumer real estate	11,117		7,294		—		496			Consumer real estate	7,294		6,526		—		257
Other consumer	Other consumer	96		158		—		1			Other consumer	158		269		—		1
Total	Total	$	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.

2523

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– continued~~

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

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


		June 30, 2022									March 31, 2023
		Type of Collateral									Type of Collateral
(dollars in thousands)	(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other		(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other
Commercial real estate	Commercial real estate	$	11,974	$	—	$	16	$	—	Commercial real estate	$	5,442	$	595	$	—	$	—
Commercial and industrial	Commercial and industrial	—		690		—		—		Commercial and industrial	—		5,385		—		—
Commercial construction	Commercial construction	1,695		—		480		—		Commercial construction	—		—		—		—
Business banking	Business banking	795		1,210		—		—		Business banking	—		—		—		—
Consumer real estate	Consumer real estate	598		—		—		—		Consumer real estate	—		—		—		—

Total	Total	$	15,062	$	1,900	$	496	$	—	Total	$	5,442	$	5,980	$	—	$	—


		December 31, 2021									December 31, 2022
		Type of Collateral									Type of Collateral
(dollars in thousands)	(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other		(dollars in thousands)	Real Estate		Business Assets		Investment/Cash		Other
Commercial real estate	Commercial real estate	$	28,046	$	—	$	—	$	—	Commercial real estate	$	5,649	$	—	$	—	$	—
Commercial and industrial	Commercial and industrial	259		4,905		—		10,473		Commercial and industrial	—		626		—		—
Commercial construction	Commercial construction	4,210		—		—		—		Commercial construction	1,655		—		—		—
Business banking	Business banking	910		1,636		—		—		Business banking	260		1,112		—		154
Consumer real estate	Consumer real estate	1,031		—		—		—		Consumer real estate	561		—		—		—

Total	Total	$	34,456	$	6,541	$	—	$	10,473	Total	$	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 Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 48,903 $ 22,237 $ 5,329 $ 11,497 $ 9,118 $ 2,831 $ 99,915
Provision for credit losses on loans(1)
(3,678) 948 1,254 1,668 582 418 1,192
Charge-offs (199) (5,797) — (1,141) (60) (481) (7,678)
Recoveries 288 4,138 — 133 33 74 4,666
Net Recoveries/(Charge-offs) 89 (1,659) — (1,008) (27) (407) (3,012)
Balance at End of Period $ 45,314 $ 21,526 $ 6,583 $ 12,157 $ 9,673 $ 2,842 $ 98,095
(1) Excludes the provision for credits losses for unfunded commitments.
Three Months Ended June 30, 2021
(dollars in thousands) Commercial
Real Estate Commercial and
Industrial Commercial
Construction Business Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 66,842 $ 14,663 $ 6,329 $ 15,680 $ 8,981 $ 2,606 $ 115,101
Provision for credit losses on loans(1)
2,937 225 (426) (560) (410) 243 2,008
Charge-offs (7,558) (473) — (410) (76) (221) (8,737)
Recoveries 965 11 2 47 152 88 1,264
Net (Charge-offs)/Recoveries (6,594) (462) 2 (363) 76 (132) (7,473)
Balance at End of Period $ 63,186 $ 14,426 $ 5,905 $ 14,756 $ 8,647 $ 2,717 $ 109,636


	Three Months Ended March 31, 2023
(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	41,428	$	25,710	$	6,264	$	12,547	$	12,105	$	3,286	$	101,340
Impact of ASU 2022-02	—		75		215		251		278		(251)		568
Provision for credit losses on loans(1)	(1,011)		(476)		412		1,497		488		180		1,090
Charge-offs	—		(3,412)		—		(652)		(77)		(318)		(4,459)
Recoveries	9		9,400		2		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 Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	50,700	$	19,727	$	5,355	$	11,338	$	8,733	$	2,723	$	98,576

Provision for credit losses on loans(1)	(1,996)		(206)		(27)		765		426		340		(698)
Charge-offs	—		—		—		(606)		(78)		(298)		(982)
Recoveries	199		2,716		1		—		37		66		3,019
Net (Charge-offs)/Recoveries	199		2,716		1		(606)		(41)		(232)		2,037
Balance at End of Period	$	48,903	$	22,237	$	5,329	$	11,497	$	9,118	$	2,831	$	99,915

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

Table of Contents

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 Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 50,700 $ 19,727 $ 5,355 $ 11,338 $ 8,733 $ 2,723 $ 98,576
Provision for credit losses on loans(1)
(5,475) 768 1,227 2,207 1,010 758 495
Charge-offs (199) (5,798) — (1,746) (138) (780) (8,661)
Recoveries 288 6,829 1 358 68 141 7,685
Net (Charge-offs)/Recoveries 89 1,031 1 (1,388) (70) (639) (976)
Balance at End of Period $ 45,314 $ 21,526 $ 6,583 $ 12,157 $ 9,673 $ 2,842 $ 98,095
(1) Excludes the provision for credits losses for unfunded commitments.
Six Months Ended June 30, 2021
(dollars in thousands) Commercial
Real Estate Commercial and
Industrial Commercial
Construction
Business Banking(1)
Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 65,656 $ 16,100 $ 7,239 $ 15,917 $ 10,014 $ 2,686 $ 117,612
Provision for credit losses on loans(1)
4,933 2,953 (1,337) (46) (1,254) 61 5,308
Charge-offs (8,369) (4,774) — (1,327) (347) (453) (15,270)
Recoveries 965 148 3 213 234 423 1,985
Net (Charge-offs)/Recoveries (7,403) (4,627) 3 (1,115) (113) (30) (13,285)
Balance at End of Period $ 63,186 $ 14,426 $ 5,905 $ 14,756 $ 8,647 $ 2,717 $ 109,636
(1) Excludes the provision for credits losses for unfunded commitments.

The C&I portfolio included $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.

~~Table of Contents~~

~~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, 2022 December 31, 2021 June 30, 2022 December 31, 2021
(dollars in thousands) Notional
Amount Fair
Value Notional Amount Fair
Value Notional
Amount Fair
Value Notional
Amount Fair
Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts - cash flow hedge (1)
$ 50,000 $ 368 $ — $ 250,000 $ 5,946 $ —
Total Derivatives Designated as Hedging Instruments $ 368 $ — $ 5,946 $ —
Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts - commercial loans $ 1,039,932 $ 51,097 $ 1,017,178 $ 33,528 $ 1,039,932 $ 51,193 $ 1,017,178 $ 33,361
Interest rate lock commitments - mortgage loans 2,062 56 12,148 401 — — — —
Forward sales contracts - mortgage loans — — 8,436 4 645 2 — —
Total Derivatives Not Designated as Hedging Instruments $ 51,153 $ 33,933 $ 51,195 $ 33,361
Total Derivatives $ 51,521 $ 33,933 $ 57,141 $ 33,631
(1) Derivative assets and derivative liabilities include interest receivable of $0.6 million and $0.2 million as of June 30,2022.

