UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)


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

For the quarterly period ended March 31, ~~2021~~2022


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

For the transition period from to

Commission file number 0-12508

______________________________________

S&T BANCORP INC.

(Exact name of registrant as specified in its charter)

______________________________________

Pennsylvania

25-1434426

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

800 Philadelphia Street

Indiana

15701

(Address of principal executive offices)

(zip code)

800-325-2265

(Registrant’s telephone number, including area code)

Not Applicable

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

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


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

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

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

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


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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Common Stock, $2.50 Par Value - ~~39,360,750~~39,311,317 shares as of April ~~30, 2021~~29, 2022

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

INDEX

S&T BANCORP, INC. AND SUBSIDIARIES


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets ~~- March 31, 2021 and December 31, 2020~~	2

	Condensed Consolidated Statements of Comprehensive Income ~~- Three Months Ended March 31, 2021 and 2020~~(Loss)	3

	Consolidated Statements of Changes in Shareholders' Equity ~~- Three Ended March 31, 2021 and 2020~~	4

	Condensed Consolidated Statements of Cash Flows ~~- Three Months Ended March 31, 2021 and 2020~~	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3730

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5344

Item 4.	Controls and Procedures	5545

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	5545

Item 1A.	Risk Factors	5545

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5646

Item 3.	Defaults Upon Senior Securities	5646

Item 4.	Mine Safety Disclosures	5746

Item 5.	Other Information	5746

Item 6.	Exhibits	5747

	Signatures	5848

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


		March 31, 2021			December 31, 2020				March 31, 2022			December 31, 2021
( in thousands, except share and per share data)		(Unaudited)			(Audited)
(in thousands, except share and per share data)								(in thousands, except share and per share data)	(Unaudited)			(Audited)
ASSETS	ASSETS							ASSETS
Cash and due from banks, including interest-bearing deposits of $601,134 and $158,903 at March 31, 2021 and December 31, 2020			$	671,429		$	229,666
Cash and due from banks, including interest-bearing deposits of $751,378 and $857,192 at March 31, 2022 and December 31, 2021								Cash and due from banks, including interest-bearing deposits of $751,378 and $857,192 at March 31, 2022 and December 31, 2021		$	823,757		$	922,215
Securities, at fair value	Securities, at fair value		817,299			773,693		Securities, at fair value		1,028,218			910,793
Loans held for sale	Loans held for sale		12,794			18,528		Loans held for sale		1,346			1,522
Portfolio loans, net of unearned income	Portfolio loans, net of unearned income		7,183,168			7,225,860		Portfolio loans, net of unearned income		6,963,911			6,999,990
Allowance for credit losses on loans			(115,101)			(117,612)
Allowance for credit losses								Allowance for credit losses		(99,915)			(98,576)
Portfolio loans, net	Portfolio loans, net		7,068,067			7,108,248		Portfolio loans, net		6,863,996			6,901,414
Bank owned life insurance	Bank owned life insurance		82,677			82,303		Bank owned life insurance		84,093			83,685
Premises and equipment, net	Premises and equipment, net		54,720			55,614		Premises and equipment, net		51,671			52,632
Federal Home Loan Bank and other restricted stock, at cost	Federal Home Loan Bank and other restricted stock, at cost		12,199			13,030		Federal Home Loan Bank and other restricted stock, at cost		9,349			9,519
Goodwill	Goodwill		373,424			373,424		Goodwill		373,424			373,424
Other intangible assets, net	Other intangible assets, net		8,211			8,675		Other intangible assets, net		6,497			6,895
Other assets	Other assets		228,159			304,716		Other assets		189,930			226,430
Total Assets	Total Assets		$	9,328,979		$	8,967,897	Total Assets		$	9,432,281		$	9,488,529
LIABILITIES	LIABILITIES							LIABILITIES
Deposits:	Deposits:							Deposits:
Noninterest-bearing demand	Noninterest-bearing demand		$	2,539,594		$	2,261,994	Noninterest-bearing demand		$	2,740,315		$	2,748,586
Interest-bearing demand	Interest-bearing demand		976,225			864,510		Interest-bearing demand		1,070,656			979,133
Money market	Money market		2,002,857			1,937,063		Money market		1,992,916			2,070,579
Savings	Savings		1,036,927			969,508		Savings		1,117,985			1,110,155
Certificates of deposit	Certificates of deposit		1,320,425			1,387,463		Certificates of deposit		1,038,586			1,088,071

Total Deposits	Total Deposits		7,876,028			7,420,538		Total Deposits		7,960,458			7,996,524
Securities sold under repurchase agreements	Securities sold under repurchase agreements		67,417			65,163		Securities sold under repurchase agreements		70,112			84,491
Short-term borrowings			0			75,000

Long-term borrowings	Long-term borrowings		23,282			23,681		Long-term borrowings		22,171			22,430
Junior subordinated debt securities	Junior subordinated debt securities		64,097			64,083		Junior subordinated debt securities		54,408			54,393

Other liabilities	Other liabilities		129,877			164,721		Other liabilities		140,182			124,237
Total Liabilities	Total Liabilities		8,160,701			7,813,186		Total Liabilities		8,247,331			8,282,075
SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY							SHAREHOLDERS’ EQUITY
Common stock ($2.50 par value) Authorized—50,000,000 shares Issued—41,449,444 shares at March 31, 2021 and December 31, 2020 Outstanding—39,268,359 shares at March 31, 2021 and 39,298,007 shares at December 31, 2020			103,623			103,623
Common stock ($2.50 par value) Authorized—50,000,000 shares Issued—41,449,444 shares at March 31, 2022 and December 31, 2021 Outstanding—39,351,688 shares at March 31, 2022 and 39,351,194 shares at December 31, 2021								Common stock ($2.50 par value) Authorized—50,000,000 shares Issued—41,449,444 shares at March 31, 2022 and December 31, 2021 Outstanding—39,351,688 shares at March 31, 2022 and 39,351,194 shares at December 31, 2021		103,623			103,623
Additional paid-in capital	Additional paid-in capital		401,353			400,668		Additional paid-in capital		403,841			403,095
Retained earnings	Retained earnings		731,718			710,061		Retained earnings		791,345			773,659
Accumulated other comprehensive income			1,061			8,971
Treasury stock — 2,181,085 shares at March 31, 2021 and 2,151,437 shares at December 31, 2020, at cost			(69,477)			(68,612)
Accumulated other comprehensive loss								Accumulated other comprehensive loss		(47,043)			(7,090)
Treasury stock — 2,097,756 shares at March 31, 2022 and 2,098,250 shares at December 31, 2021, at cost								Treasury stock — 2,097,756 shares at March 31, 2022 and 2,098,250 shares at December 31, 2021, at cost		(66,816)			(66,833)
Total Shareholders’ Equity	Total Shareholders’ Equity		1,168,278			1,154,711		Total Shareholders’ Equity		1,184,950			1,206,454
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity		$	9,328,979		$	8,967,897	Total Liabilities and Shareholders’ Equity		$	9,432,281		$	9,488,529

See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


		Three months ended March 31,							Three Months Ended March 31,
(dollars in thousands, except per share data)	(dollars in thousands, except per share data)	2021			2020			(dollars in thousands, except per share data)			2022	2021
INTEREST AND DIVIDEND INCOME	INTEREST AND DIVIDEND INCOME									INTEREST AND DIVIDEND INCOME
Loans, including fees	Loans, including fees		$	70,232		$	82,051			Loans, including fees			$	64,593	$	70,232
Investment Securities:	Investment Securities:									Investment Securities:
Taxable	Taxable		3,563			4,215				Taxable			4,936		3,563
Tax-exempt	Tax-exempt		813			870				Tax-exempt			482		813
Dividends	Dividends		173			453				Dividends			98		173
Total Interest and Dividend Income	Total Interest and Dividend Income		74,781			87,589				Total Interest and Dividend Income			70,109		74,781
INTEREST EXPENSE	INTEREST EXPENSE									INTEREST EXPENSE
Deposits	Deposits		3,481			15,338				Deposits			1,853		3,481
Borrowings and junior subordinated debt securities	Borrowings and junior subordinated debt securities		641			2,215				Borrowings and junior subordinated debt securities			523		641
Total Interest Expense	Total Interest Expense		4,122			17,553				Total Interest Expense			2,376		4,122
NET INTEREST INCOME	NET INTEREST INCOME		70,659			70,036				NET INTEREST INCOME			67,733		70,659
Provision for credit losses	Provision for credit losses		3,137			20,050				Provision for credit losses			(512)		3,137
Net Interest Income After Provision for Credit Losses	Net Interest Income After Provision for Credit Losses		67,522			49,986				Net Interest Income After Provision for Credit Losses			68,245		67,522
NONINTEREST INCOME	NONINTEREST INCOME									NONINTEREST INCOME
Net gain on sale of securities			0			0
Mortgage banking			4,310			1,236

Debit and credit card	Debit and credit card		4,162			3,482				Debit and credit card			5,063		4,162
Service charges on deposit accounts	Service charges on deposit accounts		3,474			4,008				Service charges on deposit accounts			3,974		3,474
Wealth management	Wealth management		2,944			2,362				Wealth management			3,242		2,944
Commercial loan swap income			95			2,484
Mortgage banking										Mortgage banking			1,015		4,310

Other	Other		2,252			(1,169)				Other			1,932		2,346
Total Noninterest Income	Total Noninterest Income		17,236			12,403				Total Noninterest Income			15,226		17,236
NONINTEREST EXPENSE	NONINTEREST EXPENSE									NONINTEREST EXPENSE
Salaries and employee benefits	Salaries and employee benefits		23,327			21,335				Salaries and employee benefits			23,712		23,327
Data processing and information technology	Data processing and information technology		4,225			3,868				Data processing and information technology			4,435		4,225
Occupancy	Occupancy		3,827			3,765				Occupancy			3,882		3,827
Furniture, equipment and software	Furniture, equipment and software		2,640			2,519				Furniture, equipment and software			2,777		2,640
Professional services and legal	Professional services and legal		1,531			1,048				Professional services and legal			1,949		1,531
Other Taxes			1,436			1,600
Other taxes										Other taxes			1,537		1,436
Marketing	Marketing		1,322			1,111				Marketing			1,361		1,322
FDIC Insurance			1,046			770
Merger related expenses			0			2,342
FDIC insurance										FDIC insurance			937		1,046

Other	Other		6,226			8,033				Other			6,824		6,226
Total Noninterest Expense	Total Noninterest Expense		45,580			46,391				Total Noninterest Expense			47,414		45,580
Income Before Taxes	Income Before Taxes		39,178			15,998				Income Before Taxes			36,057		39,178
Income tax expense	Income tax expense		7,276			2,767				Income tax expense			6,914		7,276
Net Income	Net Income		$	31,902		$	13,231			Net Income			$	29,143	$	31,902
Earnings per share—basic	Earnings per share—basic		$	0.81		$	0.34			Earnings per share—basic			$	0.74	$	0.81
Earnings per share—diluted	Earnings per share—diluted		$	0.81		$	0.34			Earnings per share—diluted			$	0.74	$	0.81
Dividends declared per share	Dividends declared per share		$	0.28		$	0.28			Dividends declared per share			$	0.29	$	0.28
Comprehensive Income			$	23,992		$	30,573
Comprehensive Income (Loss)										Comprehensive Income (Loss)			$	(10,810)	$	23,992

See Notes to Consolidated Financial Statements

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)


		For the three months ended March 31, 2020
(dollars in thousands, except share and per share data)		Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Total
Balance at January 1, 2020			$	103,623		$	399,944		$	761,083		$	(11,670)		$	(60,982)		$	1,191,998
Net income for the three months ended March 31, 2020			—			—			13,231			—			—			13,231
Other comprehensive income, net of tax			—			—			—			17,342			—			17,342
Adoption of accounting standard - credit losses			—			—			(22,590)			—			—			(22,590)
Cash dividends declared ($0.28 per share)			—			—			(11,051)			—			—			(11,051)
Forfeitures of restricted stock, net of issuances (26,739 shares, net of issuance of 3,290 shares)			—			—			53			—			(616)			(563)

Repurchase of common stock (411,430 shares)			—			—			—			—			(12,559)			(12,559)
Recognition of restricted stock compensation expense			—			443			—			—			—			443
Balance at March 31, 2020			$	103,623		$	400,387		$	740,726		$	5,672		$	(74,157)		$	1,176,251
See Notes to Consolidated Financial Statements
		For the three months ended March 31, 2021																			For the Three Months Ended March 31, 2021
(dollars in thousands, except share and per share data)	(dollars in thousands, except share and per share data)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total			(dollars in thousands, except share and per share data)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total
Balance at January 1, 2021	Balance at January 1, 2021		$	103,623		$	400,668		$	710,061		$	8,971		$	(68,612)		$	1,154,711	Balance at January 1, 2021		$	103,623		$	400,668		$	710,061		$	8,971		$	(68,612)		$	1,154,711
Net income for the three months ended March 31, 2021	Net income for the three months ended March 31, 2021		—			—			31,902			—			—			31,902		Net income for the three months ended March 31, 2021		—			—			31,902			—			—			31,902
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax		—			—			—			(7,910)			—			(7,910)		Other comprehensive loss, net of tax		—			—			—			(7,910)			—			(7,910)

Cash dividends declared ($0.28 per share)	Cash dividends declared ($0.28 per share)		—			—			(10,975)			—			—			(10,975)		Cash dividends declared ($0.28 per share)		—			—			(10,975)			—			—			(10,975)
Forfeitures of restricted stock, net of issuances (30,840 shares, net of issuance of 1,192 shares)			—			—			730			—			(865)			(135)
Forfeitures of restricted stock, net of issuances (30,840 shares, net of issuance of 1,192)																				Forfeitures of restricted stock, net of issuances (30,840 shares, net of issuance of 1,192)		—			—			730			—			(865)			(135)

Recognition of restricted stock compensation expense	Recognition of restricted stock compensation expense		—			685			—			—			—			685		Recognition of restricted stock compensation expense		—			685			—			—			—			685
Balance at March 31, 2021	Balance at March 31, 2021		$	103,623		$	401,353		$	731,718		$	1,061		$	(69,477)		$	1,168,278	Balance at March 31, 2021		$	103,623		$	401,353		$	731,718		$	1,061		$	(69,477)		$	1,168,278
See Notes to Consolidated Financial Statements	See Notes to Consolidated Financial Statements																			See Notes to Consolidated Financial Statements
																					For the Three Months Ended March 31, 2022
(dollars in thousands, except share and per share data)																				(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																				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																				Net income for the three months ended March 31, 2022		—			—			29,143			—			—			29,143
Other comprehensive loss, net of tax																				Other comprehensive loss, net of tax		—			—			—			(39,953)			—			(39,953)

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

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

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Three Months Ended March 31,						Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)		2021		2020		(dollars in thousands)		2022		2021
OPERATING ACTIVITIES							OPERATING ACTIVITIES

Net Cash Provided by (Used in) Operating Activities			$	90,145	$	(59,961)

Net Cash Provided by Operating Activities							Net Cash Provided by Operating Activities		$	86,596	$	90,000
INVESTING ACTIVITIES	INVESTING ACTIVITIES						INVESTING ACTIVITIES
Purchases of securities	Purchases of securities		(89,038)		(30,292)		Purchases of securities		(211,265)		(89,038)
Proceeds from maturities, prepayments and calls of securities	Proceeds from maturities, prepayments and calls of securities		34,715		33,869		Proceeds from maturities, prepayments and calls of securities		44,025		34,715

Net proceeds from sales (purchases of) of Federal Home Loan Bank stock			831		(5,277)
Net decrease (increase) in loans			33,937		(122,507)
Proceeds from sale of loans not originated for resale			640		0
Proceeds from redemption of FHLB stock							Proceeds from redemption of FHLB stock		5,818		3,988
Purchases of FHLB stock							Purchases of FHLB stock		(5,648)		(3,157)
Net decrease in loans							Net decrease in loans		38,449		33,937
Proceeds from sale of portfolio loans							Proceeds from sale of portfolio loans		—		640
Proceeds from sale of other real estate owned							Proceeds from sale of other real estate owned		6,285		145
Purchases of premises and equipment	Purchases of premises and equipment		(811)		(1,429)		Purchases of premises and equipment		(660)		(811)
Proceeds from the sale of premises and equipment	Proceeds from the sale of premises and equipment		74		0		Proceeds from the sale of premises and equipment		56		74

Net Cash Used in Investing Activities	Net Cash Used in Investing Activities		(19,652)		(125,636)		Net Cash Used in Investing Activities		(122,940)		(19,507)
FINANCING ACTIVITIES	FINANCING ACTIVITIES						FINANCING ACTIVITIES
Net increase in core deposits	Net increase in core deposits		522,528		28,684		Net increase in core deposits		13,419		522,528
Net decrease in certificates of deposit	Net decrease in certificates of deposit		(67,003)		(7,042)		Net decrease in certificates of deposit		(49,465)		(67,003)
Net increase in securities sold under repurchase agreements			2,254		49,756
Net decrease (increase) in short-term borrowings			(75,000)		128,921
Net (decrease) increase in securities sold under repurchase agreements							Net (decrease) increase in securities sold under repurchase agreements		(14,379)		2,254
Net decrease in short-term borrowings							Net decrease in short-term borrowings		—		(75,000)

Repayments on long-term borrowings	Repayments on long-term borrowings		(399)		(688)		Repayments on long-term borrowings		(259)		(399)

Treasury shares issued-net	Treasury shares issued-net		(135)		(563)		Treasury shares issued-net		(56)		(135)

Cash dividends paid to common shareholders	Cash dividends paid to common shareholders		(10,975)		(11,051)		Cash dividends paid to common shareholders		(11,374)		(10,975)
Repurchase of common stock			0		(12,559)

Net Cash Provided by Financing Activities			371,270		175,458
Net increase (decrease) in cash and cash equivalents			441,763		(10,139)

Net Cash (Used in) Provided by Financing Activities							Net Cash (Used in) Provided by Financing Activities		(62,114)		371,270
Net (decrease) increase in cash and cash equivalents							Net (decrease) increase in cash and cash equivalents		(98,458)		441,763
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period		229,666		197,823		Cash and cash equivalents at beginning of period		922,215		229,666
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period		$	671,429	$	187,684	Cash and Cash Equivalents at End of Period		$	823,757	$	671,429

Supplemental Disclosures	Supplemental Disclosures						Supplemental Disclosures
Loans transferred to held for sale	Loans transferred to held for sale		$	2,798	$	0	Loans transferred to held for sale		$	—	$	2,798

Leased right-of-use operating assets and lease liabilities			$	0	$	91
Interest paid			$	5,368	$	17,795
Income taxes paid, net of refunds			$	197	$	210

Cash paid for interest							Cash paid for interest		$	2,507	$	5,368
Cash paid for income taxes, net of refunds							Cash paid for income taxes, net of refunds		$	75	$	197

Transfers of loans to other real estate owned	Transfers of loans to other real estate owned		$	77	$	110	Transfers of loans to other real estate owned		$	—	$	77

See Notes to Consolidated Financial Statements

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Principles of Consolidation

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

Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements of S&T have been prepared in accordance with generally accepted accounting principles, or GAAP, in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission, or SEC, on ~~March 1, 2021.~~February 28, 2022. In the opinion of management, the accompanying interim financial information reflects all adjustments, consisting of normal recurring adjustments, necessary to present fairly our financial position and the results of operations for each of the interim periods presented. Results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any future period.

On June 5, 2019 we entered into an agreement to acquire DNB Financial Corporation, or DNB, and the transaction was completed on November 30, 2019. Refer to Note 2, Business Combinations in our Annual Report on Form 10-K for the year ended December 31, 2020 for further details on the merger.