~~Table of Contents~~

~~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, 2023				December 31, 2022				March 31, 2023				December 31, 2022
(dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts - cash flow hedge	$	—	$	—	$	—	$	—	$	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 loans	146		6		126		5		—		—		—		—
Forward sales contracts - mortgage loans	—		—		130		2		—		—		—		—
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, 2022 December 31, 2021 June 30, 2022 December 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 Sheets 51,465 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, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Gross amounts recognized	$	67,397	$	83,449	$	82,685	$	104,817
Gross amounts offset	—		—		—		—
Net amounts presented in the Consolidated Balance Sheets	67,397		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 Income						Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income							Amount of Gain or (Loss) Recognized in Other Comprehensive Income						Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income
(dollars in thousands)	(dollars in thousands)	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			(dollars in thousands)	March 31, 2023			March 31, 2022			March 31, 2023			March 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 hedge	Interest rate swap contracts - cash flow hedge		$	(3,271)		$	—		$	786		$	—	Interest rate swap contracts - cash flow hedge		$	4,782		$	(2,044)		$	(1,849)		$	107

Total	Total		$	(3,271)		$	—		$	786		$	—	Total		$	4,782		$	(2,044)		$	(1,849)		$	107

~~The following table presents the effect~~

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 Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Income
(dollars in thousands) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Derivatives in Cash Flow Hedging Relationships:
Interest rate swap contracts - cash flow hedge $ (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) 2022 2021 2022 2021
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loans $ (61) $ 5 $ 7 $ 315
Interest rate lock commitments—mortgage loans (129) (883) (346) (2,642)
Forward sale contracts—mortgage loans (194) 194 (5) 1,173
Total Derivatives (Loss) Gain $ (384) $ (684) $ (344) $ (1,154)


	Three months ended March 31,
(dollars in thousands)	2023			2022
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loans		$	—		$	68
Interest rate lock commitments—mortgage loans		1			(217)
Forward sale contracts—mortgage loans		(2)			188
Total Derivatives (Loss) Gain		$	(1)		$	39

~~Table of Contents~~

~~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, 2022			December 31, 2021			(dollars in thousands)	March 31, 2023			December 31, 2022
Commitments to extend credit	Commitments to extend credit		$	2,600,322		$	2,583,957	Commitments to extend credit		$	2,661,977		$	2,713,586
Standby letters of credit	Standby letters of credit		80,665			87,335		Standby letters of credit		65,676			64,356
Total	Total		$	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 of~~for the ~~dates~~periods presented:


		Three months ended June 30,						Six months ended June 30,							Three months ended March 31,
(dollars in thousands)	(dollars in thousands)	2022			2021			2022			2021			(dollars in thousands)		2023	2022
Balance at beginning of period	Balance at beginning of period		$	5,375		$	4,303		$	5,189		$	4,467	Balance at beginning of period			$	8,196	$	5,189

Provision for credit losses	Provision for credit losses		2,012			555			2,198			391		Provision for credit losses			(168)		186
Total	Total		$	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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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, 2022 Three 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, 2022 Six 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, 2023									Three 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 swap		6,080			(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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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, 2022~~March 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 looking~~Forward-looking statements are typically identified by words or phrases such as “will likely result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “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 security~~cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment, ~~including a prolonged period of low interest rates,~~ a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; 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 change~~developments affecting the industry and ~~related legislative~~the 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 conditions~~environmental, social and governance practices and disclosures, including ~~inflation and economic uncertainty;~~ climate change, hiring practices, the ~~duration and severity~~diversity of the ~~coronavirus, or COVID-19 pandemic, both in our principal area of operations~~work force, and ~~nationally, including the ultimate impact of the pandemic on the economy generally~~racial 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 ~~2021~~2022 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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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, 2022~~March 31, 2023 remained unchanged from the disclosures presented in our ~~2021~~2022 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 as~~Our 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 years~~deposit franchise, core profitability, asset quality and talent and engagement.

During the first quarter of ~~proven~~2023, the banking ~~leadership~~industry experienced significant volatility with several high-profile bank failures and industry wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding consumer confidence in the banking system. Despite these negative industry developments, our liquidity position and balance sheet remain strong. We have a well-diversified deposit base with a ~~track record~~balance mix of ~~growth~~59 percent personal and ~~transformation of commercial, consumer and wealth businesses. Additionally, we have elevated proven internal leaders and attracted external talent from larger banking institutions~~41 percent business accounts. Our total deposits decreased by less than 1 percent compared to ~~position us for future growth. Our priorities for~~December 31, 2022 and ~~beyond include pursuing high impact growth initiatives, ensuring rigorous credit risk~~can be attributed to normal deposit fluctuations and ~~enterprise governance practices, advancing strategic infrastructure and platform investments, including enhancing our digital platform, investing~~competition 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 areas~~higher interest rate environment. We have total uninsured deposits of $2.4 billion, or 33 percent of our ~~business~~total 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 source~~a 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,
		2022				2021				2022				2021
Net Income			$	28,858			$	28,367			$	58,001			$	60,268
Earnings Per Share - Diluted			$	0.74			$	0.72			$	1.48			$	1.54
(dollars in thousands)																		(dollars in thousands)		2023	2022
Net income																		Net income			$	39,799		$	29,143
Earnings per share - diluted																		Earnings per share - diluted			$	1.02		$	0.74
Return on average assets	Return on average assets		1.25		%		1.21		%		1.25		%		1.31		%	Return on average assets			1.77		%	1.25		%
Return on average shareholders' equity	Return on average shareholders' equity		9.83		%		9.65		%		9.85		%		10.39		%	Return on average shareholders' equity			13.38		%	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, 2022~~March 31, 2023 compared to the same period in ~~2021~~2022 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 expense~~provision 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 by~~and 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, 2022~~March 31, 2023 compared to the same ~~periods~~period 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 4~~116 basis points to 4.32% for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to 3.16% for the same ~~periods~~period 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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~~The provision for credit losses increased $0.6 million and decreased $3.0 million~~during 2023. NIM is reconciled to ~~$3.2 million and $2.7 million for~~net 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, 2022~~March 31, 2023 compared to the same period in ~~2021~~2022 was primarily ~~due to an increase of $1.4 million in our provision for unfunded commitments~~ related to ~~higher construction commitments~~a $4.2 million specific reserve for a C&I relationship and ~~expected loss rates~~a $1.8 million increase in ~~our construction portfolio. The decrease~~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 that occurred in 2020.

Noninterest income decreased $2.0 million to $13.2 million for the ~~six~~three months ended ~~June 30, 2022~~March 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.

~~Noninterest~~2022. 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 ~~consulting engagements~~$4.3 million to $51.7 million for the three months ended March 31, 2023 compared to the same ~~periods~~period in ~~2021. Furniture, equipment~~2022. Salaries and ~~software~~employee 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, 2022~~March 31, 2023 due to ~~new software implementation costs. Salaries~~increased 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, 2022~~March 31, 2023 compared to ~~$7.0 million and $14.2~~$6.9 million for the same ~~periods~~period in ~~2021.~~2022. Our effective tax rate was ~~20.3 percent and 19.7~~19.4 percent for the three months ~~and six months~~ ended ~~June 30, 2022~~March 31, 2023 compared to ~~19.7 percent and 19.1~~19.2 percent for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022. The ~~increases~~increase in our effective tax ~~rates~~rate for the three ~~and six~~ month ~~periods~~period ended ~~June 30, 2022 were~~March 31, 2023 was primarily due to ~~a $0.5 million decrease~~an increase in ~~low~~pretax income ~~housing tax credits~~ compared to the same ~~periods~~period in ~~2021.~~2022.

Explanation of Use of Non-GAAP Financial Measures

In addition to ~~the results of operations~~traditional 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 believes~~measures discussed below. We believe these ~~performance metrics~~non-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 believes~~we 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 ~~presentation~~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 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)	2023				2022
Total interest and dividend income per Condensed Consolidated Statements of Comprehensive Income (Loss)		$	110,903			$	70,109
Adjustment to FTE basis		555				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 expense		22,112				2,376
Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)		88,791				67,733
Adjustment to FTE basis		555				493
Net Interest Income on an FTE Basis (Non-GAAP)		$	89,346			$	68,226

Net interest margin		4.29		%		3.14		%
Adjustment to FTE basis		0.03		%		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)	2022				2021				2022				2021				(dollars in thousands)		2023	2022
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 tax	Plus: amortization of intangibles (annualized), net of tax		1,197				1,395				1,236				1,429			Plus: amortization of intangibles (annualized), net of tax			1,085			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' equity	Average 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 liability	Less: 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' equity	Average 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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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three ~~and Six~~ Months Ended ~~June 30, 2022~~March 31, 2023 Compared to

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 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) 2022 2021 2022 2021
Total interest and dividend income $ 77,599 $ 71,577 $ 147,708 $ 146,358
Total interest expense 2,405 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 basis 506 585 999 1,249
Net Interest Income on an FTE Basis (Non-GAAP) $ 75,700 $ 68,889 $ 143,926 $ 140,211
Net interest margin 3.53 % 3.13 % 3.33 % 3.28 %
Adjustment to FTE basis 0.03 % 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, 2022 Three Months Ended June 30, 2021
(dollars in thousands) Average Balance Interest Rate Average Balance Interest Rate
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 sale 1,406 14 3.95 % 4,353 33 3.01 %
Commercial real estate 3,197,406 32,978 4.14 % 3,251,894 29,930 3.69 %
Commercial and industrial 1,685,728 18,119 4.31 % 1,890,538 18,363 3.90 %
Commercial construction 404,856 3,812 3.78 % 462,928 3,854 3.34 %
Total Commercial Loans 5,287,990 54,909 4.16 % 5,605,359 52,147 3.73 %
Residential mortgage 939,756 9,337 3.98 % 863,254 8,996 4.17 %
Home equity 594,529 5,282 3.56 % 535,933 4,682 3.50 %
Installment and other consumer 119,041 1,590 5.36 % 84,259 1,271 6.05 %
Consumer construction 31,204 261 3.36 % 13,264 211 6.39 %
Total Consumer Loans 1,684,530 16,470 3.92 % 1,496,710 15,160 4.06 %
Total Portfolio Loans 6,972,520 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 stock 8,939 82 3.69 % 10,529 119 4.51 %
Total Interest-earning Assets 8,535,384 78,105 3.67 % 8,729,277 72,162 3.31 %
Noninterest-earning assets 690,207 704,635
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 market 1,930,852 709 0.15 % 2,037,976 894 0.18 %
Savings 1,118,346 128 0.05 % 1,044,899 70 0.03 %
Certificates of deposit 1,001,775 778 0.31 % 1,291,194 1,458 0.45 %
Total Interest-bearing Deposits 5,030,487 1,790 0.14 % 5,372,203 2,652 0.20 %
Securities sold under repurchase agreements 50,037 13 0.10 % 67,838 17 0.10 %
Long-term borrowings 22,072 111 2.01 % 23,113 116 2.01 %
Junior subordinated debt securities 54,413 492 3.62 % 64,103 488 3.06 %
Total Borrowings 126,522 615 1.95 % 155,054 621 1.61 %
Total Interest-bearing Liabilities 5,157,009 2,405 0.19 % 5,527,256 3,273 0.24 %
Noninterest-bearing liabilities 2,891,032 2,727,653
Shareholders' equity 1,177,550 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.~~