Reclassification

Amounts in prior period financial statements and footnotes are reclassified whenever necessary to conform to the current period presentation. Reclassifications had no effect on our results of operations or financial condition.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

~~Recently Adopted~~ Accounting ~~Standards Updates, or ASU or Update~~

~~Income Taxes (Topic 740): Simplifying the Accounting~~Policy for ~~Income Taxes~~

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptionsDerivative Instruments and improve the consistent application of GAAP by clarifying and amending other existing guidance. We adopted this ASU on January 1, 2021. The amendments in this ASU did not impact our Consolidated Balance Sheets or Consolidated Statements of Comprehensive Income.Hedging Activities

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

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

Refer to our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022, for 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 ~~Issued But Not Yet Adopted~~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. ~~Modified contracts that meet certain scope guidance are eligible for relief from the modification accounting requirements in GAAP.~~ The optional guidance generally allows for the modified contract to be accounted for as a continuation of the existing contract and does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Addendum (Topic 848) which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. We adopted ASU 2020-04 and ASU 2021-01 on January 1, 2022. We are utilizing the LIBOR transition relief as contract modifications are made during the course of the reference rate reform transition period. ASU 2020-04 and ASU 2021-01 did not have a material impact on our consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

Accounting Policy for Troubled Debt Restructurings and Vintage Disclosure

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

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

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

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods therein. We are evaluating the impact of this ASU, ~~and we~~but do not expect ~~the amendments in this ASU~~it to ~~materially~~have a material impact on our ~~Consolidated Balance Sheets or Consolidated Statements of Comprehensive Income.~~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. ~~For~~The two-class method was used to determine earnings per share for the three months ended March 31, ~~2021~~2022 and ~~2020, diluted EPS was reported using the two-class method.~~2021. The following table reconciles the numerators and denominators of basic and diluted earnings per share calculations for the periods ~~presented.~~presented:


		Three months ended March 31,						Three Months Ended March 31,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2021			2020				(in thousands, except share and per share data)	2022		2021
Numerator for Earnings per Share—Basic:
Numerator for Earnings per Share—Basic and Diluted:											Numerator for Earnings per Share—Basic and Diluted:
Net income	Net income		$	31,902		$	13,231				Net income	$	29,143	$	31,902
Less: Income allocated to participating shares	Less: Income allocated to participating shares		141			29					Less: Income allocated to participating shares	109		141
Net Income Allocated to Shareholders	Net Income Allocated to Shareholders		$	31,761		$	13,202				Net Income Allocated to Shareholders	$	29,034	$	31,761

Numerator for Earnings per Share—Diluted:
Net income			$	31,902		$	13,231
Net Income Available to Shareholders			$	31,902		$	13,231

Denominators for Earnings per Share:
Weighted Average Shares Outstanding—Basic			39,021,208			39,271,540
Add: Potentially dilutive shares			99,922			108,116
Denominator for Treasury Stock Method—Diluted			39,121,130			39,379,656

Denominator for Earnings per Share - Basic and Diluted:											Denominator for Earnings per Share - Basic and Diluted:
Weighted Average Shares Outstanding—Basic	Weighted Average Shares Outstanding—Basic		39,021,208			39,271,540					Weighted Average Shares Outstanding—Basic	39,073,754		39,021,208
Add: Average participating shares outstanding	Add: Average participating shares outstanding		0			54,398					Add: Average participating shares outstanding	16,179		—
Denominator for Two-Class Method—Diluted	Denominator for Two-Class Method—Diluted		39,021,208			39,325,938					Denominator for Two-Class Method—Diluted	39,089,933		39,021,208

Earnings per share—basic	Earnings per share—basic		$	0.81		$	0.34				Earnings per share—basic	$	0.74	$	0.81
Earnings per share—diluted	Earnings per share—diluted		$	0.81		$	0.34				Earnings per share—diluted	$	0.74	$	0.81

Restricted stock considered anti-dilutive excluded from potentially dilutive shares	Restricted stock considered anti-dilutive excluded from potentially dilutive shares		165			41					Restricted stock considered anti-dilutive excluded from potentially dilutive shares	—		165

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

NOTE 3. FAIR VALUE MEASUREMENTS

We use fair value measurements when recording and disclosing certain financial assets and liabilities. Debt securities, equity securities and derivative financial instruments are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other assets at fair value on a nonrecurring basis, such as loans held for sale, individually assessed loans, other real estate owned, or OREO, and other repossessed assets, mortgage servicing rights, or MSRs, and certain other assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. In determining fair value, we use various valuation approaches, including market, income and cost approaches. The fair value standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability, which are developed based on market data that we have obtained from independent sources. Unobservable inputs reflect our estimates of assumptions that market participants would use in pricing an asset or liability, which are developed based on the best information available in the circumstances.

The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1: valuation is based upon unadjusted quoted market prices for identical instruments traded in active markets.

Level 2: valuation is based upon quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by market data.

Level 3: valuation is derived from other valuation methodologies, including discounted cash flow models and similar techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in determining fair value.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our policy is to recognize transfers between any of the fair value hierarchy levels at the end of the reporting period in which the transfer occurred.

~~The following are descriptions of the valuation methodologies that we use for financial instruments recorded at fair value on either a recurring or nonrecurring basis.~~

~~Recurring Basis~~

~~Available-for-Sale Debt Securities~~

We obtain fair values for debt securities from a third-party pricing service which utilizes several sources for valuing fixed-income securities. We validate prices received from our pricing service through comparison to a secondary pricing service and broker quotes. We review the methodologies of the pricing services which provide us with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of our debt securities. The market valuation sources for debt securities include observable inputs rather than significant unobservable inputs and are classified as Level 2. The service provider utilizes pricing models that vary by asset class and include available trade, bid and other market information. Generally, the methodologies include broker quotes, proprietary models, vast descriptive terms and conditions databases and extensive quality control programs.

~~Equity Securities~~

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

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 3. FAIR VALUE MEASUREMENTS - continued

~~Securities Held~~

There have been no changes in ~~a Deferred Compensation Plan~~

~~We use quoted market prices~~our valuation methodologies during the three months ended March 31, 2022. Refer to ~~determine the fair value~~Note 1 of our ~~equity security assets. These securities are reported at fair value with~~Annual Report on Form 10-K for the gains and losses included in noninterest income in our Consolidated Statements of Comprehensive Income. These assets are held in a deferred compensation plan and are invested in readily quoted mutual funds. Accordingly, these assets are classified as Level 1. Deferred compensation plan assets are reported in other assets in the Consolidated Balance Sheets.

~~Derivative Financial Instruments~~

~~We use derivative instruments, including interest rate swaps~~year ended December 31, 2021 for commercial loans with our customers, interest rate lock commitments and the sale of mortgage loans in the secondary market. We calculate the fair value for derivatives using accepted valuation techniques, including discounted cash flow analysismore information on the ~~expected cash flows of each derivative. Each~~ valuation considers the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, such as interest rate curves and implied volatilities. Accordingly, derivatives are classified as Level 2. We incorporate credit valuation adjustments into the valuation models to appropriately reflect both our own nonperformance risk and the respective counterparties’ nonperformance risk in calculating fair value measurements. In adjusting the fair value of our derivative contractsmethodologies that we use for ~~the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements and collateral postings.~~

~~Nonrecurring Basis~~

~~Loans Held for Sale~~

Loans held for sale consist of 1-4 family residential loans originated for sale in the secondary market and, from time to time, certain loans are transferred from the loan portfolio to loans held for sale, all of which are carried at the lower of cost or fair value. The fair value of 1-4 family residential loans is based on the principal or most advantageous market currently offered for similar loans using observable market data. The fair value of the loans transferred from the loan portfolio is based on the amounts offered for these loans in currently pending sales transactions. Loans held for sale carried at fair value are classified as Level 3.

~~Loans Individually Evaluated~~

Loans that are individually evaluated to determine whether a specific allocation of ACL is needed are reported at fair value. Fair value is determined using the following methods: 1) the present value of expected future cash flows discounted at the loan’s original effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral less estimated selling costs when the loan is collateral dependent and we expect to liquidate the collateral. However, if repayment is expected to come from the operation of the collateral, rather than liquidation, then we do not consider estimated selling costs in determining the fair value of the collateral. Collateral values are generally based upon appraisals by approved, independent state certified appraisers. Appraisals may be discounted based on our historical knowledge, changes in market conditions from the time of appraisal or our knowledge of the borrower and the borrower’s business. Loans carried at fair value are classified as Level 3.

~~OREO and Other Repossessed Assets~~

OREO and other repossessed assets obtained in partial or total satisfaction of a loan are recorded at the lower of recorded investment in the loan or fair value less cost to sell. Subsequent to foreclosure, these assets are carried at the lower of the amount recorded at acquisition date or fair value less cost to sell. Accordingly, it may be necessary to record nonrecurring fair value adjustments. Fair value, when recorded, is generally based upon appraisals by approved, independent state certified appraisers. Appraisals on OREO may be discounted based on our historical knowledge, changes in market conditions from the time of appraisal or other information available to us. OREO and other repossessed assets carried at fair value are classified as Level 3. OREO and other repossessed assets are reported in other assets in the Consolidated Balance Sheets.

~~Table of Contents~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

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

~~Mortgage Servicing Rights~~

MSRs are reported pursuant to the amortization method and evaluated for impairment quarterly by comparing the carrying to the fair value of the MSRs. Fair value of MSRs is determined by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. The expected rate of mortgage loan prepayments is the most significant factor driving the value of MSRs. MSRs are considered impaired if the carrying value exceeds fair value. Since the valuation model includes significant unobservable inputs as listed above, MSRs are classified as Level 3. MSRs are reported in other assets in the Consolidated Balance Sheets and are amortized into mortgage banking income in the Consolidated Statements of Comprehensive Income.

~~Financial Instruments~~

~~In addition to~~ financial instruments recorded at fair value in our financial statements, fair value accounting guidance requires disclosure of the fair value of all of an entity’s assets and liabilities that are considered financial instruments. The majority of our assets and liabilities are considered financial instruments. Many of these instruments lack an available trading market as characterized byon a ~~willing buyer and a willing seller engaged in an exchange transaction. Also, it is our general practice and intent to hold our financial instruments to maturity and to not engage in trading~~recurring or sales activities with respect to such financial instruments. For fair value disclosure purposes, we substantially utilize the fair value measurement criteria as required and explained above. In cases where quoted fair values are not available, we use present value methods to determine the fair value of our financial instruments.

~~Cash and Cash Equivalents~~

~~The carrying amounts reported in the Consolidated Balance Sheets for cash and due from banks, including interest-bearing deposits, approximate fair value.~~

~~Loans~~

Our methodology to fair value loans includes an exit price notion. The fair value of variable rate loans that may reprice frequently at short-term market rates is based on carrying values adjusted for liquidity and credit risk. The fair value of variable rate loans that reprice at intervals of one year or longer, such as adjustable rate mortgage products, is estimated using discounted cash flow analyses that utilize interest rates currently being offered for similar loans and adjusted for liquidity and credit risk. The fair value of fixed rate loans is estimated using a discounted cash flow analysis that utilizes interest rates currently being offered for similar loans adjusted for liquidity and credit risk.

~~Bank Owned Life Insurance~~

~~Fair value approximates net cash surrender value of bank owned life insurance, or BOLI.~~

~~Federal Home Loan Bank, or FHLB, and Other Restricted Stock~~

~~It is not practical to determine the fair value of our FHLB and other restricted stock due to the restrictions placed on the transferability of these stocks; it is presented at carrying value.~~

~~Collateral Receivable~~

~~The carrying amount included in other assets on our Consolidated Balance Sheets approximates fair value.~~

~~Deposits~~

~~The fair values disclosed for deposits without defined maturities (e.g.~~, noninterest and interest-bearing demand, money market and savings accounts) are by definition equal to the amounts payable on demand. The carrying amounts for variable rate, fixed-term time deposits approximate their fair values. Estimated fair values for fixed rate and other time deposits are based on discounted cash flow analysis using interest rates currently offered for time deposits with similar terms. The carrying amount of accrued interest approximates fair value.

~~Table of Contents~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

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

~~Short-Term Borrowings~~

~~The carrying amounts of securities sold under repurchase agreements, or REPOs, and other short-term borrowings approximate their fair values.~~

~~Long-Term Borrowings~~

The fair values disclosed for fixed rate long-term borrowings are determined by discounting their contractual cash flows using current interest rates for long-term borrowings of similar remaining maturities. The carrying amounts of variable rate long-term borrowings approximate their fair values.

~~Junior Subordinated Debt Securities~~

~~The interest rate on the variable rate junior subordinated debt securities is reset quarterly; therefore, the carrying values approximate their fair values.~~

~~Loan Commitments and Standby Letters of Credit~~

Off-balance sheet financial instruments consist of commitments to extend credit and letters of credit. Except for interest rate lock commitments, estimates of the fair value of these off-balance sheet items are not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

~~Other~~

~~Estimates of fair value are not made for items that are not defined as financial instruments, including such items as our core deposit intangibles and the value of our trust operations.~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

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

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 ~~March 31, 2021 and December 31, 2020.~~the dates presented:

March 31, 2021
(dollars in thousands) Level 1 Level 2 Level 3 Total
ASSETS
Available-for-sale debt securities:
U.S. Treasury securities $ 0 $ 63,268 $ 0 $ 63,268
Obligations of U.S. government corporations and agencies 0 82,028 0 82,028
Collateralized mortgage obligations of U.S. government corporations and agencies 0 217,916 0 217,916
Residential mortgage-backed securities of U.S. government corporations and agencies 0 63,911 0 63,911
Commercial mortgage-backed securities of U.S. government corporations and agencies 0 277,253 0 277,253
Corporate obligations 0 2,002 0 2,002
Obligations of states and political subdivisions 0 107,505 0 107,505
Total Available-for-sale Debt Securities 0 813,883 0 813,883
Marketable equity securities 3,328 88 0 3,416
Total Securities 3,328 813,971 0 817,299
Securities held in a deferred compensation plan 7,178 0 0 7,178
Derivative financial assets:
Interest rate swaps 0 40,415 0 40,415
Interest rate lock commitments 0 0 1,509 1,509
Forward sale contracts 0 0 226 226
Total Assets $ 10,506 $ 854,386 $ 1,735 $ 866,627
LIABILITIES
Derivative financial liabilities:
Interest rate swaps $ 0 $ 40,818 $ — $ 40,818
Total Liabilities $ 0 $ 40,818 $ 0 $ 40,818


		December 31, 2020									March 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	$	0	$	10,282	$	0	$	10,282	U.S. Treasury securities	$	129,994	$	—	$	—	$	129,994
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	0		82,904		0		82,904		Obligations of U.S. government corporations and agencies	—		58,493		—		58,493
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	0		209,296		0		209,296		Collateralized mortgage obligations of U.S. government corporations and agencies	—		385,602		—		385,602
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	0		67,778		0		67,778		Residential mortgage-backed securities of U.S. government corporations and agencies	—		50,446		—		50,446
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	0		273,681		0		273,681		Commercial mortgage-backed securities of U.S. government corporations and agencies	—		330,811		—		330,811
Corporate obligations	Corporate obligations	0		2,025		0		2,025		Corporate obligations	—		500		—		500
Obligations of states and political subdivisions	Obligations of states and political subdivisions	0		124,427		0		124,427		Obligations of states and political subdivisions	—		71,234		—		71,234
Total Available-for-sale Debt Securities	Total Available-for-sale Debt Securities	0		770,393		0		770,393		Total Available-for-sale Debt Securities	129,994		897,086		—		1,027,080
Marketable equity securities	Marketable equity securities	3,228		72		0		3,300		Marketable equity securities	1,060		78		—		1,138
Total Securities	Total Securities	3,228		770,465		0		773,693		Total Securities	131,054		897,164		—		1,028,218
Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	6,794		0		0		6,794		Securities held in a deferred compensation plan	8,888		—		—		8,888
Derivative financial assets:	Derivative financial assets:									Derivative financial assets:
Interest rate swaps		0		78,319		0		78,319
Interest rate swaps - commercial loans										Interest rate swaps - commercial loans	—		29,056		—		29,056
Interest rate lock commitments	Interest rate lock commitments	0		0		2,900		2,900		Interest rate lock commitments	—		—		185		185

Forward sale contracts - mortgage loans										Forward sale contracts - mortgage loans	—		—		192		192
Interest rate swaps - cash flow hedge										Interest rate swaps - cash flow hedge	—		135		—		135
Total Assets	Total Assets	$	10,022	$	848,784	$	2,900	$	861,706	Total Assets	$	139,942	$	926,355	$	377	$	1,066,674
LIABILITIES	LIABILITIES									LIABILITIES
Derivative financial liabilities:	Derivative financial liabilities:									Derivative financial liabilities:
Interest rate swaps		$	0	$	79,033	$	0	$	79,033
Forward sale contracts		0		385		0		385
Interest rate swaps - commercial loans										Interest rate swaps - commercial loans	$	—	$	29,092	$	—	$	29,092

Interest rate swaps - cash flow hedge										Interest rate swaps - cash flow hedge	—		2,600		—		2,600
Total Liabilities	Total Liabilities	$	0	$	79,418	$	0	$	79,418	Total Liabilities	$	—	$	31,692	$	—	$	31,692

139

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 3. FAIR VALUE MEASUREMENTS - continued

There were no transfers between Level 1, Level 2 and Level 3 for the three months ended March 31, 2021. Interest rate lock commitments to borrowers were transferred from Level 2 to Level 3 during the year ended December 31, 2020 due to pull-through factors being a significant unobservable input.


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

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



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

Assets Recorded at Fair Value on a Nonrecurring Basis

We may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. Nonrecurring assets are recorded at the lower of cost or fair value in our consolidated financial statements. There were 0no liabilities measured at fair value on a nonrecurring basis at either March 31, ~~2021~~2022 or December 31, ~~2020.~~2021.

For Level 3 assets measured at fair value on a nonrecurring basis as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the significant unobservable inputs used in the fair value measurements were as follows:

March 31, 2021 Valuation Technique Significant Unobservable Inputs Range
Weighted Average
(1) (2) (3)
(dollars in thousands)
Loans individually evaluated $ 78,186 Collateral method Appraisal adjustment 0% - 47% 16.91%
Other real estate owned 1,563 Collateral method Costs to sell 4% - 7.00% 5.06%
Mortgage servicing rights 6,590 Discounted cash flow method Discount rate 9.02% - 13.77% 9.40%
Constant prepayment rates 9.24% - 12.54% 11.08%
Loans held for sale 2,798 Contractual agreement None NA NA
Total Assets $ 89,137

December 31, 2020 Valuation Technique Significant Unobservable Inputs Range
Weighted Average
(1) (2) (3)
(dollars in thousands)
Loans individually evaluated $ 67,402 Collateral method Appraisal adjustment 0% - 47% 16.90%
Other real estate owned 1,953 Collateral method Costs to sell 4% - 7.00% 4.92%
Mortgage servicing rights 4,976 Discounted cash flow method Discount rate 9.24% - 12.55% 9.42%
Constant prepayment rates 8.82% - 14.58% 13.37%
Loans held for sale 586 Contractual agreement None NA NA
Total Assets $ 74,917
NA - not applicable
(1) Weighted averages for loans held for investment were weighted by loan amounts.
(2) Weighted averages for other real estate owned were weighted by OREO balances.
(3) Weighted averages for mortgage services rights discount rate and prepayment rates are based on note rate tranches and voluntary constant prepayment rates.


	March 31, 2022		Valuation Technique	Significant Unobservable Inputs	Range			Weighted Average (1)
(dollars in thousands)
Loans individually evaluated	$	5,919	Collateral method	Appraisal adjustment	0%	-	10.00%	0.96%




Total Assets	$	5,919

(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.

1410

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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 ~~March 31, 2021 and December 31, 2020 are presented in~~ the ~~following tables:~~dates presented:


	Carrying Value(1)		Fair Value Measurements at March 31, 2022
(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits	$	823,757	$	823,757	$	823,757	$	—	$	—
Securities	1,028,218		1,028,218		131,054		897,164		—
Loans held for sale	1,346		1,346		—		—		1,346
Portfolio loans, net	6,863,996		6,671,212		—		—		6,671,212
Collateral receivable	—		—		—		—		—
Securities held in a deferred compensation plan	8,888		8,888		8,888		—		—
Mortgage servicing rights	7,789		9,791		—		—		9,791
Interest rate swaps - commercial loans	29,056		29,056		—		29,056		—
Interest rate swaps - cash flow hedge	135		135		—		135		—
Interest rate lock commitments	185		185		—		—		185
Forward sale contracts	192		192		—		—		192
LIABILITIES
Deposits	$	7,960,458	$	7,947,434	$	6,921,872	$	1,025,562	$	—
Collateral payable	23,501		23,501		23,501		—		—
Securities sold under repurchase agreements	70,112		70,112		70,112		—		—

Long-term borrowings	22,172		21,954		4,249		17,705		—
Junior subordinated debt securities	54,408		54,408		54,408		—		—
Interest rate swaps - commercial loans	29,092		29,092		—		29,092		—
Interest rate swaps - cash flow hedge	2,600		2,600		—		2,600		—

(1) As reported in the Consolidated Balance Sheets

Carrying
Value(1)
Fair Value Measurements at March 31, 2021
(dollars in thousands) Total Level 1 Level 2 Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits $ 671,429 $ 671,429 $ 671,429 $ 0 $ 0
Securities 817,299 817,299 0 817,299 0
Loans held for sale 12,794 12,794 0 0 12,794
Portfolio loans, net 7,068,067 6,976,120 0 0 6,976,120
Bank owned life insurance 82,677 82,677 0 82,677 0
FHLB and other restricted stock 12,199 12,199 0 0 12,199
Collateral receivable 43,343 43,343 43,343 0 0
Securities held in a deferred compensation plan 7,178 7,178 7,178 0 0
Mortgage servicing rights 6,590 6,590 0 0 6,590
Interest rate swaps 40,415 40,415 0 40,415 0
Interest rate lock commitments 1,509 1,509 0 0 1,509
Forward sale contracts 226 226 0 0 226
LIABILITIES
Deposits $ 7,876,028 $ 7,876,232 $ 6,555,603 $ 1,320,629 $ 0
Securities sold under repurchase agreements 67,417 67,417 67,417 0 0
Short-term borrowings 0 0 0 0 0
Long-term borrowings 23,282 23,903 4,447 19,456 0
Junior subordinated debt securities 64,097 64,097 64,097 0 0
Interest rate swaps 40,818 40,818 0 40,818 0
(1) As reported in the Consolidated Balance Sheets


		Carrying Value(1)		Fair Value Measurements at December 31, 2020									Carrying Value(1)		Fair Value Measurements at December 31, 2021
(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	$	229,666	$	229,666	$	229,666	$	0	$	0	Cash and due from banks, including interest-bearing deposits	$	922,215	$	922,215	$	922,215	$	—	$	—
Securities	Securities	773,693		773,693		3,228		770,465		0		Securities	910,793		910,793		96,388		814,405		—
Loans held for sale	Loans held for sale	18,528		18,528		0		0		18,528		Loans held for sale	1,522		1,522		—		—		1,522
Portfolio loans, net	Portfolio loans, net	7,108,248		7,028,446		0		0		7,028,446		Portfolio loans, net	6,901,414		6,815,468		—		—		6,815,468
Bank owned life insurance		82,303		82,303		0		82,303		0
FHLB and other restricted stock		13,030		13,030		0		0		13,030
Collateral receivable	Collateral receivable	77,936		77,936		77,936		0		0		Collateral receivable	37,363		37,363		37,363		—		—
Securities held in a deferred compensation plan	Securities held in a deferred compensation plan	6,794		6,794		6,794		0		0		Securities held in a deferred compensation plan	10,230		10,230		10,230		—		—
Mortgage servicing rights	Mortgage servicing rights	4,976		4,976		0		0		4,976		Mortgage servicing rights	7,677		7,677		—		—		7,677
Interest rate swaps	Interest rate swaps	78,319		78,319		0		78,319		0		Interest rate swaps	33,528		33,528		—		33,528		—
Interest rate lock commitments	Interest rate lock commitments	2,900		2,900		0		0		2,900		Interest rate lock commitments	401		401		—		—		401

Forward sale contracts												Forward sale contracts	4		4		—		—		4
LIABILITIES	LIABILITIES											LIABILITIES
Deposits	Deposits	$	7,420,538	$	7,422,894	$	6,033,075	$	1,389,819	$	0	Deposits	$	7,996,524	$	7,992,942	$	6,908,453	$	1,084,489	$	—

Securities sold under repurchase agreements	Securities sold under repurchase agreements	65,163		65,163		65,163		0		0		Securities sold under repurchase agreements	84,491		84,491		84,491		—		—
Short-term borrowings	Short-term borrowings	75,000		75,000		75,000		0		0		Short-term borrowings	—		—		—		—		—
Long-term borrowings	Long-term borrowings	23,681		24,545		4,494		20,051		0		Long-term borrowings	22,430		22,678		4,300		18,378		—
Junior subordinated debt securities	Junior subordinated debt securities	64,083		64,083		64,083		0		0		Junior subordinated debt securities	54,393		54,393		54,393		—		—
Interest rate swaps		79,033		79,033		0		79,033		0
Forward sale contracts		385		385		0		385		0
Interest rate swaps - commercial loans												Interest rate swaps - commercial loans	33,631		33,631		—		33,631		—

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

1511

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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)	(dollars in thousands)	March 31, 2021			December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Available-for-sale debt securities	Available-for-sale debt securities		$	813,883		$	770,393	Available-for-sale debt securities		$	1,027,080		$	909,651
Marketable equity securities	Marketable equity securities		3,416			3,300		Marketable equity securities		1,138			1,142
Total Securities	Total Securities		$	817,299		$	773,693	Total Securities		$	1,028,218		$	910,793

Available-for-Sale Debt Securities

The following tables present the amortized cost and fair value of available-for-sale debt securities as of the dates presented:


		March 31, 2021												December 31, 2020													March 31, 2022												December 31, 2021
(dollars in thousands)	(dollars in thousands)	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			(dollars in thousands)	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
U.S. Treasury securities	U.S. Treasury securities		$	63,361		$	259		$	(352)		$	63,268		$	9,980		$	302		$	0		$	10,282	U.S. Treasury securities		$	136,695		$	41		$	(6,742)		$	129,994		$	95,954		$	115		$	(742)		$	95,327
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies		78,715			3,313			0			82,028			78,755			4,149			0			82,904		Obligations of U.S. government corporations and agencies		58,570			179			(256)			58,493			68,599			1,749			—			70,348
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies		213,394			5,716			(1,194)			217,916			202,975			6,410			(89)			209,296		Collateralized mortgage obligations of U.S. government corporations and agencies		404,626			179			(19,203)			385,602			270,696			2,408			(2,810)			270,294
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies		64,496			632			(1,217)			63,911			66,960			818			0			67,778		Residential mortgage-backed securities of U.S. government corporations and agencies		54,444			52			(4,050)			50,446			57,029			392			(628)			56,793
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies		266,292			11,085			(124)			277,253			258,875			14,806			0			273,681		Commercial mortgage-backed securities of U.S. government corporations and agencies		340,886			169			(10,244)			330,811			336,918			5,969			(1,587)			341,300
Corporate obligations	Corporate obligations		2,001			2			(1)			2,002			2,021			5			(1)			2,025		Corporate obligations		500			—			—			500			500			—			—			500
Obligations of states and political subdivisions	Obligations of states and political subdivisions		101,949			5,556			0			107,505			117,439			6,988			0			124,427		Obligations of states and political subdivisions		70,206			1,028			—			71,234			70,539			4,550			—			75,089
Total Available-for-Sale Debt Securities (1)	Total Available-for-Sale Debt Securities (1)		$	790,208		$	26,563		$	(2,888)		$	813,883		$	737,005		$	33,478		$	(90)		$	770,393	Total Available-for-Sale Debt Securities (1)		$	1,065,927		$	1,648		$	(40,495)		$	1,027,080		$	900,235		$	15,183		$	(5,767)		$	909,651

(1) Excludes interest receivable of ~~$3.2~~$3.5 million at March 31, ~~2021and $3.4~~2022 and $3.3 million at December 31, ~~2020.~~2021. Interest receivable is included in other assets in the ~~consolidated balance sheets.~~Consolidated Balance Sheets.

1612

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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:


		March 31, 2021																March 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	5	$	53,026	$	(352)	0	$	0	$	0	5	$	53,026	$	(352)	U.S. Treasury securities	12	$	119,959	$	(6,742)	—	$	—	$	—	12	$	119,959	$	(6,742)
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	0	0		0		0	0		0		0	0		0		Obligations of U.S. government corporations and agencies	2	15,296		(256)		—	—		—		2	15,296		(256)
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	1	10,785		(124)		0	0		0		1	10,785		(124)		Collateralized mortgage obligations of U.S. government corporations and agencies	39	309,426		(15,367)		4	36,986		(3,836)		43	346,412		(19,203)
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	2	49,860		(1,217)		0	0		0		2	49,860		(1,217)		Residential mortgage-backed securities of U.S. government corporations and agencies	9	8,171		(269)		2	39,357		(3,781)		11	47,528		(4,050)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	5	68,629		(1,194)		0	0		0		5	68,629		(1,194)		Commercial mortgage-backed securities of U.S. government corporations and agencies	29	274,993		(10,244)		—	—		—		29	274,993		(10,244)
Corporate bonds	Corporate bonds	1	499		(1)		0	0		0		1	499		(1)		Corporate bonds	—	—		—		—	—		—		—	—		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	0	0		0		0	0		0		0	0		0		Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—

Total	Total	14	$	182,799	$	(2,888)	0	$	0	$	0	14	$	182,799	$	(2,888)	Total	91	$	727,845	$	(32,878)	6	$	76,343	$	(7,617)	97	$	804,188	$	(40,495)


		December 31, 2020																December 31, 2021
		Less Than 12 Months					12 Months or More					Total						Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		(dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities	0	$	0	$	0	0	$	0	$	0	0	$	0	$	0	U.S. Treasury securities	8	$	85,221	$	(742)	—	$	—	$	—	8	$	85,221	$	(742)
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies	0	0		0		0	0		0		0	0		0		Obligations of U.S. government corporations and agencies	—	—		—		—	—		—		—	—		—
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies	2	35,697		(89)		0	0		0		2	35,697		(89)		Collateralized mortgage obligations of U.S. government corporations and agencies	12	141,204		(2,436)		1	8,933		(374)		13	150,137		(2,810)
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	0	0		0		0	0		0		0	0		0		Residential mortgage-backed securities of U.S. government corporations and agencies	3	46,042		(628)		—	—		—		3	46,042		(628)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	0	0		0		0	0		0		0	0		0		Commercial mortgage-backed securities of U.S. government corporations and agencies	7	100,032		(1,587)		—	—		—		7	100,032		(1,587)
Corporate bonds	Corporate bonds	1	499		(1)		0	0		0		1	499		(1)		Corporate bonds	—	—		—		—	—		—		—	—		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	0	0		0		0	0		0		0	0		0		Obligations of states and political subdivisions	—	—		—		—	—		—		—	—		—

Total	Total	3	$	36,196	$	(90)	0	$	0	$	0	3	$	36,196	$	(90)	Total	30	$	372,499	$	(5,393)	1	$	8,933	$	(374)	31	$	381,432	$	(5,767)

We evaluate securities with unrealized losses quarterly to determine if the decline in fair value has resulted from credit losses or other factors. There ~~was 14~~were 97 debt securities in an unrealized loss position at March 31, ~~2021~~2022 and ~~3 debt securities in an unrealized loss position~~31 at December 31, ~~2020.~~2021. We do not intend to sell and it is more likely than not that we will not be required to sell the securities in an unrealized loss position before recovery of their amortized cost. The unrealized losses on the debt securities were attributable to changes in interest rates and not related to the credit quality of the issuers. All debt securities were determined to be investment grade and paying principal and interest according to the contractual terms of the security. ~~We did not record an ACL related to the securities portfolio at March 31, 2021 and December 31, 2020.~~

1713

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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),/income, for the periods presented:


		March 31, 2021						December 31, 2020							March 31, 2022						December 31, 2021
(dollars in thousands)	(dollars in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains/(Losses)		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains/(Losses)		(dollars in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Losses		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains
Total unrealized gains/(losses) on available-for-sale debt securities		$	26,563	$	(2,888)	$	23,675	$	33,478	$	(90)	$	33,388
Total unrealized gains (losses) on available-for-sale debt securities														Total unrealized gains (losses) on available-for-sale debt securities	$	1,648	$	(40,495)	$	(38,847)	$	15,183	$	(5,767)	$	9,416
Income tax (expense) benefit	Income tax (expense) benefit	(5,668)		615		(5,053)		(7,128)		19		(7,109)		Income tax (expense) benefit	(354)		8,698		8,344		(3,215)		1,221		(1,994)
Net Unrealized Gains/(Losses), Net of Tax Included in Accumulated Other Comprehensive Income/(Loss)		$	20,895	$	(2,273)	$	18,622	$	26,350	$	(71)	$	26,279
Net Unrealized (Losses) Gains, Net of Tax Included in Accumulated Other Comprehensive Income (Loss)														Net Unrealized (Losses) Gains, Net of Tax Included in Accumulated Other Comprehensive Income (Loss)	$	1,294	$	(31,797)	$	(30,503)	$	11,968	$	(4,546)	$	7,422

The amortized cost and fair value of available-for-sale debt securities at March 31, ~~2021~~2022 by contractual maturity are included in the table below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


		March 31, 2021					March 31, 2022
(dollars in thousands)	(dollars in thousands)	Amortized Cost		Fair Value		(dollars in thousands)	Amortized Cost		Fair Value
Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions	Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions					Obligations of the U.S. Treasury, U.S. government corporations and agencies, and obligations of states and political subdivisions
Due in one year or less	Due in one year or less	$	40,399	$	40,813	Due in one year or less	$	35,616	$	35,824
Due after one year through five years	Due after one year through five years	92,940		97,643		Due after one year through five years	102,542		101,364
Due after five years through ten years	Due after five years through ten years	89,580		91,236		Due after five years through ten years	106,550		101,506
Due after ten years	Due after ten years	21,106		23,109		Due after ten years	20,763		21,027
Available-for-Sale Debt Securities With Maturities		244,025		252,801

Available-for-Sale Debt Securities With Fixed Maturities						Available-for-Sale Debt Securities With Fixed Maturities	265,471		259,721
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	213,394		217,916		Collateralized mortgage obligations of U.S. government corporations and agencies	404,626		385,602
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies	64,496		63,911		Residential mortgage-backed securities of U.S. government corporations and agencies	54,444		50,446
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies	266,292		277,253		Commercial mortgage-backed securities of U.S. government corporations and agencies	340,886		330,811
Corporate Securities	Corporate Securities	2,001		2,002		Corporate Securities	500		500

Total Available-for-Sale Debt Securities	Total Available-for-Sale Debt Securities	$	790,208	$	813,883	Total Available-for-Sale Debt Securities	$	1,065,927	$	1,027,080

Debt securities with carrying values of ~~$320~~$441.8 million at March 31, ~~2021~~2022 and ~~$308~~$466.9 million at December 31, ~~2020~~2021 were pledged for various regulatory and legal requirements.

Marketable Equity Securities

The following table presents realized and unrealized net gains and losses for our marketable equity securities for the periods presented:


		Three Months Ended March 31,				Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)	2021		2020			(dollars in thousands)	2022		2021
Marketable Equity Securities	Marketable Equity Securities						Marketable Equity Securities
Net market gains/(losses) recognized		$	116	$	(1,585)
Net market (losses) gains recognized							Net market (losses) gains recognized	$	(5)	$	116
Less: Net gains recognized for equity securities sold	Less: Net gains recognized for equity securities sold	0		0			Less: Net gains recognized for equity securities sold	—		—
Unrealized (Losses)/Gains on Equity Securities Still Held		$	116	$	(1,585)
Unrealized (Losses) Gains on Equity Securities Still Held							Unrealized (Losses) Gains on Equity Securities Still Held	$	(5)	$	116

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.~~Income (Loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE

Loans are presented net of unearned income of ~~$14.0~~$10.1 million at March 31, ~~2021~~2022 and ~~$16.0~~$14.1 million at December 31, ~~2020~~2021 and net of a discount related to purchase accounting fair value adjustments of ~~$7.5~~$5.7 million at March 31, ~~2021~~2022 and ~~$8.6~~$6.7 million at December 31, ~~2020.~~2021. The following table presents loans as of the dates presented:


(dollars in thousands)	(dollars in thousands)	March 31, 2021		December 31, 2020		(dollars in thousands)	March 31, 2022		December 31, 2021
Commercial	Commercial					Commercial
Commercial real estate	Commercial real estate	$	3,284,555	$	3,244,974	Commercial real estate	$	3,257,955	$	3,236,653
Commercial and industrial	Commercial and industrial	1,931,711		1,954,453		Commercial and industrial	1,675,316		1,728,969
Commercial construction	Commercial construction	460,417		474,280		Commercial construction	398,592		440,962
Total Commercial Loans	Total Commercial Loans	5,676,683		5,673,707		Total Commercial Loans	5,331,863		5,406,584
Consumer	Consumer					Consumer
Consumer real estate	Consumer real estate	1,425,839		1,471,238		Consumer real estate	1,519,751		1,485,478
Other consumer	Other consumer	80,646		80,915		Other consumer	112,297		107,928
Total Consumer Loans	Total Consumer Loans	1,506,485		1,552,153		Total Consumer Loans	1,632,048		1,593,406
Total Portfolio Loans	Total Portfolio Loans	7,183,168		7,225,860		Total Portfolio Loans	6,963,911		6,999,990
Loans held for sale	Loans held for sale	12,794		18,528		Loans held for sale	1,346		1,522
Total Loans (1)	Total Loans (1)	$	7,195,962	$	7,244,388	Total Loans (1)	$	6,965,257	$	7,001,512

(1) Excludes interest receivable of ~~$23.4~~$18.7 million at both March 31, ~~2021~~2022 and ~~$24.7 million at~~ December 31, ~~2020.~~2021. Interest receivable is included in other assets in the ~~consolidated balance sheets.~~

Consolidated Balance Sheets.

Commercial and industrial loans, or C&I, included ~~$499.1~~$41.9 million of loans originated under the Paycheck Protection Program, or PPP, at March 31, 2022 compared to $88.3 million at December 31, 2021. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES Act was signed into law. The CARES Act included the PPP, a program designed to aid small and medium sized businesses through federally guaranteed loans distributed through banks. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted expenses in accordance with the requirements of the PPP. The loans are 100 percent guaranteed by the Small Business Administration, or SBA. These loans carry a fixed rate of 1.00 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 at least six months of the loan. The SBA pays us a processing fee ranging from 1 percent to 5 percent based on the size of the loan. Interest is accrued as earned and loan origination fees and direct costs are deferred and accreted or amortized into interest income over the life of the loan using the level yield method. When a PPP loan is paid off or forgiven by the SBA, the remaining unaccreted or unamortized net origination fees or costs will be immediately recognized into income.

~~At March 31, 2021, our~~Our business banking segment was $1.1 billion ~~compared to $1.2 billion~~ at March 31, 2022 and December 31, ~~2020.~~2021. Business banking consists of commercial loans made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards that meet small business market customers’ needs. Business banking consisted of ~~$504.2~~$552.2 million of commercial real estate loans, ~~$232.1~~$216.7 million of C&I loans ~~$11.0~~of which $20.6 million are PPP loans, $15.4 million of commercial construction loans ~~$321.8~~and $357.0 million of consumer real estate loans ~~that have a commercial purpose~~ at March 31, ~~2021.~~2022. At December 31, ~~2020~~2021 business banking consisted of ~~$453.0~~$546.1 million of commercial real estate loans, ~~$394.9~~$215.4 million of C&I loans ~~$8.2~~of which $39.7 million are PPP loans, $16.2 million of commercial construction loans and ~~$303.9~~$357.9 million of consumer real estate ~~loans that have a commercial purpose. During the first quarter of 2021, $90.2 million of commercial loans and $23.2 million of consumer loans were reclassified into the business banking segment.~~loans.

We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we mitigate this risk by reviewing the relevant economic indicators and internal risk rating trends and through stress testing of the loans in these ~~segments.~~segments to determine if additional ACL is needed. Total commercial loans represented ~~79.0~~76.6 percent of total portfolio loans at March 31, ~~2021 and 78.5~~2022 compared to 77.2 percent at December 31, ~~2020.~~2021. Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised $3.7 billion, or ~~66.0~~68.6 percent, of total commercial loans ~~at March 31, 2021~~ and ~~$3.7 billion, or 65.6 percent, of total commercial loans at December 31, 2020 and 52.1~~52.5 percent of total portfolio loans at March 31, ~~2021~~2022 and ~~51.5~~$3.7 billion, or 68.0 percent, of total commercial loans and 52.5 percent of total portfolio loans at December 31, ~~2020.~~2021.

We lend primarily in Pennsylvania and the contiguous states of Ohio, New York, West Virginia and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in this geography, resulting in a concentration. We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data and information supplied by our customers. We also use subscription services for additional geographic and industry specific information. Our CRE and commercial construction portfolios have exposure outside of this geography of 6.1 percent of the combined portfolios and 3.2 percent of total portfolio loans at March 31, 2022. This compares to 5.7 percent of the combined portfolios and 3.0 percent of total portfolio loans at December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued

concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data and information supplied by our customers. We also use subscription services for additional geographic and industry specific information. Our CRE and commercial construction portfolios have exposure outside of this geography of 5.7 percent of the combined portfolios and 3.0 percent of total portfolio loans at March 31, 2021. This compares to 5.9 percent of the combined portfolios and 3.0 percent of total portfolio loans at December 31, 2020.