~~Table of Contents~~

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

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


		Six Months Ended June 30, 2022							Six Months Ended June 30, 2021								Three Months Ended March 31, 2023							Three Months Ended March 31, 2022
(dollars in thousands)	(dollars in thousands)	Average Balance		Interest			Rate		Average Balance		Interest			Rate		(dollars in thousands)	Average Balance		Interest			Rate		Average Balance		Interest			Rate
ASSETS	ASSETS															ASSETS
Interest-bearing deposits with banks	Interest-bearing deposits with banks	$	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 sale	Loans held for sale	1,475			27		3.72	%	5,351			78		2.90	%	Loans held for sale	126			2		6.39	%	1,545			14		3.51	%
Commercial real estate	Commercial real estate	3,227,156			62,323		3.89	%	3,252,763			60,066		3.72	%	Commercial real estate	3,132,382			42,104		5.45	%	3,257,238			29,345		3.65	%
Commercial and industrial	Commercial and industrial	1,699,222			34,946		4.15	%	1,923,813			39,180		4.10	%	Commercial and industrial	1,711,113			28,515		6.76	%	1,712,865			16,827		3.98	%
Commercial construction	Commercial construction	407,048			7,141		3.54	%	474,037			7,887		3.36	%	Commercial construction	388,795			6,932		7.23	%	409,264			3,329		3.30	%
Total Commercial Loans	Total Commercial Loans	5,333,426			104,410		3.95	%	5,650,613			107,134		3.82	%	Total Commercial Loans	5,232,290			77,551		6.01	%	5,379,367			49,501		3.73	%
Residential mortgage	Residential mortgage	918,132			18,299		4.00	%	880,246			18,412		4.20	%	Residential mortgage	1,144,821			12,613		4.43	%	896,268			8,962		4.02	%
Home equity	Home equity	582,721			10,105		3.50	%	534,329			9,473		3.58	%	Home equity	650,385			10,067		6.28	%	570,781			4,823		3.43	%
Installment and other consumer	Installment and other consumer	114,531			3,065		5.40	%	82,095			2,518		6.19	%	Installment and other consumer	122,873			2,364		7.80	%	109,972			1,475		5.44	%
Consumer construction	Consumer construction	26,544			443		3.36	%	14,578			399		5.52	%	Consumer construction	45,870			528		4.67	%	21,833			181		3.37	%
Total Consumer Loans	Total Consumer Loans	1,641,928			31,911		3.91	%	1,511,249			30,803		4.10	%	Total Consumer Loans	1,963,949			25,572		5.26	%	1,598,854			15,441		3.90	%
Total Portfolio Loans	Total Portfolio Loans	6,975,354			136,321		3.94	%	7,161,862			137,936		3.88	%	Total Portfolio Loans	7,196,239			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 stock		9,108			161		3.54	%	10,884			257		4.73	%
Total other earning assets																Total other earning assets	34,720			581		6.71	%	9,280			79		3.40	%
Total Interest-earning Assets	Total Interest-earning Assets	8,640,804			148,708		3.47	%	8,527,887			147,607		3.49	%	Total Interest-earning Assets	8,372,193			111,458		5.39	%	8,747,398			70,602		3.27	%
Noninterest-earning assets	Noninterest-earning assets	699,097							730,117							Noninterest-earning assets	754,677							709,246
Total Assets	Total Assets	$	9,339,901						$	9,258,003						Total Assets	$	9,126,870						$	9,456,644
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY															LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand	Interest-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 market	Money market	1,993,009			1,455		0.15	%	2,003,569			1,837		0.18	%	Money market	1,670,988			7,748		1.88	%	2,055,857			746		0.15	%
Savings	Savings	1,113,723			206		0.04	%	1,020,201			221		0.04	%	Savings	1,090,137			806		0.30	%	1,109,048			78		0.03	%
Certificates of deposit	Certificates of deposit	1,035,793			1,621		0.32	%	1,317,751			3,623		0.55	%	Certificates of deposit	1,052,460			5,676		2.19	%	1,070,189			844		0.32	%
Total Interest-bearing Deposits	Total Interest-bearing Deposits	5,125,582			3,644		0.14	%	5,288,816			6,133		0.23	%	Total Interest-bearing Deposits	4,638,208			14,903		1.30	%	5,221,733			1,853		0.14	%
Securities sold under repurchase agreements	Securities sold under repurchase agreements	65,826			33		0.10	%	66,254			42		0.13	%	Securities sold under repurchase agreements	—			—		—	%	81,790			20		0.10	%
Short-term borrowings	Short-term borrowings	—			—		—	%	12,707			12		0.19	%	Short-term borrowings	451,668			5,487		4.93	%	—			—		—	%
Long-term borrowings	Long-term borrowings	22,190			218		1.98	%	23,291			232		2.01	%	Long-term borrowings	14,689			98		2.71	%	22,310			107		1.95	%
Junior subordinated debt securities	Junior subordinated debt securities	54,406			887		3.29	%	64,095			977		3.07	%	Junior subordinated debt securities	54,458			1,007		7.50	%	54,398			395		2.95	%
Total Borrowings	Total Borrowings	142,422			1,138		1.61	%	166,348			1,262		1.53	%	Total Borrowings	520,815			6,592		5.13	%	158,498			523		1.34	%
Other interest-bearing liabilities																Other interest-bearing liabilities	54,669			617		4.58	%	—			—		—	%
Total Interest-bearing Liabilities	Total Interest-bearing Liabilities	5,268,004			4,781		0.18	%	5,455,164			7,396		0.27	%	Total Interest-bearing Liabilities	5,213,692			22,112		1.72	%	5,380,231			2,376		0.18	%
Noninterest-bearing liabilities	Noninterest-bearing liabilities	2,884,828							2,633,219							Noninterest-bearing liabilities	2,706,820							2,879,718
Shareholders' equity	Shareholders' equity	1,187,069							1,169,620							Shareholders' equity	1,206,358							1,196,694
Total Liabilities and Shareholders' Equity	Total 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, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021~~2022. 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 $2.6~~increased $19.7 million for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021.~~2022. The ~~decreases~~increase in interest expense ~~were~~was primarily due to ~~lower average rates paid on~~higher interest rates. Average interest-bearing deposits decreased $583.5 million for the three months ended March 31, 2023 compared to the same ~~periods~~period in ~~2021. Average interest-bearing deposits decreased $341.7 million and $163.2 million for the three and six months ended June 30, 2022 compared~~2022. The decrease was due to the ~~same periods in 2021. The decreases were concentrated in higher-balance, rate sensitive accounts. Additionally, we discontinued a money~~competitive 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 9~~increased 116 basis points for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021~~2022. 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 9~~increased 154 basis points for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to the same ~~periods~~period in ~~2021.~~2022.

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

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


		Three Months Ended June 31, 2022 Compared to June 31, 2021						Six Months Ended June 31, 2022 Compared to June 31, 2021							Three 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 banks	Interest-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 sale	Loans held for sale	(22)		3		(19)		(56)		6		(50)		Loans held for sale	(12)		1		(12)
Commercial real estate	Commercial real estate	(502)		3,549		3,048		(473)		2,729		2,256		Commercial real estate	(1,125)		13,884		12,759
Commercial and industrial	Commercial and industrial	(1,989)		1,746		(244)		(4,574)		340		(4,234)		Commercial and industrial	(17)		11,705		11,688
Commercial construction	Commercial construction	(483)		441		(42)		(1,115)		368		(746)		Commercial construction	(167)		3,770		3,603
Total Commercial Loans	Total Commercial Loans	(2,974)		5,736		2,762		(6,161)		3,437		(2,724)		Total Commercial Loans	(1,309)		29,359		28,050
Residential mortgage	Residential mortgage	797		(456)		341		792		(905)		(113)		Residential mortgage	2,485		1,165		3,651
Home equity	Home equity	512		88		600		858		(227)		631		Home equity	673		4,571		5,244
Installment and other consumer	Installment and other consumer	525		(205)		319		995		(448)		547		Installment and other consumer	173		716		889
Consumer construction	Consumer construction	286		(236)		50		328		(285)		43		Consumer construction	200		148		347
Total Consumer Loans	Total Consumer Loans	2,120		(810)		1,310		2,973		(1,865)		1,108		Total Consumer Loans	3,531		6,600		10,131
Total Portfolio Loans	Total Portfolio Loans	(855)		4,927		4,072		(3,188)		1,573		(1,616)		Total Portfolio Loans	2,222		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 assets														Total other earning assets	216		286		502
Change in Interest Earned on Interest-earning Assets	Change 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 demand	Interest-bearing demand	$	(4)	$	(50)	$	(54)	$	17	$	(108)	$	(90)	Interest-bearing demand	$	(30)	$	518	$	487
Money market	Money market	(47)		(138)		(185)		(10)		(373)		(382)		Money market	(140)		7,141		7,002
Savings	Savings	5		54		58		20		(36)		(15)		Savings	(1)		730		728
Certificates of deposit	Certificates of deposit	(327)		(354)		(680)		(775)		(1,226)		(2,001)		Certificates of deposit	(14)		4,846		4,832
Total Interest-bearing Deposits	Total Interest-bearing Deposits	(373)		(488)		(861)		(747)		(1,742)		(2,490)		Total Interest-bearing Deposits	(185)		13,235		13,049
Securities sold under repurchase agreements	Securities sold under repurchase agreements	(4)		—		(4)		—		(8)		(9)		Securities sold under repurchase agreements	(20)		—		(20)
Short-term borrowings	Short-term borrowings	—		—		—		(12)		—		(12)		Short-term borrowings	5,487		—		5,487
Long-term borrowings	Long-term borrowings	(5)		—		(5)		(11)		(3)		(14)		Long-term borrowings	(37)		28		(9)
Junior subordinated debt securities	Junior subordinated debt securities	(74)		77		3		(148)		58		(90)		Junior subordinated debt securities	—		611		611
Total Borrowings	Total Borrowings	(84)		77		(6)		(171)		46		(125)		Total Borrowings	5,430		639		6,069
Change in Interest Paid on Interest-bearing Liabilities	Change in Interest Paid on Interest-bearing Liabilities	(457)		(411)		$	(868)	(918)		(1,696)		(2,614)		Change in Interest Paid on Interest-bearing Liabilities	5,862		13,874		19,735
Change in Net Interest Income	Change 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 expected~~commitments. 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, 2022~~March 31, 2023 compared to ~~$2.6 million and $5.7~~a negative $0.5 million for the same ~~periods~~period in ~~2021.~~2022. The provision for credit losses included ~~$2.0 million and $2.2~~a negative $0.2 million for the reserve for unfunded commitments for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$0.6 million and $0.4~~$0.2 million for the same ~~periods~~period in ~~2021.~~2022.