We individually evaluate all substandard and nonaccrual commercial loans that have experienced a forbearance or change in terms agreement, and all substandard consumer and residential mortgage loans that entered into an agreement to modify their existing loan, to determine if they should be designated as troubled debt restructurings, or TDRs.

All TDRs will be reported as such for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is fully expected that the remaining principal and interest will be collected according to the restructured agreement. TDRs can be returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, is not in doubt and there is a period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring.

The following tables summarize ~~restructured loans~~TDRs as of the dates presented:

March 31, 2021
(dollars in thousands) Performing
TDRs Nonperforming
TDRs Total
TDRs
Commercial real estate $ 9 $ 15,754 $ 15,762
Commercial and industrial 7,576 11,425 19,001
Commercial construction 3,245 0 3,245
Business banking 1,471 397 1,868
Consumer real estate 5,611 2,407 8,018
Other consumer 5 0 5
Total $ 17,916 $ 29,983 $ 47,899


		December 31, 2020							March 31, 2022						December 31, 2021
(dollars in thousands)	(dollars in thousands)	Performing TDRs		Nonperforming TDRs		Total TDRs		(dollars in thousands)	Performing TDRs		Nonperforming TDRs		Total TDRs		Performing TDRs		Nonperforming TDRs		Total TDRs
Commercial real estate	Commercial real estate	$	14	$	16,654	$	16,668	Commercial real estate	$	—	$	969	$	969	$	—	$	1,697	$	1,697
Commercial and industrial	Commercial and industrial	7,090		9,885		16,975		Commercial and industrial	721		10,225		10,946		748		14,889		15,637
Commercial construction	Commercial construction	3,267		0		3,267		Commercial construction	2,167		480		2,647		2,190		2,087		4,277
Business banking	Business banking	1,503		430		1,933		Business banking	987		1,586		2,573		858		1,696		2,554
Consumer real estate	Consumer real estate	5,581		2,319		7,900		Consumer real estate	6,861		2,129		8,990		6,122		1,405		7,527
Other consumer	Other consumer	5		0		5		Other consumer	3		—		3		3		—		3
Total	Total	$	17,460	$	29,288	$	46,748	Total	$	10,739	$	15,389	$	26,128	$	9,921	$	21,774	$	31,695

There were 0no TDR's that returned to accruing status during the three months ended March 31, ~~2021~~2022 and March 31, ~~2020.~~2021.

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


	Three Months Ended March 31, 2022
	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	7	766		—		1,112		—		—		1,878		1,928
Other consumer	—	—		—		—		—		—		—		—
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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 5. LOANS AND LOANS HELD FOR SALE - continued

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

Three Months Ended March 31, 2021
Number
of
Contracts Type of Modification
Total
Pre-Modification Outstanding Recorded Investment(2)
Total
Post-Modification Outstanding Recorded Investment(2)
(dollars in thousands)
Bankruptcy(1)
Forbearance Extend
Maturity Modify
Rate Modify
Payments
Commercial real estate 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Commercial industrial 2 0 0 821 0 5,475 6,304 6,296
Commercial construction 0 0 0 0 0 0 0 0
Business banking 0 0 0 0 0 0 0 0
Consumer real estate 11 340 80 0 0 148 609 568
Other consumer 1 1 0 0 0 0 1 1
Total(2)
14 $ 341 $ 80 $ 821 $ 0 $ 5,623 $ 6,914 $ 6,865
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.

Three Months Ended March 31, 2020
Number
of
Contracts Type of Modification
Total
Pre-Modification Outstanding Recorded Investment(2)
Total
Post-Modification Outstanding Recorded Investment(2)
(dollars in thousands)
Bankruptcy(1)
Forbearance Extend
Maturity Modify
Rate Modify
Payments
Commercial real estate 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Commercial industrial 0 0 0 0 0 0 0 0
Commercial construction 1 0 0 1,891 0 0 1,891 1,806
Business banking 0 0 0 0 0 0 0 0
Consumer real estate 5 78 0 0 0 27 105 91
Other consumer 0 0 0 0 0 0 0 0
Total(2)
6 $ 78 $ 0 $ 1,891 $ 0 $ 27 $ 1,996 $ 1,897
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
(2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.

In response to the coronavirus, or COVID-19, pandemic and its economic impact on our customers, we implemented a short-term modification program that complies with the CARES Act to provide temporary payment relief to those borrowers directly impacted by the pandemic who were not more than 30 days past due as of December 31, 2019. This program allows for a deferral of payments for 90 days and up to a maximum of 180 days for our commercial customers. The customer remains responsible for deferred payments along with any additional interest accrued during the deferral period. Under the applicable guidance, none of these loans were considered restructured as of March 31, 2021. We had 40 commercial loans that were modified totaling $61.8 million at March 31, 2021 compared to 52 commercial loans that were modified totaling $195.6 million at December 31, 2020.


	Three Months Ended March 31, 2021
	Number of Contracts	Type of Modification										Total Post-Modification Outstanding Recorded Investment(2)		Total Pre-Modification Outstanding Recorded Investment(2)
(dollars in thousands)		Bankruptcy(1)		Other		Extend Maturity		Modify Rate		Modify Payments
Commercial real estate	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial industrial	2	—		—		821		—		5,475		6,296		6,304
Commercial construction	—	—		—		—		—		—		—		—
Business banking	—	—		—		—		—		—		—		—
Consumer real estate	11	340		80		—		—		148		568		609
Other consumer	1	1		—		—		—		—		1		1
Total	14	$	341	$	80	$	821	$	—	$	5,623	$	6,865	$	6,914
(1) Bankruptcy is consumer bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed. (2) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.

As of March 31, ~~2021,~~2022, we had 12 commitments to lend an additional $0.8 million on TDRs compared to 20 commitments to lend an additional $0.8 million ~~on TDRs.~~as of March 31, 2021. Defaulted TDRs are defined as loans having a payment default of 90 days or more after the restructuring takes place. There were 0no TDRs that defaulted during the three months ended March 31, ~~2021. There were 11 TDRs that defaulted during the three months ended~~2022 and March 31, ~~2020 totaling $21.1 million that were restructured within the last 12 months prior to defaulting.~~

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 5. LOANS AND LOANS HELD FOR SALE - continued~~

2021.

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

Nonperforming Assets
(dollars in thousands) March 31, 2021 December 31, 2020
Nonperforming Assets
Nonaccrual loans $ 102,430 $ 117,485
Nonaccrual TDRs 29,983 29,289
Total Nonaccrual Loans(1)
132,413 146,774
OREO 1,620 2,155
Total Nonperforming Assets $ 134,033 $ 148,929
(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.

The decrease in nonperforming loans of $11.6 million at March 31, 2021 compared to December 31, 2020 was primarily related to the payoff of a $4.6 million commercial real estate relationship and a $3.9 million charge off of an $11.1 million C&I relationship that was previously held in specific reserve.


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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES

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

The following are key risks within each portfolio segment:

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

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

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

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

Consumer Real Estate—Loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and ~~lines.~~lines and credits cards. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

Management monitors various credit quality indicators for the commercial, business banking and consumer loan portfolios, including changes in risk ratings, nonperforming status and delinquency on a monthly basis.

We monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans within the pass rating generally have a lower risk of loss than loans risk rated as special mention or substandard.

Our risk ratings are consistent with regulatory guidance and are as follows:

Pass—The loan is currently performing and is of high quality.

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

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

Special Mention—A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in the strength of our credit position at some future date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

Substandard—A substandard loan is not adequately protected by the net worth and/or paying capacity of the borrower or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

Doubtful—Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

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


		March 31, 2021																			March 31, 2022
		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)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total

Commercial real estate	Commercial real estate																			Commercial real estate
Pass	Pass	$	96,988	$	319,206	$	444,668	$	376,347	$	258,362	$	850,342	$	44,872	0		$	2,390,785	Pass	$	92,158	$	367,329	$	333,477	$	423,653	$	308,371	$	878,459	$	34,981	$	—	$	2,438,428
Special mention	Special mention	0		450		35,420		8,342		22,541		113,614		0		0		180,367		Special mention	—		—		304		25,293		2,634		100,061		—		—		128,292
Substandard	Substandard	0		0		17,259		15,772		19,894		146,624		1,482		0		201,030		Substandard	—		—		1,343		13,865		17,707		104,659		1,500		—		139,074
Doubtful	Doubtful	0		0		645		0		0		7,499		0		0		8,144		Doubtful	—		—		—		—		—		5		—		—		5
Total commercial real estate	Total commercial real estate	96,988		319,656		497,992		400,461		300,796		1,118,080		46,354		0		2,780,327		Total commercial real estate	92,158		367,329		335,124		462,811		328,712		1,083,184		36,481		—		2,705,799

Commercial and industrial	Commercial and industrial																			Commercial and industrial
Pass	Pass	252,427		478,363		168,546		110,278		55,096		179,887		361,828		0		1,606,425		Pass	42,350		369,064		106,684		94,211		75,757		157,096		569,064		—		1,414,226
Special mention	Special mention	0		3,090		28,623		3,562		180		1,289		17,718		0		54,461		Special mention	—		44		816		4,012		2,366		1,137		9,862		—		18,237
Substandard	Substandard	5,476		0		6,165		4,415		5,778		12,715		4,153		0		38,701		Substandard	—		—		—		10,654		1,288		4,072		5,523		—		21,537
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		4,506		—		—		—		—		4,506
Total commercial and industrial	Total commercial and industrial	257,902		481,453		203,334		118,255		61,054		193,891		383,699		0		1,699,588		Total commercial and industrial	42,350		369,108		107,500		113,383		79,411		162,305		584,449		—		1,458,506

Commercial construction	Commercial construction																			Commercial construction
Pass	Pass	24,730		127,643		195,245		53,248		2,059		10,856		13,232		0		427,012		Pass	24,551		161,638		70,185		73,539		4,984		4,281		31,026		—		370,204
Special mention	Special mention	0		3,490		2,862		0		0		8,478		0		0		14,830		Special mention	—		—		—		3,578		—		4,423		—		—		8,001
Substandard	Substandard	0		0		4,148		0		501		2,967		0		0		7,616		Substandard	—		—		2,157		480		4		2,391		—		—		5,032
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction	Total commercial construction	24,730		131,133		202,255		53,248		2,560		22,301		13,232		0		449,459		Total commercial construction	24,551		161,638		72,342		77,597		4,988		11,095		31,026		—		383,237

Business banking	Business banking																			Business banking
Pass	Pass	34,568		121,017		167,764		134,358		89,027		362,534		110,572		265		1,020,105		Pass	66,205		255,051		104,999		129,574		100,316		336,209		109,505		505		1,102,364
Special mention	Special mention	0		502		1,972		1,379		1,621		7,759		287		122		13,642		Special mention	—		98		193		2,926		2,853		5,959		161		110		12,300
Substandard	Substandard	0		72		1,267		3,777		2,990		25,409		1,141		674		35,330		Substandard	—		2		103		2,648		3,150		19,129		927		613		26,572
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total business banking	Total business banking	34,568		121,591		171,003		139,513		93,638		395,703		112,001		1,061		1,069,078		Total business banking	66,205		255,151		105,295		135,148		106,319		361,297		110,593		1,228		1,141,236

Consumer real estate	Consumer real estate																			Consumer real estate
Pass	Pass	20,000		116,640		110,942		58,166		55,435		267,411		436,449		23,550		1,088,594		Pass	56,244		141,404		96,932		84,920		35,181		223,298		482,845		23,510		1,144,334
Special mention	Special mention	0		0		0		0		0		2,246		0		0		2,246		Special mention	—		—		—		—		—		923		—		—		923
Substandard	Substandard	0		0		186		2,089		1,506		7,896		503		1,080		13,260		Substandard	40		82		139		286		1,735		11,402		1,004		2,912		17,600
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total consumer real estate	Total consumer real estate	20,000		116,640		111,128		60,255		56,942		277,553		436,952		24,630		1,104,099		Total consumer real estate	56,284		141,486		97,071		85,206		36,916		235,623		483,849		26,422		1,162,857

Other consumer	Other consumer																			Other consumer
Pass	Pass	872		14,119		11,576		5,723		2,673		2,283		35,151		955		73,354		Pass	6,035		15,522		8,176		5,931		2,448		1,349		71,494		1,273		112,228
Special mention	Special mention	0		0		0		0		0		0		0		0		0		Special mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	0		0		109		125		104		4,968		374		1,579		7,260		Substandard	—		—		—		17		4		2		—		25		48
Doubtful	Doubtful	0		0		0		0		0		4		0		0		4		Doubtful	—		—		—		—		—		—		—		—		—
Total other consumer	Total other consumer	872		14,119		11,686		5,848		2,778		7,255		35,525		2,534		80,618		Total other consumer	6,035		15,522		8,176		5,948		2,452		1,351		71,494		1,298		112,276

Pass	Pass	429,585		1,176,989		1,098,741		738,120		462,653		1,673,313		1,002,104		24,770		6,606,275		Pass	287,543		1,310,008		720,453		811,828		527,057		1,600,692		1,298,915		25,288		6,581,784
Special mention	Special mention	0		7,532		68,876		13,283		24,342		133,387		18,005		122		265,547		Special mention	—		142		1,313		35,809		7,853		112,503		10,023		110		167,753
Substandard	Substandard	5,476		72		29,134		26,177		30,773		200,579		7,653		3,332		303,198		Substandard	40		84		3,742		27,950		23,888		141,655		8,954		3,550		209,863
Doubtful	Doubtful	0		0		645		0		0		7,503		0		0		8,148		Doubtful	—		—		—		4,506		—		5		—		—		4,511
Total	Total	$	435,060	$	1,184,593	$	1,197,397	$	777,580	$	517,769	$	2,014,783	$	1,027,762	$	28,225	$	7,183,168	Total	$	287,583	$	1,310,234	$	725,508	$	880,093	$	558,798	$	1,854,855	$	1,317,892	$	28,948	$	6,963,911

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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, 2020																			December 31, 2021
		Risk Rating																			Risk Rating
(dollars in thousands)	(dollars in thousands)	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Revolving-Term		Total		(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total

Commercial real estate	Commercial real estate																			Commercial real estate
Pass	Pass	$	334,086	$	422,800	$	394,963	$	277,724	$	307,321	$	615,217	$	46,330	$	0	$	2,398,441	Pass	$	385,347	$	316,003	$	412,191	$	314,303	$	213,019	$	698,992	$	35,448	$	—	$	2,375,303
Special mention	Special mention	0		35,499		10,200		22,502		55,174		75,022		0		0		198,397		Special mention	—		—		37,786		6,401		40,445		75,938		—		—		160,570
Substandard	Substandard	0		17,259		12,781		19,914		50,700		83,792		1,500		0		185,946		Substandard	—		1,356		18,743		14,039		12,555		106,461		1,500		—		154,654
Doubtful	Doubtful	0		645		0		0		1,989		6,529		0		0		9,163		Doubtful	—		—		—		—		—		—		—		—		—
Total commercial real estate	Total commercial real estate	334,086		476,203		417,944		320,140		415,184		780,560		47,830		0		2,791,947		Total commercial real estate	385,347		317,359		468,720		334,743		266,019		881,391		36,948		—		2,690,528

Commercial and industrial	Commercial and industrial																			Commercial and industrial
Pass	Pass	454,131		199,453		140,049		68,607		27,645		206,782		383,082		0		1,479,749		Pass	437,483		126,371		115,359		83,030		37,176		132,182		536,554		—		1,468,155
Special mention	Special mention	3,697		8,211		2,628		697		768		1,046		23,527		0		40,574		Special mention	46		—		3,060		2,546		72		832		8,887		—		15,443
Substandard	Substandard	0		7,793		2,613		8,544		75		13,781		2,022		0		34,828		Substandard	—		—		14,221		1,336		4,174		3,456		4,961		—		28,148
Doubtful	Doubtful	0		0		0		4,401		0		0		0		0		4,401		Doubtful	—		—		1,777		—		—		—		—		—		1,777
Total commercial and industrial	Total commercial and industrial	457,828		215,457		145,290		82,249		28,488		221,609		408,631		0		1,559,552		Total commercial and industrial	437,529		126,371		134,417		86,912		41,422		136,470		550,402		—		1,513,523

Commercial construction	Commercial construction																			Commercial construction
Pass	Pass	131,235		224,794		59,649		2,420		6,346		4,555		12,778		0		441,777		Pass	142,321		108,405		111,512		16,838		989		3,539		30,036		—		413,640
Special mention	Special mention	1,578		2,533		3,886		0		0		8,593		0		0		16,590		Special mention	—		—		—		—		—		4,458		—		—		4,458
Substandard	Substandard	0		3,580		0		501		0		3,629		0		0		7,710		Substandard	—		2,157		2,020		—		—		2,480		—		—		6,657
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction	Total commercial construction	132,813		230,907		63,535		2,921		6,346		16,777		12,778		0		466,077		Total commercial construction	142,321		110,562		113,532		16,838		989		10,477		30,036		—		424,755

Business banking	Business banking																			Business banking
Pass	Pass	296,254		154,335		123,207		86,552		77,238		266,042		103,571		291		1,107,490		Pass	257,264		107,791		141,411		110,586		79,187		293,215		107,093		443		1,096,990
Special mention	Special mention	0		1,060		1,147		1,602		1,084		6,866		637		123		12,519		Special mention	104		151		1,986		1,365		1,057		5,929		160		111		10,863
Substandard	Substandard	103		1,078		3,896		3,209		3,880		25,871		1,341		680		40,058		Substandard	41		106		1,579		3,277		1,645		19,591		977		625		27,841
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total business banking	Total business banking	296,357		156,473		128,250		91,363		82,202		298,779		105,549		1,094		1,160,067		Total business banking	257,409		108,048		144,976		115,228		81,889		318,735		108,230		1,179		1,135,693

Consumer real estate	Consumer real estate																			Consumer real estate
Pass	Pass	120,736		122,171		67,700		63,653		73,805		243,939		438,888		22,667		1,153,559		Pass	137,465		100,995		91,981		48,531		39,029		231,861		442,530		23,391		1,115,783
Special mention	Special mention	0		0		1,489		0		0		150		132		0		1,771		Special mention	—		—		—		—		—		937		—		—		937
Substandard	Substandard	0		373		742		1,480		2,449		6,958		0		0		12,002		Substandard	—		—		184		1,625		1,355		5,664		876		1,161		10,865
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total consumer real estate	Total consumer real estate	120,736		122,544		69,931		65,133		76,254		251,047		439,020		22,667		1,167,332		Total consumer real estate	137,465		100,995		92,165		50,156		40,384		238,462		443,406		24,552		1,127,585

Other consumer	Other consumer																			Other consumer
Pass	Pass	18,849		13,162		6,784		3,395		2,082		687		26,647		2,767		74,373		Pass	19,976		9,396		7,120		2,878		613		2,037		57,702		1,130		100,852
Special mention	Special mention	0		0		0		0		0		0		0		0		0		Special mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	15		0		0		0		0		3,367		744		2,386		6,512		Substandard	83		52		141		215		408		4,407		201		1,547		7,054
Doubtful	Doubtful	0		0		0		0		0		0		0		0		0		Doubtful	—		—		—		—		—		—		—		—		—
Total other consumer	Total other consumer	18,864		13,162		6,784		3,395		2,082		4,054		27,391		5,153		80,885		Total other consumer	20,059		9,448		7,261		3,093		1,021		6,444		57,903		2,677		107,906

Pass	Pass	1,355,291		1,136,715		792,352		502,350		494,436		1,337,221		1,011,297		25,726		6,655,389		Pass	1,379,856		768,961		879,574		576,166		370,013		1,361,826		1,209,363		24,964		6,570,723
Special Mention	Special Mention	5,274		47,302		19,350		24,802		57,026		91,677		24,296		123		269,851		Special Mention	150		151		42,832		10,312		41,574		88,094		9,047		111		192,271
Substandard	Substandard	118		30,083		20,032		33,648		57,105		137,398		5,607		3,066		287,056		Substandard	124		3,671		36,888		20,492		20,137		142,059		8,515		3,333		235,219
Doubtful	Doubtful	0		645		0		4,401		1,989		6,529		0		0		13,564		Doubtful	—		—		1,777		—		—		—		—		—		1,777
Total	Total	$	1,360,684	$	1,214,746	$	831,734	$	565,201	$	610,556	$	1,572,826	$	1,041,199	$	28,914	$	7,225,860	Total	$	1,380,130	$	772,783	$	961,071	$	606,970	$	431,724	$	1,591,979	$	1,226,925	$	28,408	$	6,999,990

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

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

The following tables ~~presents~~present loan balances by year of origination and performing and nonperforming status for our portfolio segments as of ~~March 31, 2021 and December 31, 2020:~~the dates presented:


		March 31, 2021																			March 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	Performing	$	96,988	$	319,656	$	481,588	$	400,461	$	294,122	$	1,046,085	$	46,354	$	0	$	2,685,253	Performing	$	92,158	$	367,329	$	335,124	$	460,353	$	326,451	$	1,062,113	$	36,481	$	—	$	2,680,009
Nonperforming	Nonperforming	0		0		16,404		0		6,674		71,995		0		0		95,074		Nonperforming	—		—		—		2,458		2,261		21,071		—		—		25,790
Total commercial real estate	Total commercial real estate	96,988		319,656		497,992		400,461		300,796		1,118,080		46,354		0		2,780,327		Total commercial real estate	92,158		367,329		335,124		462,811		328,712		1,083,184		36,481		—		2,705,799

Commercial and industrial	Commercial and industrial																			Commercial and industrial
Performing	Performing	252,427		481,453		203,334		117,623		55,366		193,614		383,355		0		1,687,172		Performing	42,350		369,108		107,500		104,858		79,353		162,248		582,519		—		1,447,936
Nonperforming(1)		5,476		0		0		631		5,689		276		344		0		12,416
Nonperforming																				Nonperforming	—		—		—		8,525		58		57		1,930		—		10,570
Total commercial and industrial	Total commercial and industrial	257,902		481,453		203,334		118,255		61,054		193,891		383,699		0		1,699,588		Total commercial and industrial	42,350		369,108		107,500		113,383		79,411		162,305		584,449		—		1,458,506

Commercial construction	Commercial construction																			Commercial construction
Performing	Performing	24,730		131,133		202,255		53,248		2,560		21,917		13,232		0		449,074		Performing	24,551		161,638		72,342		77,117		4,988		10,711		31,026		—		382,373
Nonperforming	Nonperforming	0		0		0		0		0		384		0		0		384		Nonperforming	—		—		—		480		—		384		—		—		864
Total commercial construction	Total commercial construction	24,730		131,133		202,255		53,248		2,560		22,301		13,232		0		449,459		Total commercial construction	24,551		161,638		72,342		77,597		4,988		11,095		31,026		—		383,237

Business Banking
Business banking																				Business banking
Performing	Performing	34,568		121,591		170,640		137,748		92,837		384,332		111,932		1,004		1,054,651		Performing	66,205		255,149		105,295		134,873		104,917		355,063		110,565		1,172		1,133,239
Nonperforming	Nonperforming	0		0		362		1,765		801		11,371		69		57		14,426		Nonperforming	—		2		—		275		1,402		6,234		28		56		7,997
Total business banking	Total business banking	34,568		121,591		171,003		139,513		93,638		395,703		112,001		1,061		1,069,078		Total business banking	66,205		255,151		105,295		135,148		106,319		361,297		110,593		1,228		1,141,236

Consumer real estate	Consumer real estate																			Consumer real estate
Performing	Performing	20,000		116,640		110,249		59,931		56,397		272,547		436,628		23,759		1,096,150		Performing	56,284		141,486		96,167		84,952		36,674		230,971		483,658		25,487		1,155,679
Nonperforming	Nonperforming	0		0		880		324		545		5,006		324		871		7,949		Nonperforming	—		—		904		254		242		4,652		191		935		7,178
Total consumer real estate	Total consumer real estate	20,000		116,640		111,128		60,255		56,942		277,553		436,952		24,630		1,104,099		Total consumer real estate	56,284		141,486		97,071		85,206		36,916		235,623		483,849		26,422		1,162,857

Other consumer	Other consumer																			Other consumer
Performing	Performing	872		14,119		11,485		5,848		2,697		5,689		35,346		2,397		78,455		Performing	6,035		15,522		8,051		5,948		2,452		1,351		71,494		1,298		112,151
Nonperforming	Nonperforming	0		0		201		0		81		1,566		179		137		2,163		Nonperforming	—		—		125		—		—		—		—		—		125
Total other consumer	Total other consumer	872		14,119		11,686		5,848		2,778		7,255		35,525		2,534		80,618		Total other consumer	6,035		15,522		8,176		5,948		2,452		1,351		71,494		1,298		112,276

Performing	Performing	429,585		1,184,593		1,179,550		774,859		503,978		1,924,183		1,026,847		27,160		7,050,755		Performing	287,583		1,310,232		724,479		868,101		554,835		1,822,457		1,315,743		27,957		6,911,387
Nonperforming	Nonperforming	5,476		0		17,847		2,720		13,790		90,599		915		1,065		132,413		Nonperforming	—		2		1,029		11,992		3,963		32,398		2,149		991		52,524
Total	Total	$	435,060	$	1,184,593	$	1,197,397	$	777,580	$	517,769	$	2,014,783	$	1,027,762	$	28,225	$	7,183,168	Total	$	287,583	$	1,310,234	$	725,508	$	880,093	$	558,798	$	1,854,855	$	1,317,892	$	28,948	$	6,963,911
(1) In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.

2722

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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, 2020																			December 31, 2021
(dollars in thousands)	(dollars in thousands)	2020		2019		2018		2017		2016		2015 and Prior		Revolving		Revolving-Term		Total		(dollars in thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total

Commercial real estate	Commercial real estate																			Commercial real estate
Performing	Performing	$	334,086	$	459,799	$	417,944	$	313,465	$	394,972	$	722,782	$	47,830	$	0	$	2,690,879	Performing	$	385,347	$	317,359	$	461,613	$	332,482	$	259,723	$	865,567	$	36,948	$	—	$	2,659,039
Nonperforming	Nonperforming	0		16,404		0		6,675		20,212		57,778		0		0		101,070		Nonperforming	—		0		7,107		2,261		6,296		15,824		—		—		31,488
Total commercial real estate	Total commercial real estate	334,086		476,203		417,944		320,140		415,184		780,560		47,830		0		2,791,947		Total commercial real estate	385,347		317,359		468,720		334,743		266,019		881,391		36,948		—		2,690,528

Commercial and industrial	Commercial and industrial																			Commercial and industrial
Performing	Performing	457,828		214,144		143,706		69,411		28,426		220,701		408,350		0		1,542,566		Performing	437,529		126,371		123,944		86,852		38,540		136,427		548,622		—		1,498,285
Nonperforming	Nonperforming	0		1,313		1,584		12,838		62		908		281		0		16,985		Nonperforming	—		—		10,473		60		2,882		43		1,780		—		15,239
Total commercial and industrial	Total commercial and industrial	457,828		215,457		145,290		82,249		28,488		221,609		408,631		0		1,559,552		Total commercial and industrial	437,529		126,371		134,417		86,912		41,422		136,470		550,402		—		1,513,523

Commercial construction	Commercial construction																			Commercial construction
Performing	Performing	132,813		230,907		63,535		2,921		6,346		16,393		12,778		0		465,692		Performing	142,321		110,562		111,445		16,838		989		10,093		30,036		—		422,284
Nonperforming	Nonperforming	0		0		0		0		0		384		0		0		384		Nonperforming	—		—		2,087		—		—		384		—		—		2,471
Total commercial construction	Total commercial construction	132,813		230,907		63,535		2,921		6,346		16,777		12,778		0		466,077		Total commercial construction	142,321		110,562		113,532		16,838		989		10,477		30,036		—		424,755

Business Banking
Business banking																				Business banking
Performing	Performing	296,327		156,164		126,432		90,414		80,106		286,970		105,494		1,037		1,142,944		Performing	257,368		107,984		144,689		113,820		81,195		311,673		108,202		1,122		1,126,052
Nonperforming	Nonperforming	30		309		1,818		949		2,096		11,809		55		57		17,123		Nonperforming	41		64		287		1,408		694		7,062		28		57		9,641
Total business banking	Total business banking	296,357		156,473		128,250		91,363		82,202		298,779		105,549		1,094		1,160,067		Total business banking	257,409		108,048		144,976		115,228		81,889		318,735		108,230		1,179		1,135,693

Consumer real estate	Consumer real estate																			Consumer real estate
Performing	Performing	120,736		122,315		69,225		63,647		74,690		245,331		438,702		21,572		1,156,216		Performing	137,465		100,253		91,689		49,853		39,657		234,297		443,238		23,839		1,120,291
Nonperforming	Nonperforming	0		229		706		1,486		1,564		5,716		318		1,096		11,116		Nonperforming	—		742		476		303		727		4,165		168		713		7,294
Total consumer real estate	Total consumer real estate	120,736		122,544		69,931		65,133		76,254		251,047		439,020		22,667		1,167,332		Total consumer real estate	137,465		100,995		92,165		50,156		40,384		238,462		443,406		24,552		1,127,585

Other consumer	Other consumer																			Other consumer
Performing	Performing	18,864		13,162		6,784		3,395		2,082		3,958		27,391		5,153		80,789		Performing	20,059		9,290		7,261		3,093		1,021		6,444		57,903		2,677		107,748
Nonperforming	Nonperforming	0		0		0		0		0		96		0		0		96		Nonperforming	—		158		—		—		—		—		—		—		158
Total other consumer	Total other consumer	18,864		13,162		6,784		3,395		2,082		4,054		27,391		5,153		80,885		Total other consumer	20,059		9,448		7,261		3,093		1,021		6,444		57,903		2,677		107,906

Performing	Performing	1,360,654		1,196,491		827,625		543,253		586,622		1,496,135		1,040,544		27,762		7,079,086		Performing	1,380,089		771,819		940,641		602,938		421,125		1,564,501		1,224,949		27,638		6,933,699
Nonperforming	Nonperforming	30		18,254		4,108		21,948		23,934		76,691		654		1,153		146,774		Nonperforming	41		964		20,430		4,032		10,599		27,478		1,976		770		66,291
Total	Total	$	1,360,684	$	1,214,746	$	831,734	$	565,201	$	610,556	$	1,572,826	$	1,041,199	$	28,914	$	7,225,860	Total	$	1,380,130	$	772,783	$	961,071	$	606,970	$	431,724	$	1,591,979	$	1,226,925	$	28,408	$	6,999,990

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


		March 31, 2021										March 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		Past Due 90+ Days Still Accruing(2)		Non - performing		Total Past Due Loans		Total Loans
Commercial real estate	Commercial real estate	$	2,685,253	$	0	$	0	$	95,074	$	95,074		$	2,780,327	Commercial real estate	$	2,680,009	$	—	$	—	$	—	$	25,790	$	25,790	$	2,705,799
Commercial and industrial~~(1)~~	Commercial and industrial~~(1)~~	1,687,172		0		0		12,416		12,416			1,699,588		Commercial and industrial~~(1)~~	1,447,404		3		—		529		10,570		11,102		1,458,506
Commercial construction	Commercial construction	449,074		0		0		384		384			449,459		Commercial construction	382,373		—		—		—		864		864		383,237
Business banking	Business banking	1,053,430		1,191		30		14,426		15,647			1,069,078		Business banking	1,130,830		1,409		413		587		7,997		10,406		1,141,236
Consumer real estate	Consumer real estate	1,094,601		1,444		104		7,949		9,498			1,104,099		Consumer real estate	1,152,858		2,693		128		—		7,178		9,999		1,162,857
Other consumer	Other consumer	78,314		102		39		2,163		2,304			80,618		Other consumer	111,765		176		210		—		125		511		112,276
Total~~(2)~~(1)	Total~~(2)~~(1)	$	7,047,844	$	2,737	$	174	$	132,413	$	135,324		$	7,183,168	Total~~(2)~~(1)	$	6,905,239	$	4,281	$	751	$	1,116	$	52,524	$	58,672	$	6,963,911

(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.

~~(2)~~ We had 403 loans that were modified totaling ~~$61.8~~$12.5 million under the CARES Act at March 31, ~~2021.~~2022. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the ~~modification program,~~modifications, this delinquency table may not accurately reflect the credit risk associated with these loans.

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

Table of Contents

S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued


		December 31, 2020															December 31, 2021
(dollars in thousands)	(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due (2)		Non - performing		Total Past Due Loans		Total Loans		(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Past Due 90+ Days Still Accruing		Non - performing		Total Past Due Loans		Total Loans
Commercial real estate	Commercial real estate	$	2,690,877	$	0	$	0	$	0	$	101,070	$	101,070	$	2,791,947	Commercial real estate	$	2,659,040	$	—	$	—	$	—	$	31,488	$	31,488	$	2,690,528
Commercial and industrial	Commercial and industrial	1,542,567		0		0		0		16,985		16,985		1,559,552		Commercial and industrial	1,497,755		529		—		—		15,239		15,768		1,513,523
Commercial construction	Commercial construction	462,094		19		3,580		0		384		3,983		466,077		Commercial construction	421,834		450		—		—		2,471		2,921		424,755
Business banking	Business banking	1,140,581		1,614		379		371		17,122		19,486		1,160,067		Business banking	1,124,748		813		491		—		9,641		10,945		1,135,693
Consumer real estate	Consumer real estate	1,153,028		1,087		1,968		132		11,117		14,304		1,167,332		Consumer real estate	1,117,074		1,087		2,130		—		7,294		10,511		1,127,585
Other consumer	Other consumer	80,583		168		37		0		96		302		80,885		Other consumer	107,492		206		50		—		158		414		107,906
Total(1)	Total(1)	$	7,069,730	$	2,888	$	5,965	$	503	$	146,774	$	156,130	$	7,225,860	Total(1)	$	6,927,943	$	3,085	$	2,671	$	—	$	66,291	$	72,047	$	6,999,990
(1) We had 52 loans that were modified totaling $195.6 million under the CARES Act at December 31, 2020. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans. (2) Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2020.
(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.																(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 ~~table presents~~tables present loans on nonaccrual status by class of ~~loan:~~loan for the periods presented:


										March 31, 2021													For the Three Months Ended
		March 31, 2021								For the three months ended		March 31, 2022										March 31, 2022
(dollars in thousands)	(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Past Due 90+ Days Still Accruing		Interest Income Recognized on Nonaccrual(1)			(dollars in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual With No Related Allowance		Past Due 90+ Days Still Accruing (2)				Interest Income Recognized on Nonaccrual(1)
Commercial real estate	Commercial real estate	$	101,070	$	95,074	$	52,460	$	0	$	61		Commercial real estate	$	31,488	$	25,790	$	21,058	$	—			$	32
Commercial and industrial~~(2)~~	Commercial and industrial~~(2)~~	16,985		12,416		11,425		0		43			Commercial and industrial~~(2)~~	15,239		10,570		1,700		529				32
Commercial construction	Commercial construction	384		384		0		0		0			Commercial construction	2,471		864		480		—				—
Business banking	Business banking	17,122		14,426		397		0		137			Business banking	9,641		7,997		1,586		587				48
Consumer real estate	Consumer real estate	11,117		7,949		345		0		110			Consumer real estate	7,294		7,178		—		—				61
Other consumer	Other consumer	96		2,163		0		0		1			Other consumer	158		125		—		—				—
Total	Total	$	146,774	$	132,413	$	64,628	$0		$	352		Total	$	66,291	$	52,524	$	24,824	$	1,116			$	173

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

(2)~~In addition to~~ We had 5 loans that were originated under the PPP program totaling $1.1 million at March 31, 2022 that were 90 days or greater past due. These loans were in process of forgiveness and were not considered as nonperforming loans due to the terms of ~~$132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.~~the SBA guarantee.

December 31, 2020
December 31, 2020 For the twelve months ended
(dollars in thousands) Beginning of Period Nonaccrual End of Period Nonaccrual Nonaccrual With No Related Allowance Past Due 90+ Days Still Accruing
Interest Income Recognized on Nonaccrual(1)
Commercial real estate $ 25,356 $ 101,070 $ 60,401 $ 0 $ 22
Commercial and industrial 10,911 16,985 6,436 0 101
Commercial construction 737 384 285 0 0
Business banking 9,863 17,122 3,890 371 275
Consumer real estate 6,063 11,117 398 132 423
Other consumer 1,127 96 0 0 4
Total $ 54,057 $ 146,774 $ 71,410 $ 503 $ 826


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

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

2924

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

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


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

Total	$	25,477	$	2,258	$	—	$	10,910


		March 31, 2021									December 31, 2021
		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	$	86,683	$	0	$	5,350	$	0	Commercial real estate	$	28,046	$	—	$	—	$	—
Commercial and industrial	Commercial and industrial	335		11,968		0		0		Commercial and industrial	259		4,905		—		10,473
Commercial construction	Commercial construction	3,245		0		0		0		Commercial construction	4,210		—		—		—
Business banking	Business banking	1,856		12		0		0		Business banking	910		1,636		—		—
Consumer real estate	Consumer real estate	345		0		0		0		Consumer real estate	1,031		—		—		—

Total	Total	$	92,464	$	11,980	$	5,350	$	0	Total	$	34,456	$	6,541	$	—	$	10,473

December 31, 2020
Type of Collateral
(dollars in thousands) Real Estate Business
Assets Investment/Cash Other
Commercial real estate $ 100,450 $ 0 $ 0 $ 0
Commercial and industrial 1,040 15,080 0 0
Commercial construction 3,552 0 0 0
Business banking 3,085 1,619 0 689
Consumer real estate 398 0 0 0
Total $ 108,525 $ 16,699 $ 0 $ 689

The following tables present activity in the ACL for the periods presented:


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

Three Months Ended March 31, 2021
(dollars in thousands) Commercial
Real Estate Commercial and
Industrial Commercial
Construction Business Banking Consumer
Real Estate Other
Consumer Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period $ 65,656 $ 16,100 $ 7,239 $ 15,917 $ 10,014 $ 2,686 $ 117,612
Provision for credit losses on loans(1)
1,996 2,728 (911) 514 (844) (182) 3,301
Charge-offs (810) (4,302) 0 (917) (271) (232) (6,532)
Recoveries 0 137 1 166 82 334 720
Net (Charge-offs)/Recoveries (810) (4,165) 1 (751) (189) 102 (5,812)
Balance at End of Period $ 66,842 $ 14,663 $ 6,329 $ 15,680 $ 8,981 $ 2,606 $ 115,101
(1) Excludes unfunded commitments


		Three Months Ended March 31, 2020															Three Months Ended March 31, 2021
(dollars in thousands)	(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans		(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:	Allowance for credit losses on loans:															Allowance for credit losses on loans:
Balance at beginning of period	Balance at beginning of period	$	30,577	$	15,681	$	7,900	$	0	$	6,337	$	1,729	$	62,224	Balance at beginning of period	$	65,656	$	16,100	$	7,239	$	15,917	$	10,014	$	2,686	$	117,612
Impact of CECL adoption		4,810		7,853		(3,376)		12,898		4,525		642		27,352

Provision for credit losses on loans(1)	Provision for credit losses on loans(1)	7,639		6,196		2,309		1,194		472		620		18,430		Provision for credit losses on loans(1)	1,996		2,728		(911)		514		(844)		(182)		3,301
Charge-offs	Charge-offs	(442)		(9,879)		(229)		(460)		(172)		(248)		(11,430)		Charge-offs	(810)		(4,302)		—		(917)		(271)		(232)		(6,532)
Recoveries	Recoveries	27		19		2		74		38		114		274		Recoveries	—		137		1		166		82		334		720
Net (Charge-offs)/Recoveries	Net (Charge-offs)/Recoveries	(415)		(9,860)		(227)		(386)		(134)		(134)		(11,156)		Net (Charge-offs)/Recoveries	(810)		(4,165)		1		(751)		(189)		102		(5,812)
Balance at End of Period	Balance at End of Period	$	42,611	$	19,870	$	6,606	$	13,706	$	11,200	$	2,857	$	96,850	Balance at End of Period	$	66,842	$	14,663	$	6,329	$	15,680	$	8,981	$	2,606	$	115,101

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

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S&T BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 6. ALLOWANCE FOR CREDIT LOSSES – continued

The adoption of ASU 2016-13 resulted in an increase to our ACL of $27.4 million on January 1, 2020. The increase included $8.2 million for S&T legacy loans and $9.3 million for acquired loans from the DNB merger. We also recorded a day one adjustment of $9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020. We obtained information on the relationship subsequent to filing our December 31, 2019 10-K, but before the end of the first quarter of 2020. The updated information supported a loss existed at January 1, 2020.

The provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management's assessment of expected losses in the loan portfolio at the balance sheet date. The provision for credit losses decreased $16.9 million to $3.1 million for the three months ended

March 31, 2021 compared to $20.0 million for the same period in 2020. The decrease in the provision for credit losses of $16.9 million was primarily due to a significant increase in provision needed during the three months ended March 31, 2020 due to the negative impact of the COVID-19 pandemic and our adoption of CECL on January 1, 2020. The provision for credit losses for the three months ended March 31, 2020 included $14.3 million related to the economic forecast and other qualitative reserves established for the uncertainty of the pandemic. Our total qualitative reserve decreased $2.7 million for the three months ended March 31, 2021 compared to the same period in 2020 mainly due to a decrease of $3.1 million for the economic forecast. Our economic forecast covers a period of two years and is driven primarily by national unemployment data. The forecasted national unemployment rate improved at March 31, 2021 compared to the same time in 2020.

Net loan charge-offs were $5.8 million, or 0.33 percent annualized as a percentage of average loans at March 31, 2021 compared to $11.2 million, or 0.63 percent of average loans during the same period in 2020. Nonperforming loans increased $61.4 million to $135.2 million at March 31, 2021 compared to $73.8 million at March 31, 2020. The significant increase in nonperforming loans primarily related to the addition of $53.6 million of hotel loans which moved to nonperforming during the fourth quarter of 2020 as a result of continued deterioration due to the pandemic.

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

ACL.

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivatives Not Designated as Hedging Instruments

Interest Rate ~~Swaps~~Contracts with Customers

~~In accordance with applicable accounting guidance for derivatives and hedging, all derivatives are recognized as either assets or liabilities on the balance sheet at fair value.~~ Interest rate swaps with customers are contracts in which a series of ~~interest rate~~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.

Pursuant to our agreements with various financial institutions, we may receive collateral or may be required to post collateral based upon mark-to-market positions. Beyond unsecured threshold levels, collateral in the form of cash or securities may be made available to counterparties of interest rate swap transactions. Based upon our current positions and related future collateral requirements relating to them, we believe any effect on our cash flow or liquidity position to be immaterial.

Derivatives contain an element of credit risk, the possibility that we will incur a loss because a counterparty, which may be a financial institution or a customer, fails to meet its contractual obligations. All derivative contracts with financial institutions may be executed only with counterparties approved by our Asset and Liability Committee, or ALCO, and derivatives with customers may only be executed with customers within credit exposure limits approved by our Senior Loan Committee. Interest rate swaps 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.~~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 ~~the~~ 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.~~Income (Loss).

Derivatives Designated as Hedging Instruments

Cash Flow Hedges of Interest Rate Risk

As part of our interest rate risk management strategy, we use interest rate swaps to add stability to interest income and to manage exposure to interest rate movements. Interest rate swaps designated as cash flow hedges 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.

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued

The following table indicates the amounts representing the value of derivative assets and derivative liabilities ~~as of~~for the dates presented:

Derivatives
(included in Other Assets) Derivatives
(included in Other Liabilities)
(dollars in thousands) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020
Derivatives not Designated as Hedging Instruments:
Interest Rate Swap Contracts - Commercial Loans
Fair value $ 40,415 $ 78,319 $ 40,818 $ 79,033
Notional amount 983,243 983,638 983,243 983,638
Collateral posted 0 0 43,340 77,930
Interest Rate Lock Commitments - Mortgage Loans
Fair value 1,509 2,900 0 0
Notional amount 44,519 51,053 0 0
Forward Sale Contracts - Mortgage Loans
Fair value 226 0 0 385
Notional amount $ 36,835 $ 0 $ 0 $ 47,062

Presenting offsetting derivatives that are subject to legally enforceable netting arrangements with the same party is permitted. For example, we may have a derivative asset and a derivative liability with the same counterparty to a swap transaction and we are permitted to offset the asset position and the liability position resulting in a net presentation.


	Derivative Assets (Included in Other Assets)								Derivative Liabilities (Included in Other Liabilities)
	March 31, 2022				December 31, 2021				March 31, 2022				December 31, 2021
(dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts - cash flow hedge	$	50,000	$	135			$	—	$	150,000	$	2,600			$	—
Total Derivatives Designated as Hedging Instruments			$	135			$	—			$	2,600			$	—

Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts - commercial customers	$	1,034,249	$	29,056	$	1,017,178	$	33,528	$	1,034,249	$	29,092	$	1,017,178	$	33,361
Interest rate lock commitments - mortgage loans	13,901		185		12,148		401		—		—				—
Forward sales contracts - mortgage loans	13,503		192		8,436		4		—		—				—
Total Derivatives Not Designated as Hedging Instruments			$	29,433			$	33,933			$	29,092			$	33,361

Total Derivatives			$	29,568			$	33,933			$	31,692			$	33,631

The following table indicates the gross amounts of ~~commercial loan~~interest rate swap derivative assets and derivative liabilities, the amounts offset and the carrying values in the Consolidated Balance Sheets asat March 31, 2022:


	Derivatives (included in Other Assets)				Derivatives (included in Other Liabilities)
(dollars in thousands)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Gross amounts recognized	$	34,957	$	37,289	$	37,402	$	37,392
Gross amounts offset	(5,766)		(3,761)		(5,710)		(3,761)
Net amounts presented in the Consolidated Balance Sheets	29,191		33,528		31,692		33,631
Cash collateral received/pledged(1)	(23,501)		—		—		(33,631)
Net Amount	$	5,690	$	33,528	$	31,692	$	—
(1) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the cash collateral cannot reduce the net derivative position below zero. Therefore, excess cash collateral, if any, is not reflected above.

The following table presents the effect of the ~~dates presented:~~

Derivatives
(included in Other Assets) Derivatives
(included in Other Liabilities)
(dollars in thousands) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020
Derivatives not Designated as Hedging Instruments:
Gross amounts recognized $ 44,022 $ 82,655 $ 43,865 $ 82,626
Gross amounts offset (3,607) (4,336) (3,047) (3,593)
Net Amounts Presented in the Consolidated Balance Sheets 40,415 78,319 40,818 79,033
Gross amounts not offset(1)
0 0 (43,340) (77,930)
Net Amount $ 40,415 $ 78,319 $ (2,522) $ 1,103

~~(1)~~ ~~Amounts represent collateral posted~~cash flow hedges on OCI and on the Condensed Consolidated Statements of Comprehensive Income (Loss) for the ~~periods presented.~~three months ended March 31, 2022 and 2021.


	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)	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Derivatives in Cash Flow Hedging Relationships:
Interest rate swap contracts - cash flow hedge		$	(2,601)		$	—		$	137		$	—

Total		$	(2,601)		$	—		$	137		$	—

The following table indicates the gain or loss recognized in income on derivatives for the periods presented:

Three Months Ended March 31,
(dollars in thousands) 2021 2020
Derivatives not Designated as Hedging Instruments
Interest rate swap contracts—commercial loans $ 310 $ 114
Interest rate lock commitments—mortgage loans (1,759) 2,606
Forward sale contracts—mortgage loans 979 (1,293)
Total Derivatives (Loss)/Gain $ (470) $ 1,427

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES – continued


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

NOTE 8. COMMITMENTS AND CONTINGENCIES

Commitments

In the normal course of business, we offer off-balance sheet credit arrangements to enable our customers to meet their financing objectives. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated financial statements. Our exposure to credit loss, in the event the customer does not satisfy the terms of the agreement, equals the contractual amount of the obligation less the value of any collateral. We apply the same credit policies in making commitments and standby letters of credit that are used for the underwriting of loans to customers. Commitments generally have fixed expiration dates, annual renewals or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

The following table sets forth our commitments and letters of credit as of the dates presented:


(dollars in thousands)	(dollars in thousands)	March 31, 2021			December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Commitments to extend credit	Commitments to extend credit		$	2,261,223		$	2,185,752	Commitments to extend credit		$	2,481,275		$	2,583,957
Standby letters of credit	Standby letters of credit		88,418			89,095		Standby letters of credit		79,550			87,335
Total	Total		$	2,349,641		$	2,274,847	Total		$	2,560,825		$	2,671,292

Allowance for Credit Losses on Unfunded Loan Commitments

We maintain an allowance for credit losses on unfunded commercial and consumer lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a draw-down on the commitment. The provision for credit losses on unfunded loan commitments is included in the provision for credit losses on our Condensed Consolidated Statements of Comprehensive ~~Income.~~Income (Loss). The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.

The following table presents activity in the allowance for credit losses on unfunded loan commitments as of the dates presented:

(dollars in thousands) Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Balance at beginning of period $ 4,467 $ 3,112
Impact of adopting ASU 2016-13 at January 1, 2020 0 1,349
Balance after adoption of ASU 2016-13 4,467 4,461
(Recovery) provision for credit losses (164) 1,616
Total $ 4,303 $ 6,077

~~The decrease in allowance for credit losses on unfunded loan commitments for the three months ended March 31, 2021 was due to a decrease in the loss rates for the construction portfolio.~~


	Three Months Ended March 31,
(dollars in thousands)	2022			2021
Balance at beginning of period		$	5,189		$	4,467


Provision for credit losses		186			(164)
Total		$	5,375		$	4,303

Litigation

In the normal course of business, we are subject to various legal and administrative proceedings and claims. While any type of litigation contains a level of uncertainty, we believe that the outcome of such proceedings or claims pending will not have a material adverse effect on our consolidated financial position or results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued

NOTE 9. OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the change in components of other comprehensive income (loss) for the periods presented, net of tax effects.

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
(dollars in thousands) Pre-Tax
Amount Tax
(Expense)
Benefit Net of Tax
Amount Pre-Tax
Amount Tax Benefit (Expense) Net of Tax
Amount
Change in net unrealized gains/(losses) on debt securities available-for-sale $ (9,712) $ 2,072 $ (7,640) $ 21,568 $ (4,592) $ 16,976
Adjustment to funded status of employee benefit plans (1)
(343) 73 (270) 465 (99) 366
Other Comprehensive (Loss) Income $ (10,055) $ 2,145 $ (7,910) $ 22,033 $ (4,691) $ 17,342
(1) Pension settlement accounting was triggered during the three months ended March 31, 2021 resulting in a charge of $0.7 million immediately recognizing a portion of unrecognized actuarial loss and a remeasurement of our pension obligation.


	Three Months Ended March 31, 2022									Three Months Ended March 31, 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) gains on debt securities available-for-sale		$	(48,261)		$	10,332		$	(37,929)		$	(9,712)		$	2,072		$	(7,640)
Change in interest rate swap		(2,601)			557			(2,044)			—			—			—
Adjustment to funded status of employee benefit plans		(12)			32			20			(343)			73			(270)
Other Comprehensive Loss		$	(50,874)		$	10,921		$	(39,953)		$	(10,055)		$	2,145		$	(7,910)

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

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued~~

~~NOTE 10. EMPLOYEE BENEFITS~~

Our qualified and nonqualified defined benefit plans were amended to freeze benefit accruals for all persons entitled to benefits under the plans in 2016. We will continue recording pension expense related to these plans, primarily representing interest costs on the accumulated benefit obligation and amortization of actuarial losses accumulated in the plans, as well as income from expected investment returns on pension assets. Since the plans have been frozen, 0 service costs are included in net periodic pension expense.

The investment policy for S&T's defined benefit plan is 90 percent fixed income and 10 percent equity and cash. The expected long-term rate of return on plan assets is 2.42 percent compared to 3.45 percent in prior periods.

We remeasured our pension obligation and recognized a pension settlement charge of $0.7 million for the three months ended March 31, 2021. A settlement charge is incurred when the aggregate amount of lump-sum distributions during the year is greater than the sum of the interest cost component of the annual net periodic pension cost.

~~The following table summarizes the components of net periodic pension cost for the periods presented:~~

Three Months Ended March 31,
(dollars in thousands) 2021 2020
Components of Net Periodic Pension Cost
Interest cost on projected benefit obligation $ 703 $ 891
Expected return on plan assets (716) (972)
Net amortization 248 384
Settlement Charge 749 0
Net Periodic Pension Expense $ 984 $ 303

~~The components of net periodic pension expense are included in salaries and employee benefits on the Consolidated Statements of Comprehensive Income.~~

~~NOTE 11. SHARE REPURCHASE PLAN~~

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

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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 ~~at and~~ for the three month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021. Our MD&A should be read in conjunction with our Consolidated Financial Statements and Notes. The results of operations reported in the accompanying Consolidated Financial Statements are not necessarily indicative of results to be expected in future periods.

Important Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains or incorporates statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting S&T and its future business and operations. ~~Forward-looking~~Forward looking statements are typically identified by words or phrases such as “will likely result”, “expect”, “anticipate”, “estimate”, “forecast”, “project”, “intend”, ~~“ believe”~~“believe”, “assume”, “strategy”, “trend”, “plan”, “outlook”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit ~~losses; cyber-security~~losses, or ACL; cyber security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; changes in accounting policies, practices, or ~~guidance, for example, our adoption of CECL;~~guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; climate change and related legislative and regulatory initiatives; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions ~~including DNB,~~ cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and ~~employees;~~employees, particularly in light of the strong competition in the marketplace; our ability to successfully manage our CEO transition; general economic or business conditions, including the strength of regional economic conditions in our market area; macroeconomic conditions including inflation and economic uncertainty; the duration and severity of the coronavirus, ~~(“COVID-19”)~~or COVID-19 pandemic, both in our principal area of operations and nationally, including the ultimate impact of the pandemic on the economy generally and on our operations; our participation in the Paycheck Protection Program; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses.

Many of these factors, as well as other factors, are described elsewhere in this report, and in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, including Part I,II, Item ~~1A-"~~1A, Risk ~~Factors"~~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 ~~involving significant judgments~~ and ~~assumptions used in the preparation of the Consolidated Financial Statements~~estimates as of March 31, ~~2021 have~~2022 remained unchanged from the disclosures presented in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 under Part II, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”.~~Operations.”

Overview

We are a bank holding company that is headquartered in Indiana, Pennsylvania with assets of ~~$9.3~~$9.4 billion at March 31, ~~2021.~~2022. We operate in five markets including Western Pennsylvania, Eastern Pennsylvania, Northeast Ohio, Central Ohio and Upstate New York. We provide a full range of financial services with retail and commercial banking products, cash management services, trust and brokerage services. Our common stock trades on the NASDAQ Global Select Market under the symbol “STBA”.

We earn revenue primarily from interest on loans and securities and fees charged for financial services provided to our customers. We incur expenses for the cost of deposits and other funding sources, provision for credit losses and other operating costs such as salaries and employee benefits, data processing, occupancy and tax expense.

On August 23, 2021, Christopher McComish joined S&T as our new chief executive officer. He brings over 34 years of proven banking leadership with a track record of growth and transformation of commercial, consumer and wealth businesses. Additionally, we have elevated both proven internal leaders and attracted external talent from larger banking institutions to position us for future growth. Our ~~mission is to become the financial services provider of choice within the markets that we serve which will enable us~~priorities for 2022 and beyond include pursuing high impact growth initiatives, ensuring rigorous credit risk and enterprise governance practices, advancing strategic infrastructure and platform investments, including enhancing our digital platform, investing in organization talent and performance and promoting strategic clarity and effective communications. Organic loan growth continues to be a high performing regional community bank. We strive to do this by delivering exceptional service and value. Our strategic plan follows a disciplined approach focused on organic growth, which includes both growthour top priority within our current footprint and through market expansion. ~~We employ a geographic market-based~~Our growth ~~platform in order to drive organic growth. We acknowledge that each of our five markets are in different stages of development and that our market-based~~ strategy will allow us to customize our approach to each market given its developmental stage and unique characteristics. We also actively evaluate acquisition opportunities that align with our strategic objectives as another source of growth. Our strategic plan includes a collaborative model that combines expertise from all areas of our business and focuses on satisfying each customer’s individual financial objectives. We ~~continuously work to maintain and improve the efficiency~~also actively evaluate acquisition opportunities that align with our strategic objectives as another source of ~~our different lines~~growth.

Earnings Summary

We recognized net income of ~~business.~~

~~COVID-19 Update~~

The extent to which the COVID-19 pandemic may adversely impact our business depends on future developments, which remain highly uncertain and unpredictable. The pandemic has had, and we expect that it will continue to have, negative impacts on S&T’s commercial and consumer loan customers and the economy as a whole. The severity and length of the pandemic’s impact on S&T and the U.S. and global economies continue to be unknown.

As we navigate through the uncertainty resulting from the pandemic, our first priority remains the safety of both our employees and customers. Our financial performance continues to be negatively impacted in many ways due to the pandemic. We are closely monitoring our asset quality with a focus on the portfolios that have been significantly impacted by the pandemic, including our hotel portfolio. We did experience improvement in our asset quality during$29.1 million, or $0.74 per diluted share for the three months ended March 31, 2021, but remain cautious given the current environment. Our balance sheet is asset sensitive resulting in our net interest income and net interest margin, or NIM, being negatively impacted in this low interest rate environment. Our net interest income is also being impacted by declining loan balances as new loan originations have decreased in the current environment. Partially offsetting this impact was the Paycheck Protection Program, or PPP. During the first quarter of 2021, PPP forgiveness was $156.5 million and we had an average balance of PPP loans of $454.8 million which positively impacted net interest income by $5.8 million.

~~Earnings Summary~~

~~We recognized record~~2022 compared to a net income of $31.9 million, or $0.81 per diluted share for the ~~three months ended March 31, 2021 compared to $13.2 million, or $0.34 per diluted share in the~~ same period ~~of 2020.~~in 2021. The ~~increase~~$2.8 million decrease in net income for the three months ended March 31, ~~2021 of $18.7 million~~2022 was primarily due to decreases in net interest income of $2.9 million and noninterest income of $2.0 million and increases in noninterest expenses of $1.8 million offset by a significant decrease ~~of $16.9 million~~ in our provision for credit losses ~~primarily related~~of $3.6 million compared to the ~~$16.3 million increase~~same period in our ACL in response to the COVID-19 pandemic in the prior year. Also impacting the increase was a $4.8 million increase in noninterest income and a decrease in noninterest expense of $0.8 million offset by an increase in income tax expense of $4.5 million.2021.

Net interest income ~~increased $0.7~~decreased $2.9 million to ~~$70.7~~$67.7 million for the three months ended March 31, ~~2021~~2022 compared to ~~$70.0~~$70.6 million during the same period in 2021. The decline was primarily due to reduced PPP revenue of $4.1 million compared to the prior period. The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points for the three months ended March 31, 2022 compared to the same period in 2021. Increased interest-bearing deposits with banks negatively impacted the net interest margin on an FTE basis (non-GAAP) by 16 basis points and reduced revenue from PPP loans negatively impacted the net interest margin on an FTE basis (non-GAAP) by 4 basis points for the three months ended March 31, 2022 compared to the prior period.

The provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, decreased $3.6 million to a negative $0.5 million for the three months ended March 31, 2022 compared to $3.1 million for the same period in ~~2020. Average interest-earning assets increased $244.3 million to $8.3 billion and average interest-bearing liabilities decreased $419.0 million to $5.4 billion~~2021. The significant decrease in the provision for credit losses during the three months ended March 31, ~~2021 compared~~2022 was mainly due to a $2.5 million recovery on a C&I relationship during the ~~same periods~~first quarter of 2022 and improvement in ~~2020. Average interest-bearing deposits with banks increased $202.6~~economic conditions resulting in declines in our criticized and classified assets and nonperforming loans.

Noninterest income decreased $2.0 million for the three months ended March 31, 2022 compared to the same period in 2021. The decrease in noninterest income primarily related to a decrease of $3.3 million in mortgage banking due to a lower volume of loans originated for sale in the secondary market. Partially offsetting this decrease was higher debit and credit card fees of $0.9 million and service charges on deposit accounts of $0.5 million due to the improving economic environment resulting in increased customer activity.

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

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~~March 31, 2021~~incentive increases partially offset by lower pension and medical expense. Other noninterest expense increased $0.6 million mainly due to higher other real estate owned, or OREO, expense compared to ~~March 31, 2020 due~~the same period in 2021.