The increase in the provision for credit losses ~~of $0.6~~for 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, 2022~~March 31, 2023 compared to $2.0 million for the same period in ~~2021~~2022. The net recovery was primarily due to ~~an increase of $1.4~~the $9.3 million ~~in our provision for unfunded commitments~~recovery 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 losses~~a $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 large~~a 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)	2022			2021			$ Change			% Change			2022			2021			$ Change			% Change			(dollars in thousands)	2023			2022			$ Change			% Change
Net gain on sale of securities			$	—		$	29		$	(29)		NM			$	—		$	29		$	(29)		NM

Debit and credit card	Debit and credit card		4,756			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 accounts	Service charges on deposit accounts		4,181			3,642			539			14.8	%		8,155			7,116			1,039			14.6	%	Service charges on deposit accounts		4,076			3,974			102			2.6	%
Wealth management	Wealth management		3,247			3,167			80			2.5	%		6,489			6,111			378			6.2	%	Wealth management		2,948			3,242			(294)			(9.1)	%
Mortgage banking	Mortgage banking		466			1,734			(1,268)			(73.1)	%		1,481			6,044			(4,563)			(75.5)	%	Mortgage banking		301			1,015			(714)			(70.3)	%

Other	Other		(20)			2,108			(2,128)			(100.9)	%		1,912			4,541			(2,629)			(57.9)	%	Other		1,492			1,932			(440)			(22.8)	%
Total Noninterest Income	Total 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, 2022~~March 31, 2023 compared to the same ~~periods~~period 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) 2022 2021 $ Change % Change 2022 2021 $ Change % Change
Salaries and employee benefits $ 24,811 $ 24,515 $ 296 1.2 % $ 48,523 $ 47,842 $ 681 1.4 %
Data processing and information technology 4,104 3,787 317 8.4 % 8,539 8,012 527 6.6 %
Occupancy 3,634 3,434 200 5.8 % 7,516 7,261 255 3.5 %
Furniture, equipment and software 2,939 2,402 537 22.3 % 5,716 5,042 674 13.4 %
Other taxes 1,682 1,832 (150) (8.2) % 3,219 3,268 (49) (1.5) %
Professional services and legal 2,380 1,637 743 45.4 % 4,329 3,168 1,161 36.6 %
Marketing 1,524 996 528 53.0 % 2,885 2,318 567 24.5 %
FDIC insurance 882 924 (42) (4.5) % 1,819 1,970 (151) (7.7) %
Other 6,468 6,302�� 166 2.6 % 13,292 12,614 678 5.4 %
Total Noninterest Expense $ 48,424 $ 45,829 $ 2,595 5.7 % $ 95,838 $ 91,495 $ 4,343 4.7 %

Noninterest expense increased $2.6 million to $48.4 million for the three months ended June 30, 2022 and increased $4.3 million to $95.8 million for the six months ended June 30, 2022 compared to the same periods in 2021. Professional services and legal increased by $0.7 million for the three months ended ~~June 30, 2022 and $1.2 million for the six months ended June 30, 2022~~March 31, 2023 due to ~~increased consulting engagements compared~~a decline in loan sale activity caused by rising interest rates and a shift to ~~the same periods in 2021. Furniture, equipment~~holding originated mortgage loans on our balance sheet. Debit and ~~software increased $0.5~~credit card income decreased $0.7 million for the three months ended ~~June 30, 2022~~March 31, 2023 due to decreased debit card incentive income and ~~increased $0.7~~timing 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 month~~three months ended ~~June 30, 2022~~March 31, 2023 primarily due to ~~new software implementation~~a net gain on sale of OREO in 2022.

Noninterest Expense


	Three Months Ended March 31,
(dollars in thousands)	2023			2022			$ Change			% Change
Salaries and employee benefits		$	27,601		$	23,712		$	3,889		16.4	%
Data processing and information technology		4,258			4,435			(177)			(4.0)	%
Occupancy		3,835			3,882			(47)			(1.2)	%
Furniture, equipment and software		2,861			2,777			84			3.0	%
Professional services and legal		1,821			1,949			(128)			(6.6)	%
Other taxes		1,790			1,537			253			16.5	%
Marketing		1,853			1,361			492			36.1	%
FDIC insurance		1,012			937			75			8.0	%

Other		6,668			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, 2022~~March 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~~

~~Table of Contents~~

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

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

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

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

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, 2022			December 31, 2021			$ Change			(dollars in thousands)	March 31, 2023			December 31, 2022			$ Change
U.S. Treasury securities	U.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 agencies	Obligations of U.S. government corporations and agencies		52,815			70,348			(17,533)		Obligations of U.S. government corporations and agencies		42,095			41,811			284
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies		427,635			270,294			157,341		Collateralized mortgage obligations of U.S. government corporations and agencies		432,739			428,407			4,332
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies		46,416			56,793			(10,377)		Residential mortgage-backed securities of U.S. government corporations and agencies		41,170			41,587			(417)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies		333,994			341,300			(7,306)		Commercial mortgage-backed securities of U.S. government corporations and agencies		317,099			327,313			(10,214)
Corporate obligations	Corporate obligations		500			500			—		Corporate obligations		—			500			(500)
Obligations of states and political subdivisions	Obligations of states and political subdivisions		69,850			75,089			(5,239)		Obligations of states and political subdivisions		30,895			30,471			424
Available-for-Sale Debt Securities	Available-for-Sale Debt Securities		1,067,492			909,651			157,841		Available-for-Sale Debt Securities		997,702			1,001,784			(4,082)
Marketable equity securities	Marketable equity securities		1,084			1,142			(58)		Marketable equity securities		1,006			994			12
Total Securities	Total 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 $157.8~~remained 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 ~~gain~~loss 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, total~~March 31, 2023, our bond portfolio had gross unrealized ~~gains in the bond portfolio were $1.2~~losses of $88.9 million offset by gross unrealized ~~losses~~gains of ~~$63.1~~$0.6 million compared to December 31, ~~2021,~~2022, when total gross unrealized ~~gains~~losses were ~~$15.2~~$102.6 million offset by gross unrealized ~~losses~~gains 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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S&T BANCORP, INC. AND SUBSIDIARIES