The provision for income taxes decreased $0.4 million to ~~a significant increase in deposits as a result of government stimulus programs, the PPP and our customers' liquidity preferences. Average loan balances increased $58.8~~$6.9 million for the three months ended March 31, ~~2021~~2022 compared to the same period in 2020 due to PPP loans. The decrease in average interest-bearing liabilities compared to the same period in 2020 was due to decreases in average borrowings of $255.4 million and $163.6 million in average interest-bearing deposits for the three months ended March 31, 2021 compared to the same period in 2020. Net interest margin, on a fully taxable-equivalent, or FTE, basis (non-GAAP), decreased 6 basis points to 3.47 percent for the three months ended March 31, 2021 compared to 3.53 percent for the same period in 2020 due to the decline in short-term interest rates during 2021. PPP loans positively impacted the net interest margin on an FTE basis by 10 basis points for the three months ended March 31, 2021. Net interest margin is reconciled to net interest income adjusted to an FTE basis below in the "Net Interest Income" section of this MD&A.

The provision for credit losses, which includes a provision for losses on unfunded commitments, decreased $16.9 million to $3.1 million for the three months ended March 31, 2021 compared to $20.0 million in the same period in 2020. The significant decrease in the provision for credit losses during the three months ended March 31, 2021 was mainly due to the $16.3 million increase in our ACL in response to the pandemic in the prior year. For the three months ended March 31, 2021, we had net charge-offs of $5.8 million compared to net charge-offs of $11.2$7.3 million for the same period in ~~2020. Annualized net loan charge-offs to average loans was 0.33 percent for the three months ended March 31, 2021compared to 0.63 percent for the same period in 2020.~~

~~Noninterest income increased $4.8 million to $17.2 million for the three months ended March 31, 2021 compared to $12.4 million for the same period in 2020.~~2021. The increase in noninterest income primarily related to an increase of $3.1 million in mortgage banking fees due to higher gains on loans sold and an increase in the mortgage servicing rights valuation compared to the same periods in 2020. Also impacting the increase was higher other income of $3.4 million for the three months ended March 31, 2021 related to changes in the valuation of our deferred compensation plan and equity securities portfolio compared to the same period in 2020. Offsetting this increase was a decline in commercial loan swap income of $2.4 million due to the change in the rate environment impacting customer activity compared to the same period in 2020.

~~Noninterest expense decreased $0.8 million to $45.6 million for the three months ended March 31, 2021 compared to $46.4 million for the same period in 2020. The~~ decrease was mainly due to $2.3 million of merger-related expenses recognized in the three months ended March 31, 2020 compared to no merger-related expenses in 2021. This decrease was offset by increases of $2.0 million in salaries and employee benefits and $0.5 million in professional services and legal expenses for the three months ended March 31, 2021.

~~The provision for income taxes increased $4.5 million to $7.3 million for the three months ended March 31, 2021 compared to the same period in 2020. The increase~~ in income tax expense was primarily due to the ~~$23.2 million increase~~decrease in pretax income ~~for the three months ended March 31, 2021~~of $3.1 million compared to the same period in ~~2020.~~2021. Our effective tax rate was ~~18.6~~19.2 percent for the three months ended March 31, ~~2021~~2022 compared to ~~17.3~~18.6 percent for the same period in ~~2020.~~2021. The change in our effective tax rate for the three months ended March 31, ~~2021~~2022 was primarily due to ~~the increase~~decreased tax benefits associated with low income housing tax credits in ~~pretax income.~~2022 compared to 2021.

Explanation of Use of Non-GAAP Financial Measures

In addition to the results of operations presented in accordance with generally accepted accounting principles, or GAAP, in the United States, management uses, and this quarterly report references, net interest income and net interest margin, each on a fully taxable equivalent, or FTE, basis, which are non-GAAP financial measures. Management believes net interest income and net interest margin on an FTE basis provide information useful to investors in understanding our underlying business, operational performance and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Although management believes that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered alternatives to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies.

We believe the presentation of net interest income and net interest margin on an FTE basis ensures the comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Interest income (GAAP) per the Condensed Consolidated Statements of Comprehensive Income (Loss) is reconciled to net interest income adjusted on an FTE basis and net interest margin adjusted on an FTE basis in the "Results of Operations - Three Months Ended March 31, ~~2021~~2022 Compared to Three Months Ended March 31, ~~2020~~2021 - Net Interest Income" section of this MD&A.

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RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2021~~2022 Compared to

Three Months Ended March 31, ~~2020~~2021

Net Interest Income

Our principal source of revenue is net interest income. Net interest income represents the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is affected by changes in the average balance of interest-earning assets and interest-bearing liabilities and changes in interest rates and spreads. The level and mix of interest-earning assets and interest-bearing liabilities is managed by our Asset and Liability Committee, or ALCO, in order to mitigate interest rate and liquidity risks of the balance sheet. A variety of ALCO strategies were implemented, within prescribed ALCO risk parameters, to produce what we believe is an acceptable level of net interest income.

The interest income on interest-earning assets and the net interest margin are presented on an FTE basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and securities and the dividend-received deduction for equity securities using the federal statutory tax rate of 21 percent for each ~~period and the dividend-received deduction for equity securities.~~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 ~~rates~~net interest margin on an FTE basis for the periods presented:


		Three Months Ended March 31,								Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)	2021				2020					(dollars in thousands)	2022		2021
Total interest income			$	74,781			$	87,589
Total interest and dividend income													Total interest and dividend income	$	70,109		$	74,781
Total interest expense	Total interest expense		4,122				17,553						Total interest expense	2,376			4,122
Net Interest Income per Consolidated Statements of Comprehensive Income			70,659				70,036
Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)													Net Interest Income per Condensed Consolidated Statements of Comprehensive Income (Loss)	67,733			70,659
Adjustment to FTE basis	Adjustment to FTE basis		663				849						Adjustment to FTE basis	493			663
Net Interest Income on an FTE Basis (Non-GAAP)	Net Interest Income on an FTE Basis (Non-GAAP)		$	71,322			$	70,885					Net Interest Income on an FTE Basis (Non-GAAP)	$	68,226		$	71,322
Net interest margin	Net interest margin		3.44		%		3.48		%				Net interest margin	3.14		%	3.44		%
Adjustment to FTE basis	Adjustment to FTE basis		0.03		%		0.05		%				Adjustment to FTE basis	0.02		%	0.03		%
Net Interest Margin on an FTE Basis (Non-GAAP)	Net Interest Margin on an FTE Basis (Non-GAAP)		3.47		%		3.53		%				Net Interest Margin on an FTE Basis (Non-GAAP)	3.16		%	3.47		%

Income amounts are annualized for rate calculations.

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Average Balance Sheet and Net Interest Income Analysis (FTE)

The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets and the average balances, interest and rates paid on interest-bearing liabilities for the periods presented:


		Three Months Ended March 31, 2021						Three Months Ended March 31, 2020								Three Months Ended March 31, 2022							Three Months Ended March 31, 2021
(dollars in thousands)	(dollars in thousands)	Average Balance		Interest			Rate	Average Balance		Interest			Rate		(dollars in thousands)	Average Balance		Interest			Rate		Average Balance		Interest			Rate
ASSETS	ASSETS														ASSETS
Interest-bearing deposits with banks	Interest-bearing deposits with banks	$	302,219		$	65	0.09 %	$	99,646		$	355	1.42	%	Interest-bearing deposits with banks	$	756,141		$	303	0.16	%	$	302,219		$	65	0.09	%
Securities, at fair value(1)(2)	Securities, at fair value(1)(2)	782,118			4,566		2.34 %	786,858			4,995		2.54	%	Securities, at fair value(1)(2)	1,002,212			5,265		2.10	%	782,118			4,566		2.34	%
Loans held for sale	Loans held for sale	6,360			45		2.83 %	1,867			18		3.76	%	Loans held for sale	1,545			14		3.51	%	6,360			45		2.83	%
Commercial real estate	Commercial real estate	3,253,641			30,136		3.76 %	3,408,684			40,093		4.73	%	Commercial real estate	3,257,238			29,345		3.65	%	3,253,641			30,136		3.76	%
Commercial and industrial	Commercial and industrial	1,957,459			20,817		4.31 %	1,751,678			19,738		4.53	%	Commercial and industrial	1,712,865			16,827		3.98	%	1,957,459			20,817		4.31	%
Commercial construction	Commercial construction	485,269			4,034		3.37 %	386,363			4,495		4.68	%	Commercial construction	409,264			3,329		3.30	%	485,269			4,034		3.37	%
Total Commercial Loans	Total Commercial Loans	5,696,369			54,987		3.91 %	5,546,725			64,326		4.66	%	Total Commercial Loans	5,379,367			49,501		3.73	%	5,696,369			54,987		3.91	%
Residential mortgage	Residential mortgage	897,427			9,416		4.22 %	990,866			10,328		4.18	%	Residential mortgage	896,268			8,962		4.02	%	897,427			9,416		4.22	%
Home equity	Home equity	532,708			4,791		3.65 %	540,193			6,501		4.84	%	Home equity	570,781			4,823		3.43	%	532,708			4,791		3.65	%
Installment and other consumer	Installment and other consumer	79,907			1,247		6.33 %	79,680			1,388		7.01	%	Installment and other consumer	109,972			1,475		5.44	%	79,907			1,247		6.33	%
Consumer construction	Consumer construction	15,908			188		4.79 %	10,508			120		4.61	%	Consumer construction	21,833			181		3.37	%	15,908			188		4.79	%
Total Consumer Loans	Total Consumer Loans	1,525,950			15,642		4.14 %	1,621,247			18,337		4.54	%	Total Consumer Loans	1,598,854			15,441		3.90	%	1,525,950			15,642		4.14	%
Total Portfolio Loans	Total Portfolio Loans	7,222,319			70,630		3.96 %	7,167,972			82,663		4.64	%	Total Portfolio Loans	6,978,221			64,942		3.77	%	7,222,319			70,630		3.96	%
Total Loans(1)(3)	Total Loans(1)(3)	7,228,679			70,675		3.96 %	7,169,839			82,681		4.64	%	Total Loans(1)(3)	6,979,765			64,955		3.77	%	7,228,679			70,675		3.96	%
Federal Home Loan Bank and other restricted stock	Federal Home Loan Bank and other restricted stock	11,242			139		4.94 %	23,601			407		6.90	%	Federal Home Loan Bank and other restricted stock	9,280			79		3.40	%	11,242			139		4.94	%
Total Interest-earning Assets	Total Interest-earning Assets	8,324,259			75,445		3.67 %	8,079,944			88,438		4.40	%	Total Interest-earning Assets	8,747,398			70,602		3.27	%	8,324,259			75,445		3.67	%
Noninterest-earning assets	Noninterest-earning assets	756,273						687,382							Noninterest-earning assets	709,246							756,273
Total Assets	Total Assets	$	9,080,532					$	8,767,326						Total Assets	$	9,456,644						$	9,080,532
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY														LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand	Interest-bearing demand	$	895,891		$	222	0.10 %	$	942,030		$	1,382	0.59	%	Interest-bearing demand	$	986,639		$	185	0.08	%	$	895,891		$	222	0.10	%
Money market	Money market	1,968,779			943		0.19 %	1,993,764			6,318		1.27	%	Money market	2,055,857			746		0.15	%	1,968,779			943		0.19	%
Savings	Savings	995,228			152		0.06 %	830,985			477		0.23	%	Savings	1,109,048			78		0.03	%	995,228			152		0.06	%
Certificates of deposit	Certificates of deposit	1,344,604			2,165		0.65 %	1,601,324			7,161		1.80	%	Certificates of deposit	1,070,189			844		0.32	%	1,344,604			2,165		0.65	%
Total Interest-bearing Deposits	Total Interest-bearing Deposits	5,204,503			3,481		0.27 %	5,368,103			15,338		1.15	%	Total Interest-bearing Deposits	5,221,733			1,853		0.14	%	5,204,503			3,481		0.27	%
Securities sold under repurchase agreements	Securities sold under repurchase agreements	64,653			25		0.15 %	30,790			42		0.56	%	Securities sold under repurchase agreements	81,790			20		0.10	%	64,653			25		0.15	%
Short-term borrowings	Short-term borrowings	25,556			12		0.19 %	286,365			1,145		1.61	%	Short-term borrowings	—			—		—	%	25,556			12		0.19	%
Long-term borrowings	Long-term borrowings	23,471			116		2.00 %	51,845			325		2.52	%	Long-term borrowings	22,310			107		1.95	%	23,471			116		2.00	%
Junior subordinated debt securities	Junior subordinated debt securities	64,088			488		3.09 %	64,195			703		4.40	%	Junior subordinated debt securities	54,398			395		2.95	%	64,088			488		3.09	%
Total Borrowings	Total Borrowings	177,768			641		1.46 %	433,195			2,215		2.06	%	Total Borrowings	158,498			523		1.34	%	177,768			641		1.46	%
Total Interest-bearing Liabilities	Total Interest-bearing Liabilities	5,382,271			4,123		0.31 %	5,801,298			17,553		1.22	%	Total Interest-bearing Liabilities	5,380,231			2,376		0.18	%	5,382,271			4,123		0.31	%
Noninterest-bearing liabilities	Noninterest-bearing liabilities	2,538,149						1,776,453							Noninterest-bearing liabilities	2,879,718							2,538,149
Shareholders’ equity		1,160,113						1,189,575
Total Liabilities and Shareholders’ Equity		$	9,080,532					$	8,767,326
Shareholders' equity															Shareholders' equity	1,196,694							1,160,113
Total Liabilities and Shareholders' Equity															Total Liabilities and Shareholders' Equity	$	9,456,644						$	9,080,532
Net Interest Income (1)(2)	Net Interest Income (1)(2)				$	71,322					$	70,885			Net Interest Income (1)(2)				$	68,226						$	71,322
Net Interest Margin (1)(2)	Net Interest Margin (1)(2)						3.47 %						3.53	%	Net Interest Margin (1)(2)						3.16	%						3.47	%

(1) Tax-exempt interest income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 ~~percent for 2021 and 2020.~~percent.

(2) Taxable investment income is adjusted for the dividend-received deduction for equity securities.

(3) Nonaccruing loans are included in the daily average loan amounts outstanding.

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

Interest income on an FTE basis (non-GAAP) decreased $4.8 million for the three months ended March 31, 2022 compared to the same period in 2021. The decrease in interest income was primarily due to reduced PPP revenue. Average PPP loans decreased $394.3 million compared to the three months ended March 31, 2021. Average loan balances, excluding PPP loans, increased $145.4 million for the three months ended March 31, 2022 compared to the same period in 2021. Average securities increased $220.1 million for the three months ended March 31, 2022 compared to the same period in 2021. Securities increased due to interest-bearing deposits with banks being redeployed to higher yielding assets. Average interest-bearing deposits with banks increased $453.9 million for the three months ended March 31, 2022 compared to the same period in 2021 due to PPP forgiveness and a significant increase in average deposits as a result of customer PPP loans and stimulus payments along with customers' liquidity preferences in 2021. Overall, the FTE rate on interest-earning assets (non-GAAP) decreased 40 basis points for the three months ended March 31, 2022 compared to the same period in 2021.

Interest expense decreased $1.7 million for the three months ended March 31, 2022 compared to the same period in 2021. The decrease was primarily due to lower average rates paid on interest-bearing deposits compared to the same period in 2021. Average interest-bearing deposits increased $17.2 million for the three months ended March 31, 2022 compared to the same period in 2021. The average rate paid on interest-bearing deposits decreased 13 basis points compared to the same period in 2021 primarily due to maturities of higher costing certificates of deposit. Average demand deposits increased $372.3 million for the three months ended March 31, 2022 compared to the same period in 2021. We experienced demand deposit growth throughout 2021 due to customer PPP loans and stimulus payments along with customers' liquidity preferences. Average brokered deposits decreased $40.7 million and average total borrowings decreased $19.3 million for the three months ended March 31, 2022 compared to the same period in 2021 due to maturities and a reduced need for wholesale funding. Overall, the cost of interest-bearing liabilities decreased 13 basis points for the three months ended March 31, 2022 compared to the same period in 2021.

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Net interest income on an FTE basis (non-GAAP) increased $0.4 million for the three months ended March 31, 2021 compared to the same period in 2020. Net interest income was favorably impacted by Paycheck Protection Program, or PPP loans which increased interest income by $5.8 million for the three months ended March 31, 2021 compared to the same period in 2020. The net interest margin on an FTE basis (non-GAAP) decreased 6 basis points for the three months ended March 31, 2021 compared to the same period in 2020. PPP loans positively impacted the net interest margin on an FTE basis by 10 basis points for the three months ended March 31, 2021.

Interest income on an FTE basis (non-GAAP) decreased $13.0 million, or 14.7 percent, for the three months ended March 31, 2021 compared to the same period in 2020. The decrease in interest income was primarily due to lower short-term interest rates compared to the same period in 2020. Average loan balances increased $58.8 million compared to the same period in 2020. PPP loans contributed $454.8 million to the average increase in loans which was offset by lower loan activity related to the COVID-19 pandemic. The average rate earned on loans decreased 68 basis points compared to the same period in 2020 primarily due to lower short-term interest rates. Average interest-bearing deposits with banks increased $202.6 million and the average rate decreased 133 basis points compared to the same period in 2020. Higher average interest-bearing deposits with banks was due to a significant increase in deposits as a result of government stimulus programs, PPP and our customers' liquidity preferences. Overall, the FTE rate on interest-earning assets (non-GAAP) decreased 73 basis points compared to the same period in 2020.

Interest expense decreased $13.4 million for the three months ended March 31, 2021 compared to the same period in 2020. The decrease was primarily due to lower short-term interest rates compared to the same period in 2020. Average interest-bearing deposits decreased $163.6 million for the three months ended March 31, 2021 compared to the same period in 2020. The average rate paid decreased 88 basis points compared to the same period in 2020 primarily due to lower short-term interest rates. The interest-bearing deposits decrease is favorably offset by a $715.6 million increase in demand deposits. We experienced demand deposit growth due to customer PPP loans and stimulus payments along with customers' liquidity preferences. Brokered deposits decreased $306.9 million compared to the same period in 2020 due to excess liquidity. Average total borrowings decreased $255.4 million and the average rate paid decreased 60 basis points compared to the same period in 2020. Borrowings decreased compared to the same period in 2020 due to excess liquidity. Overall, the cost of interest-bearing liabilities decreased 91 basis points for the three months ended March 31, 2021 compared to the same period in 2020.

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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 March 31, 2021 Compared to March 31, 2020
(dollars in thousands)
Volume (4)
Rate (4)
Total
Interest earned on:
Interest-bearing deposits with banks $ 722 $ (1,012) $ (290)
Securities, at fair value(1)(2)
(30) (400) (430)
Loans held for sale 42 (15) 27
Commercial real estate (1,824) (8,133) (9,957)
Commercial and industrial 2,319 (1,239) 1,079
Commercial construction 1,151 (1,612) (461)
Total Commercial Loans 1,646 (10,984) (9,339)
Residential mortgage (974) 62 (912)
Home equity (90) (1,619) (1,709)
Installment and other consumer 4 (145) (141)
Consumer construction 62 6 67
Total Consumer Loans (998) (1,697) (2,695)
Total Portfolio Loans 648 (12,681) (12,033)
Total Loans (1)(3)
690 (12,696) (12,006)
Federal Home Loan Bank and other restricted stock (213) (55) (268)
Change in Interest Earned on Interest-earning Assets $ 1,168 $ (14,162) $ (12,994)
Interest paid on:
Interest-bearing demand $ (68) $ (1,092) $ (1,160)
Money market (79) (5,296) (5,375)
Savings 94 (419) (325)
Certificates of deposit (1,148) (3,848) (4,996)
Total Interest-bearing Deposits (1,201) (10,656) (11,856)
Securities sold under repurchase agreements 47 (65) (18)
Short-term borrowings (1,042) (90) (1,133)
Long-term borrowings (178) (31) (209)
Junior subordinated debt securities (1) (214) (215)
Total Borrowings (1,174) (400) (1,574)
Change in Interest Paid on Interest-bearing Liabilities $ (2,375) $ (11,056) $ (13,431)
Change in Net Interest Income $ 3,543 $ (3,107) $ 437


	Three Months Ended March 31, 2022 Compared to March 31, 2021
(dollars in thousands)		Volume (4)		Rate (4)		Total
Interest earned on:
Interest-bearing deposits with banks		$	98	$	140	$	238
Securities, at fair value(1)(2)		1,285		(586)		699
Loans held for sale		(34)		3		(31)
Commercial real estate		33		(825)		(791)
Commercial and industrial		(2,601)		(1,389)		(3,990)
Commercial construction		(632)		(73)		(704)
Total Commercial Loans		(3,200)		(2,287)		(5,486)
Residential mortgage		(12)		(442)		(454)
Home equity		342		(311)		31
Installment and other consumer		469		(242)		227
Consumer construction		70		(77)		(7)
Total Consumer Loans		870		(1,071)		(202)
Total Portfolio Loans		(2,330)		(3,358)		(5,688)
Total Loans (1)(3)		(2,364)		(3,355)		(5,719)
Federal Home Loan Bank and other restricted stock		(24)		(36)		(60)
Change in Interest Earned on Interest-earning Assets		$	(1,006)	$	(3,836)	$	(4,842)
Interest paid on:
Interest-bearing demand		$	22	$	(59)	$	(36)
Money market		42		(239)		(197)
Savings		17		(91)		(74)
Certificates of deposit		(442)		(879)		(1,321)
Total Interest-bearing Deposits		(360)		(1,268)		(1,628)
Securities sold under repurchase agreements		7		(11)		(4)
Short-term borrowings		(12)		—		(12)
Long-term borrowings		(6)		(3)		(9)
Junior subordinated debt securities		(74)		(19)		(93)
Total Borrowings		(85)		(33)		(118)
Change in Interest Paid on Interest-bearing Liabilities		(445)		(1,301)		(1,746)
Change in Net Interest Income		$	(561)	$	(2,536)	$	(3,096)

(1) Tax-exempt income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 ~~percent for 2021 and 2020.~~percent.