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

Loan Composition


		June 30, 2022				December 31, 2021									March 31, 2023				December 31, 2022
(dollars in thousands)	(dollars in thousands)	Amount		% of Loans		Amount		% of Loans		$ Change		% Change		(dollars in thousands)	Amount		% of Loans		Amount		% of Loans		$ Change		% Change
Commercial	Commercial													Commercial
Commercial real estate	Commercial real estate	$	3,191,670	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 industrial	Commercial and industrial	1,695,031		24.1	%	1,728,969		24.7	%	(33,938)		(2.0)	%	Commercial and industrial	1,709,612		23.6	%	1,718,976		23.9	%	(9,364)		(0.5)	%
Commercial construction	Commercial construction	410,425		5.8	%	440,962		6.3	%	(30,537)		(6.9)	%	Commercial construction	393,658		5.4	%	399,371		5.6	%	(5,713)		(1.4)	%

Total Commercial Loans	Total Commercial Loans	5,297,126		75.2	%	5,406,584		77.2	%	(109,458)		(2.0)	%	Total Commercial Loans	5,248,349		72.4	%	5,246,534		73.0	%	1,815		—	%
Consumer	Consumer													Consumer
Consumer real estate	Consumer real estate	1,623,830		23.1	%	1,485,478		21.2	%	138,352		9.3	%	Consumer real estate	1,882,872		26.0	%	1,812,539		25.2	%	70,333		3.9	%
Other consumer	Other consumer	119,938		1.7	%	107,928		1.5	%	12,010		11.1	%	Other consumer	119,843		1.6	%	124,896		1.8	%	(5,053)		(4.0)	%
Total Consumer Loans	Total Consumer Loans	1,743,768		24.8	%	1,593,406		22.8	%	150,362		9.4	%	Total Consumer Loans	2,002,715		27.6	%	1,937,435		27.0	%	65,280		3.4	%
Total Portfolio Loans	Total Portfolio Loans	7,040,894		100.0	%	6,999,990		100.0	%	40,904		0.6	%	Total Portfolio Loans	7,251,064		100.0	%	7,183,969		100.0	%	67,095		0.9	%
Loans held for sale	Loans held for sale	1,311				1,522				(211)		(13.9)	%	Loans held for sale	81				16				65		406.3	%
Total Loans	Total 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, 2022~~March 31, 2023 compared to $7.2 billion at December 31, ~~2021. P~~2022.

~~ortfolio loans excluding PPP loans increased $117.5 million compared to~~ ~~December 31, 2021~~. As of ~~June 30, 2022, 74~~March 31, 2023, 71.0 percent of our total loans ~~are~~were variable rate loans and 2629.0 percent ~~are~~were fixed rate loans.

Commercial loans, including CRE, C&I and commercial construction, comprised ~~75.2~~72.4 percent of total portfolio loans at ~~June 30, 2022~~March 31, 2023 and ~~77.2~~73.0 percent at December 31, ~~2021.~~2022. The commercial loan portfolio ~~decreased $109.5~~increased $1.8 million at ~~June 30, 2022~~March 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 related~~and 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, if~~pay-offs and lower origination volume due to the ~~proceeds are used~~current macro environment.

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

for payroll and other permitted expenses in accordance with the requirements of the PPP. These loans carry a fixed rate of 1 percent and a term of two years, or five years for loans approved by the SBA on or after June 5, 2020. Payments are deferred for the first six months of the loan. The loans are 100 percent guaranteed by the SBA. The SBA pays us a processing fee ranging from 1 percent to 5 percent based on the size of the loan.

Consumer loans represent ~~24.8~~27.6 percent of our total portfolio loans at ~~June 30, 2022~~March 31, 2023 and ~~22.8~~27.0 percent at December 31, ~~2021.~~2022. The consumer loan portfolio increased ~~$150.4~~$65.3 million at ~~June 30, 2022 with increases~~March 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. Portfolio~~2022. Consistent with 2022, we continue to retain consumer real estate loans ~~increased~~on our balance sheet as portfolio loans versus selling these loans in ~~2022~~the secondary market due to a ~~shift from mortgage loans sold to loans held in the portfolio due to increased~~higher volume of jumbo loans and the pricing of loans in the secondary market.

Allowance for Credit Losses

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

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

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

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

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

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

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

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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 Banking		Consumer Real Estate		Other Consumer		Total Loans
Allowance for credit losses on loans:
Balance at beginning of period	$	41,428	$	25,710	$	6,264	$	12,547	$	12,105	$	3,286	$	101,340
Impact of ASU 2022-02	—		75		215		251		278		(251)		568
Provision for credit losses on loans(1)	(1,011)		(476)		412		1,497		488		180		1,090
Charge-offs	—		(3,412)		—		(652)		(77)		(318)		(4,459)
Recoveries	9		9,400		2		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, 2023		December 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 loans	1.49	%	1.41	%
Allowance for credit losses to nonaccrual loans	439	%	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 substandard~~primarily due to ~~financial deterioration that led to cash flow shortfalls during the second quarter of 2022.~~loan payoffs. Special mention loans ~~decreased $9.3~~increased $40.7 million to ~~$183.0~~$261.7 million at ~~June 30, 2022~~March 31, 2023 compared to ~~$192.3~~$221.0 million at December 31, ~~2021.~~2022. The ~~decrease~~increase 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 $18.4~~CRE 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 ~~lending~~loan 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 $2.2~~decreased $0.2 million to ~~$7.4~~$8.0 million at ~~June 30, 2022~~March 31, 2023 compared to ~~$5.2~~$8.2 million at December 31, ~~2021.~~2022. This change was primarily related to ~~higher construction~~lower 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 for~~represents NPA's as of the dates presented:


(dollars in thousands)	(dollars in thousands)	June 30, 2022				December 31, 2021				$ Change			(dollars in thousands)	March 31, 2023				December 31, 2022				$ Change
Nonperforming Loans (Excluding TDRs)
Nonaccrual Loans													Nonaccrual Loans
Commercial real estate	Commercial real estate		$	15,006			$	29,791			$	(14,785)	Commercial real estate		$	7,931			$	7,323			$	608
Commercial and industrial	Commercial and industrial		342				350				(8)		Commercial and industrial		9,348				2,974				6,374
Commercial construction	Commercial construction		384				384				—		Commercial construction		384				384				—
Business banking			6,582				7,945				(1,363)
Consumer real estate	Consumer real estate		5,195				5,889				(694)		Consumer real estate		6,664				8,093				(1,429)
Other Consumer	Other Consumer		256				158				98		Other Consumer		317				278				39
Total Nonperforming Loans (Excluding TDRs)			27,765				44,517				(16,752)
Nonperforming Troubled Debt Restructurings
Commercial real estate			16				1,697				(1,681)
Commercial and industrial			—				14,889				(14,889)
Commercial construction			480				2,087				(1,607)
Business banking			1,325				1,696				(371)
Consumer real estate			2,189				1,405				784
Other Consumer			—				—				—
Total Nonperforming Troubled Debt Restructurings			4,010				21,774				(17,764)
Total Nonperforming Loans			31,775				66,291				(34,516)
Total Nonaccrual Loans													Total Nonaccrual Loans		24,644				19,052				5,592
OREO	OREO		7,046				13,313				(6,267)		OREO		3,076				3,065				11
Total Nonperforming Assets	Total 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 loans			0.45		%		0.95		%
Nonaccrual loans as a percent of total portfolio loans													Nonaccrual loans as a percent of total portfolio loans		0.34		%		0.27		%
Nonperforming assets as a percent of total portfolio loans plus OREO	Nonperforming assets as a percent of total portfolio loans plus OREO		0.55		%		1.13		%				Nonperforming assets as a percent of total portfolio loans plus OREO		0.38		%		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. ~~Nonperforming~~Nonaccrual loans ~~decreased $34.5~~increased $5.6 million, or ~~52.0~~29.4 percent, to ~~$31.8~~$24.6 million at ~~June 30, 2022~~March 31, 2023 compared to ~~$66.3~~$19.0 million at December 31, ~~2021.~~2022. The ~~significant decrease~~increase in ~~nonperforming~~nonaccrual loans primarily related to the ~~payoff~~addition of ~~two~~the $6.8 million C&I ~~relationships totaling $14.1~~relationship.

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	%
Business		2,584,246		36.1	%		2,666,995		36.9	%		(82,749)		(3.1)	%
Public funds		363,240		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, 2023			December 31, 2022			$ Change

Noninterest-bearing demand		$	2,468,638		$	2,588,692		$	(120,054)
Interest-bearing demand		841,130			846,653			(5,523)
Money market		1,599,814			1,731,521			(131,707)
Savings		1,068,274			1,118,511			(50,237)
Certificates of deposit		1,175,238			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 returned~~compared to ~~performing status totaling $6.7 million during the six months ended June 30, 2022. The decrease in OREO related~~December 31, 2022 mainly due to the ~~sale~~migration of ~~a property for $6.3~~$153.0 million ~~during the first quarter~~from 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, 2022 December 31, 2021 $ Change
Noninterest-bearing demand $ 2,736,849 $ 2,748,586 $ (11,737)
Interest-bearing demand 880,432 979,133 (98,701)
Money market 1,888,506 2,070,579 (182,073)
Savings 1,125,344 1,110,155 15,189
Certificates of deposit 981,116 1,088,071 (106,955)
Total Deposits $ 7,612,247 $ 7,996,524 $ (384,277)

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

Borrowings


(dollars in thousands)	(dollars in thousands)	June 30, 2022			December 31, 2021			$ Change			(dollars in thousands)	March 31, 2023			December 31, 2022			$ Change
Securities sold under repurchase agreements			$	39,259		$	84,491		$	(45,232)

Short-term borrowings											Short-term borrowings		$	495,000		$	370,000		$	125,000
Long-term borrowings	Long-term borrowings		21,988			22,430			(442)		Long-term borrowings		14,628			14,741			(113)
Junior subordinated debt securities	Junior subordinated debt securities		54,423			54,393			30		Junior subordinated debt securities		54,468			54,453			15
Total Borrowings	Total 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 $45.6~~increased $124.9 million to $564.1 million compared to $439.2 million at December 31, ~~2021 related~~2022 primarily due to ~~a decrease in securities sold under repurchase agreements. We no longer offer repurchase agreements as a product for our customers~~loan growth and ~~the remaining balance of $39.3 million is in process of being transferred to other~~ deposit ~~products.~~

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

declines.

Information pertaining to short-term borrowings is summarized in the table below for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 and for the twelve months ended December 31, ~~2021.~~2022.


		Securities Sold Under Repurchase Agreements							Short-Term Borrowings
(dollars in thousands)	(dollars in thousands)	June 30, 2022			December 31, 2021			(dollars in thousands)	March 31, 2023			December 31, 2022
Balance at the period end	Balance at the period end	$	39,259		$	84,491		Balance at the period end	$	495,000		$	370,000
Average balance during the period	Average balance during the period	$	65,826		$	69,964		Average balance during the period	$	451,668		$	40,013
Average interest rate during the period	Average interest rate during the period	0.10		%	0.11		%	Average interest rate during the period	4.93		%	4.15		%
Maximum month-end balance during the period	Maximum 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 end	Average interest rate at the period end	0.10		%	0.10		%	Average interest rate at the period end	5.11		%	4.49		%

Information pertaining to long-term borrowings is summarized in the tables below for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 and for the twelve months ended December 31, ~~2021.~~2022.


		Long-Term Borrowings							Long-Term Borrowings
(dollars in thousands)	(dollars in thousands)	June 30, 2022			December 31, 2021			(dollars in thousands)	March 31, 2023			December 31, 2022
Balance at the period end	Balance at the period end	$	21,988		$	22,430		Balance at the period end	$	14,628		$	14,741
Average balance during the period	Average balance during the period	$	22,190		$	22,995		Average balance during the period	$	14,689		$	19,090
Average interest rate during the period	Average interest rate during the period	1.98		%	1.99		%	Average interest rate during the period	2.71		%	2.15		%
Maximum month-end balance during the period	Maximum 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 end	Average interest rate at the period end	2.03		%	1.94		%	Average interest rate at the period end	2.70		%	2.61		%

		Junior Subordinated Debt Securities							Junior Subordinated Debt Securities
(dollars in thousands)	(dollars in thousands)	June 30, 2022			December 31, 2021			(dollars in thousands)	March 31, 2023			December 31, 2022
Balance at the period end	Balance at the period end	$	54,423		$	54,393		Balance at the period end	$	54,468		$	54,453
Average balance during the period	Average balance during the period	$	54,406		$	61,653		Average balance during the period	$	54,458		$	54,421
Average interest rate during the period	Average interest rate during the period	3.29		%	2.99		%	Average interest rate during the period	7.50		%	4.40		%
Maximum month-end balance during the period	Maximum 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 end	Average interest rate at the period end	4.17		%	2.69		%	Average interest rate at the period end	7.34		%	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, 2022~~March 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, 2023						December 31, 2022
(dollars in thousands)	Borrowing Capacity		Balance		Available		Borrowing Capacity		Balance		Available
FHLB	$	2,964,932	$	624,079	$	2,340,853	$	2,925,614	$	491,288	$	2,434,326
Federal Reserve Window	794,393		—		794,393		839,836		—		839,836
Federal Reserve BTLF	730,500		—		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 ~~2021~~2022 Form 10-K for more information on these future cash outflows.

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

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 ~~$726.9~~and $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 ~~10.9~~10.0 percent at ~~June 30, 2022. Highly liquid assets have declined by $309.8 million when comparing June 30, 2022 to December~~March 31, 2021. The majority of the decrease in liquid assets is attributed to decreases in cash balances which are primarily a result of decreased deposits. At June 30, 2022, we had remaining borrowing availability of $2.8 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 ~~10.25~~11.15 percent at ~~June 30, 2022~~March 31, 2023 compared to ~~9.74~~11.06 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 ~~12.34~~13.10 percent at ~~June 30, 2022~~March 31, 2023 compared to ~~12.03~~12.81 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, 2022				December 31, 2021				(dollars in thousands)	Adequately Capitalized		Well- Capitalized		March 31, 2023				December 31, 2022
						Amount		Ratio		Amount		Ratio							Amount		Ratio		Amount		Ratio
S&T Bancorp, Inc.	S&T Bancorp, Inc.													S&T Bancorp, Inc.
Tier 1 leverage	Tier 1 leverage	4.00	%	5.00	%	$	915,985	10.25	%	$	889,785	9.74	%	Tier 1 leverage	4.00	%	5.00	%	$	989,316	11.15	%	$	967,708	11.06	%
Common equity tier 1 to risk-weighted assets	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	886,985		12.34	%	860,785		12.03	%	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	960,316		13.10	%	938,708		12.81	%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	915,985		12.74	%	889,785		12.43	%	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	989,316		13.50	%	967,708		13.21	%
Total capital to risk-weighted assets	Total capital to risk-weighted assets	8.00	%	10.00	%	1,023,119		14.23	%	987,420		13.79	%	Total capital to risk-weighted assets	8.00	%	10.00	%	1,106,039		15.09	%	1,078,897		14.73	%
S&T Bank	S&T Bank													S&T Bank
Tier 1 leverage	Tier 1 leverage	4.00	%	5.00	%	$	890,488	9.97	%	$	864,127	9.46	%	Tier 1 leverage	4.00	%	5.00	%	$	957,491	10.80	%	$	938,377	10.73	%
Common equity tier 1 to risk-weighted assets	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	890,488		12.39	%	864,127		12.09	%	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	957,491		13.07	%	938,377		12.81	%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	890,488		12.39	%	864,127		12.09	%	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	957,491		13.07	%	938,377		12.81	%
Total capital to risk-weighted assets	Total capital to risk-weighted assets	8.00	%	10.00	%	997,622		13.89	%	961,762		13.45	%	Total capital to risk-weighted assets	8.00	%	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, 2022				December 31, 2021							March 31, 2023										December 31, 2022
		1 - 12 Months	13 - 24 Months	% Change in EVE		1 - 12 Months		13 - 24 Months			% Change in EVE		1 - 12 Months				13 - 24 Months			% Change in EVE			1 - 12 Months			13 - 24 Months			% Change in EVE
Change in Interest Rate (basis points)	Change in Interest Rate (basis points)	% Change in Pretax Net Interest Income	% Change in Pretax Net Interest Income		% Change in Pretax Net Interest Income		% Change in Pretax Net Interest Income		Change in Interest Rate (basis points)	% Change in Pretax Net Interest Income				% Change in Pretax Net Interest Income				% Change in Pretax Net Interest Income					% Change in Pretax Net Interest Income
400	400	30.1	36.4		(4.0)		30.4		40.3				18.4		400	14.0			19.6			(13.6)			14.6			22.0			(13.2)
300	300	22.6	27.5	1.1		22.5		30.0			19.9	300	10.4				14.5				(9.1)			11.0			16.6			(8.5)
200	200	15.2	18.5	4.0		14.9		20.2			18.4	200	6.8				9.5			(5.1)			7.4			11.2			(4.6)
100	100	7.6	9.4	3.9		7.0		9.9			11.9	100	3.4				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 decline~~when 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, 2022~~March 31, 2023 to December 31, ~~2021. We benefit less in the increasing rate scenarios~~2022 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 ~~scenario~~scenarios when comparing ~~June 30, 2022~~March 31, 2023 to December 31, ~~2021. The EVE changes are~~2022 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

~~Table of Contents~~

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

Item 1A. Risk Factors

There have been no material changes to the risk factors that we have previously disclosed in Part I, Item 1A – “Risk Factors” in our ~~2021~~2022 Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the SEC on February ~~28, 2022~~24, 2023 other than the risks described below.

~~Russia’s invasion~~

Table of ~~Ukraine has created~~Contents

S&T BANCORP, INC. AND SUBSIDIARIES

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 ~~economic~~depositor 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 ~~disruptions~~services 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 affect~~have 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. In~~Furthermore, 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 ~~lead~~investments may be threatened due to ~~instability~~market-wide liquidity problems. While we maintain liquidity primarily through customer deposits and ~~lack of~~through 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 result~~value of ~~any diplomatic negotiations remains uncertain, these consequences, including those we cannot yet predict, may cause~~investment 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 ~~price~~financial 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 ~~second~~first quarter of ~~2022:~~2023:

Period Total number of shares purchased Average price paid per share
Total number of shares purchased as part of publicly announced plan(1)
Approximate dollar value of shares that may yet be purchased under the plan
$37,441,683
04/01/2022 - 04/30/2022 — $— — 37,441,683
05/01/2022 - 05/31/2022 — — — 37,441,683
06/01/2022 - 06/30/2022 151,220 27.4611 151,220 33,289,015
Total 151,220 $27.4611 151,220 $33,289,015


Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plan(1)	Approximate dollar value of shares that may yet be purchased under the plan
				$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 ~~the~~its $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 time~~shares 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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S&T BANCORP, INC. AND SUBSIDIARIES

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

~~Table of Contents~~

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

Item 6. Exhibits





~~2.1~~	Agreement and Plan of Merger, dated June 5, 2019, by and between DNB Financial Corporation and S&T Bancorp, Inc. Filed as Exhibit 2.1 to S&T Bancorp, Inc. Current Report on Form 8-K filed on June 5, 2019, and incorporated herein by reference.
~~10.1~~	Severance Agreement dated June 7, 2022 by and between George Basara and S&T Bancorp, Inc. Filed as Exhibit 10.1 to S&T Bancorp, Inc. Current Report on Form 8-K filed on June 10, 2022, and incorporated herein by reference.*
~~10.2~~	Form of Restricted Stock Unit Award Agreement - LTIP.*	~~Filed herewith.~~
~~10.3~~	Form of Restricted Stock Unit Award Agreement - Non-LTIP.*	~~Filed herewith.~~
~~10.4~~	Form of Restricted Stock Unit Award Agreement - Directors.*	~~Filed herewith.~~
31.1	Rule 13a-14(a) Certification of the Chief Executive ~~Officer.~~Officer
31.2	Rule 13a-14(a) Certification of the Chief Financial ~~Officer.~~Officer
32	Rule 13a-14(b) Certification of the Chief Executive Officer and Chief Financial ~~Officer.~~Officer
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)
* Management Contract or Compensatory Plan or Arrangement

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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, 2022~~May 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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		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets	2

	Condensed Consolidated Statements of Comprehensive Income (Loss)	3

	Consolidated Statements of Changes in Shareholders' Equity	4

	Condensed Consolidated Statements of Cash Flows	65

	Notes to Consolidated Financial Statements	76

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3228

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4944

Item 4.	Controls and Procedures	5045

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	5045

Item 1A.	Risk Factors	5145

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5146

Item 3.	Defaults Upon Senior Securities	5147

Item 4.	Mine Safety Disclosures	5147

Item 5.	Other Information	5147

Item 6.	Exhibits	5247

	Signatures	5348


	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


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