(2) Taxable investment income is adjusted for the dividend-received deduction for equity securities.

(3) Nonaccruing loans are included in the daily average loan amounts outstanding.

(4) Changes to rate/volume are allocated to both rate and volume on a proportionate dollar basis.

Provision for Credit Losses

The provision for credit losses, which includes a provision for losses on loans and on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management's assessment of expected credit losses in the ~~loan~~ portfolio at the balance sheet date. The provision for credit losses decreased ~~$16.9~~$3.6 million to ~~$3.1~~a negative $0.5 million for the three months ended

March 31, ~~2021~~2022 compared to ~~$20.0~~$3.1 million for the same period in ~~2020.~~2021.

The decrease in the provision for credit losses of $16.9 million was primarily due to a significant increase in provision needed during the three months ended March 31, 2020 due to the negative impact of the COVID-19 pandemic and our adoption of CECL on January 1, 2020. The provision for credit losses for the three months ended March 31, 2020 included $14.3 million related to the economic forecast and other qualitative reserves established for the uncertainty of the pandemic. Our total qualitative reserve decreased $2.7$3.6 million for the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020 mainly~~2021 was primarily due to a ~~decrease~~$2.5 million recovery on a C&I relationship during the first quarter of ~~$3.1 million for the~~2022 and improvement in economic ~~forecast. Our economic~~conditions resulting in an improved forecast ~~covers a period of two years~~ and is

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

~~driven primarily by national unemployment data. The forecasted national unemployment rate improved at March 31, 2021 compared to the same time~~declines in ~~2020.~~our criticized and classified assets and nonperforming loans.

Net loan ~~charge-offs~~recoveries were $5.8 million, or 0.33 percent annualized as a percentage of average loans at March 31, 2021 compared to $11.2 million, or 0.63 percent of average loans during the same period in 2020. Nonperforming loans increased $61.4 million to $135.2 million at March 31, 2021 compared to $73.8 million at March 31, 2020. The significant increase in nonperforming loans primarily related to the addition of $53.6 million of hotel loans which moved to nonperforming during the fourth quarter of 2020 as a result of continued deterioration due to the pandemic.

~~Noninterest Income~~

Three Months Ended March 31,
(dollars in thousands) 2021 2020 $ Change % Change
Net gain on sale of securities $ — $ — $ — —
Mortgage banking 4,310 1,236 3,074 248.7 %
Debit and credit card 4,162 3,482 680 19.5 %
Service charges on deposit accounts 3,474 4,008 (534) (13.3) %
Wealth management 2,944 2,362 582 24.6 %
Commercial loan swap income 95 2,484 (2,389) (96.2) %
Other 2,252 (1,169) 3,421 (292.6) %
Total Noninterest Income $ 17,236 $ 12,403 $ 4,833 39.0 %

~~Noninterest income increased $4.8 million to $17.2~~$2.0 million for the three months ended March 31, ~~2021~~2022 compared to ~~the same period in 2020. The increase in noninterest income primarily related to an increase~~net loan charge-offs of ~~$3.1~~$5.8 million in mortgage banking fees due to higher gains on loans sold and an increase in the mortgage servicing rights valuation compared to the same periods in 2020.Wealth management income increased $0.6 million due to higher assets under management from market appreciation and an increase in customer activity. Debit and credit card income increased $0.7 million due to increased activity and the improving economic environment. Other income increased $3.4 million related to changes in the valuation of our deferred compensation plan, which has a corresponding offset in salaries and employee benefits expense resulting in no impact to net income, and the change in value in the equity securities portfolio compared to the same period in 2020. Offsetting these increases was a $2.4 million decrease in commercial loan swap income. Commercial loan swap activity was significant in first quarter of 2020, but activity has declined due to the pandemic. Service charges on deposit accounts decreased $0.5 million also due to reduced activity related to the pandemic.

~~Noninterest Expense~~

Three Months Ended March 31,
(dollars in thousands) 2021 2020 $ Change % Change
Salaries and employee benefits (1)
$ 23,327 $ 21,335 $ 1,992 9.3 %
Data processing and information technology (1)
4,225 3,868 357 9.2 %
Occupancy (1)
3,827 3,765 62 1.6 %
Furniture, equipment and software (1)
2,640 2,519 121 4.8 %
Professional services and legal (1)
1,531 1,048 483 46.1 %
Other taxes 1,436 1,600 (164) (10.3) %
Marketing (1)
1,322 1,111 211 19.0 %
FDIC insurance 1,046 770 276 35.8 %
Merger related expenses — 2,342 (2,342) (100.0) %
Other (1)
6,226 8,033 (1,807) (22.5) %
Total Noninterest Expense $ 45,580 $ 46,391 $ (810) (1.7) %

~~(1)Excludes Merger related expenses for 2020 amounts only.~~

Noninterest expense decreased $0.8 million to $45.6 million for the three months ended March 31, 2021 compared to the same period in 2020 mainly due to merger related expenses in 2020. Total merger related expenses of $2.3 million for the three months ended March 31, 2020 included $1.4 million of salaries and employee benefits, $0.4 million for data processing, $0.2

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

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

million for professional services and $0.3 million in various other expenses. Other noninterest expense decreased due to historic tax credits for $1.1million in the three months ended March 31, 2020 and lower travel, lodging and training expenses resulting from the pandemic during the three months ended March 31, 2021 compared to the same period in 2020. Partially offsetting these decreases was a $2.0 million increase in salaries and employee benefits mainly due to a change in the valuation related to a deferred compensation plan of $1.6 million, which has a corresponding offset in other noninterest income resulting in no impact to net income, higher pension expense due to an increase in retirees electing lump-sum distributions causing settlement accounting and higher medical expenses. Professional services and legal expenses increased $0.5 million mainly due to higher consulting and legal expense.

~~Provision for Income Taxes~~

The provision for income taxes increased $4.5 million to $7.3 million for the three months ended March 31, 2021 compared to $2.8 million in the same period in 2020 as a result of the increase in pretax income of $23.2 million. Our effective tax rate was 18.6 percent for the three months ended March 31, 2021 compared to 17.3 percent for the same period in ~~2020.~~2021. The ~~change in our effective tax rate for the three months ended March 31, 2021 was~~net recoveries were primarily due to the ~~increase in pretax income.~~

~~Financial Condition as of March 31, 2021~~

Total assets increased $361.1 million to $9.3 billion at March 31, 2021 compared to $9.0 billion at December 31, 2020. Cash and due from banks increased $441.8 million to $671.4 million at March 31, 2021 compared to December 31, 2020 due to a significant increase in deposits as a result of government stimulus programs, PPP and our customers' liquidity preferences. Total portfolio loans decreased $42.7 million to $7.2 billion at March 31, 2021 compared to December 31, 2020. The decrease in portfolio loans primarily related to a decrease in the consumer loan portfolio of $45.7 million, with decreases in residential mortgage of $37.2 million, home equity of $4.8 million, consumer construction of $3.4 million and other consumer of $0.3 million. The commercial loan portfolio increased $3.0 million with increases of $39.6 million in CRE offset by decreases of $22.7 million in C&I and $13.9 million in commercial construction. Excluding the PPP loans, portfolio loans decreased $76.9 million compared to December 31, 2020 due to decreased activity related to the COVID-19 pandemic.

Securities increased $43.6 million to $817.3 million at March 31, 2021 from $773.7 million at December 31, 2020. The increase in securities is primarily due to an increase in overall investing activities due to excess liquidity. The bond portfolio had a net unrealized gain of $23.7 million at March 31, 2021 compared to $33.4 million at December 31, 2020 due to rising interest ratesabove mentioned recovery that occurred during the first quarter of ~~2021.~~2022.

~~Our deposits increased $455.5 million with total deposits~~Refer to the "Allowance for Credit Losses" section of $7.9 billion at March 31, 2021 compared to $7.4 billion at December 31, 2020. Customer deposits increased $508.8 million from December 31, 2020. The increase in customer deposits is primarily related to stimulus programs, PPP and our customers' liquidity preferences. Total brokered deposits decreased $53.3 million from December 31, 2020 due to a reduced needthis MD&A for wholesale funding due to strong customer deposit growth. Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.

Total borrowings decreased $73.1 million to $154.8 million at March 31, 2021 compared to $227.9 million at December 31, 2020 due to increased customer deposits. The decrease in borrowings primarily related to a decline in short-term borrowings of $75.0 million compared to December 31, 2020.

Total shareholders’ equity increased by $13.6 million to $1,168.3 million at March 31, 2021 compared to $1,154.7 million at December 31, 2020. The increase was primarily due to net income of $31.9 million offset partially by dividends of

$11.0 million and a decrease in other comprehensive income of $7.9 million. The $7.9 million decrease in other comprehensive income was due to a $7.6 million decrease in unrealized gains on our available-for-sale investment securities and a $0.3 million change in the funded status of our employee benefit plans, net of taxes.further details.

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

Noninterest Income


	Three Months Ended March 31,
(dollars in thousands)		2022	2021	$ Change			% Change
Net gain on sale of securities					$	—		$	—	$	—	$	—
Debit and credit card					5,063			4,162		901		21.6		%
Service charges on deposit accounts					3,974			3,474		500		14.4		%
Wealth management					3,242			2,944		298		10.1		%
Mortgage banking					1,015			4,310		(3,295)		(76.5)		%

Other					1,932			2,346		(414)		(17.6)		%
Total Noninterest Income					$	15,226		$	17,236	$	(2,010)	(11.7)		%

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

Noninterest Expense


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

Other noninterest expense		6,824			6,226			598			9.6	%
Total Noninterest Expense		$	47,414		$	45,580		$	1,834		4.0	%

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

Provision for Income Taxes

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

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

Financial Condition as of March 31, 2022

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

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

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

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

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

Securities Activity


(dollars in thousands)	(dollars in thousands)	March 31, 2021			December 31, 2020			$ Change			(dollars in thousands)	March 31, 2022			December 31, 2021			$ Change
U.S. Treasury securities	U.S. Treasury securities		$	63,268		$	10,282		$	52,986	U.S. Treasury securities		$	129,994		$	95,327		$	34,667
Obligations of U.S. government corporations and agencies	Obligations of U.S. government corporations and agencies		82,028			82,904			(876)		Obligations of U.S. government corporations and agencies		58,493			70,348			(11,855)
Collateralized mortgage obligations of U.S. government corporations and agencies	Collateralized mortgage obligations of U.S. government corporations and agencies		217,916			209,296			8,620		Collateralized mortgage obligations of U.S. government corporations and agencies		385,602			270,294			115,308
Residential mortgage-backed securities of U.S. government corporations and agencies	Residential mortgage-backed securities of U.S. government corporations and agencies		63,911			67,778			(3,867)		Residential mortgage-backed securities of U.S. government corporations and agencies		50,446			56,793			(6,347)
Commercial mortgage-backed securities of U.S. government corporations and agencies	Commercial mortgage-backed securities of U.S. government corporations and agencies		277,253			273,681			3,572		Commercial mortgage-backed securities of U.S. government corporations and agencies		330,811			341,300			(10,489)
Corporate obligations	Corporate obligations		2,002			2,025			(23)		Corporate obligations		500			500			—
Obligations of states and political subdivisions	Obligations of states and political subdivisions		107,505			124,427			(16,922)		Obligations of states and political subdivisions		71,234			75,089			(3,855)
Available-for-Sale Debt Securities	Available-for-Sale Debt Securities		813,883			770,393			43,490		Available-for-Sale Debt Securities		1,027,080			909,651			117,429
Marketable equity securities	Marketable equity securities		3,416			3,300			116		Marketable equity securities		1,138			1,142			(4)
Total Securities	Total Securities		$	817,299		$	773,693		$	43,606	Total Securities		$	1,028,218		$	910,793		$	117,425

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 ~~$43.6~~$117.4 million to ~~$817.3 million~~$1.0 billion at March 31, ~~2021~~2022 from ~~$773.7~~$910.8 million at December 31, ~~2020.~~2021. The increase in securities iswas primarily due to ~~an increase in overall~~ investing ~~activities due to excess liquidity.~~interest-bearing deposits with bank into higher yielding assets.

At March 31, ~~2021~~2022 our bond portfolio was in a net unrealized ~~gain~~loss position of ~~$23.7~~$38.9 million compared to a net unrealized gain position of ~~$33.4~~$9.4 million at December 31, ~~2020.~~2021. At March 31, ~~2021~~2022 total gross unrealized gains in the bond portfolio were ~~$26.6~~$1.6 million offset by gross unrealized losses of ~~$2.9~~$40.5 million compared to December 31, ~~2020,~~2021, when total gross unrealized gains were ~~$33.5~~$15.2 million offset by gross unrealized losses of ~~$0.1~~$5.8 million. The decrease in the net unrealized gain position was primarily due to an increase in interest rates from December 31, ~~2020~~2021, to March 31, ~~2021. Management evaluates the securities portfolio to determine if an ACL is needed each quarter. We did not record an ACL related to the securities portfolio at March 31, 2021.~~2022.

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

Loan Composition

March 31, 2021 December 31, 2020
(dollars in thousands) Amount % of Loans Amount % of Loans
Commercial
Commercial real estate $ 3,284,555 45.7 % $ 3,244,974 44.9 %
Commercial and industrial 1,931,711 26.9 % 1,954,453 27.0 %
Commercial construction 460,417 6.4 % 474,280 6.6 %
Total Commercial Loans 5,676,683 79.0 % 5,673,707 78.5 %
Consumer
Consumer real estate 1,425,839 19.8 % 1,471,238 20.4 %
Other consumer 80,646 1.1 % 80,915 1.1 %
Total Consumer Loans 1,506,485 21.0 % 1,552,153 21.5 %
Total Portfolio Loans 7,183,168 100.0 % 7,225,860 100.0 %
Loans held for sale 12,794 18,528
Total Loans $ 7,195,962 $ 7,244,388


	March 31, 2022				December 31, 2021
(dollars in thousands)	Amount		% of Loans		Amount		% of Loans		$ Change		% Change
Commercial
Commercial real estate	$	3,257,955	46.8	%	$	3,236,653	46.2	%	$	21,302	0.7	%
Commercial and industrial	1,675,316		24.1	%	1,728,969		24.7	%	(53,653)		(3.1)	%
Commercial construction	398,592		5.7	%	440,962		6.3	%	(42,370)		(9.6)	%

Total Commercial Loans	5,331,863		76.6	%	5,406,584		77.2	%	(74,721)		(1.4)	%
Consumer
Consumer real estate	1,519,751		21.8	%	1,485,478		21.2	%	34,273		2.3	%
Other consumer	112,297		1.6	%	107,928		1.5	%	4,369		4.0	%
Total Consumer Loans	1,632,048		23.4	%	1,593,406		22.8	%	38,642		2.4	%
Total Portfolio Loans	6,963,911		100.0	%	6,999,990		100.0	%	(36,079)		(0.5)	%
Loans held for sale	1,346				1,522				(176)		(11.6)	%
Total Loans	$	6,965,257			$	7,001,512			$	(36,255)	(0.5)	%

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.

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Total portfolio loans decreased ~~$42.7~~$36.1 million to ~~$7.2~~$7.0 billion at March 31, ~~2021~~2022 compared to December 31, ~~2020. The decrease in portfolio~~2021. Portfolio loans ~~is primarily related to a decline in the consumer loan portfolio of $45.7~~excluding PPP loans increased $10.3 million compared to December 31, ~~2020 with decreases~~2021. As of ~~$45.4 million in consumer real estate and $0.3 million in other consumer. Consumer loans represent 21.0~~March 31, 2022, 74 percent of our total ~~portfolio~~ loans ~~at March 31, 2021~~are variable rate loans and ~~21.5~~26 percent ~~at December 31, 2020.~~are fixed rate loans.

Commercial loans, including CRE, C&I and commercial construction, comprised ~~79.0~~76.6 percent of total portfolio loans at March 31, ~~2021~~2022 and ~~78.5~~77.2 percent at December 31, ~~2020.~~2021. The ~~increase of $3.0~~commercial loan portfolio decreased $74.7 million ~~in commercial loans related to $39.6 million of growth in CRE, offset by decreases of $22.7 million in C&I, and $13.9 million in commercial construction~~at March 31, 2022 compared to December 31, ~~2020.~~2021. C&I loans decreased $53.7 million at March 31, 2022 which mainly related to a PPP loan decline of $46.4 million since December 31, 2021.

As of March 31, ~~2021,~~2022, we had ~~$499.1~~$41.9 million of PPP loans included in C~~&I.~~&I compared to $88.3 million at December 31, 2021. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted expenses in accordance with the requirements of the PPP. These loans carry a fixed rate of ~~1.00~~1 percent and a term of two years, or five years for loans approved by the SBA on or after June 5, 2020. Payments are deferred for the first six months of the loan. The loans are 100 percent guaranteed by the SBA. The SBA pays us a processing fee ranging from 1 percent to 5 percent based on the size of the loan.

Consumer loans represent 23.4 percent of our total portfolio loans at March 31, 2022 and 22.8 percent at December 31, 2021. The consumer loan portfolio increased $38.6 million at March 31, 2022 with increases in consumer real estate of $34.3 million and other consumer of $4.4 million compared to December 31, 2021.

Allowance for Credit Losses

~~The following are key risks within each~~ Refer to Part 1. Financial Information, Note 6. Allowance for Credit Losses for details on our portfolio ~~segment:~~

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

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

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

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

~~Consumer Real Estate~~—Loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

~~Other Consumer~~—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines. The primary source of repayment for these loanssegments.

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is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

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


		Three Months Ended March 31, 2021															Three Months Ended March 31, 2022
(dollars in thousands)	(dollars in thousands)	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Business Banking		Consumer Real Estate		Other Consumer		Total Loans		(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:	Allowance for credit losses on loans:															Allowance for credit losses on loans:
Balance at beginning of period	Balance at beginning of period	$	65,656	$	16,100	$	7,239	$	15,917	$	10,014	$	2,686	$	117,612	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)	Provision for credit losses on loans(1)	1,996		2,728		(911)		514		(844)		(182)		3,301		Provision for credit losses on loans(1)	(1,996)		(206)		(27)		765		426		340		(698)
Charge-offs	Charge-offs	(810)		(4,302)		—		(917)		(271)		(232)		(6,532)		Charge-offs	—		—		—		(606)		(78)		(298)		(982)
Recoveries	Recoveries	—		137		1		166		82		334		720		Recoveries	199		2,716		1		—		37		66		3,019
Net (Charge-offs)/Recoveries		(810)		(4,165)		1		(751)		(189)		102		(5,812)
Net Recoveries/(Charge-offs)																Net Recoveries/(Charge-offs)	199		2,716		1		(606)		(41)		(232)		2,037
Balance at End of Period	Balance at End of Period	$	66,842	$	14,663	$	6,329	$	15,680	$	8,981	$	2,606	$	115,101	Balance at End of Period	$	48,903	$	22,237	$	5,329	$	11,497	$	9,118	$	2,831	$	99,915
(1) Excludes provision on unfunded commitments
(1) Excludes the provision for credit losses for unfunded commitments.																(1) Excludes the provision for credit losses for unfunded commitments.

March 31, 2021 December 31, 2020
Ratio of net charge-offs to average loans outstanding 0.33 % * 0.61 %
Allowance for credit losses as a percentage of total portfolio loans 1.60 % 1.63 %
Allowance for loan losses as a percentage of total portfolio loans - excluding PPP loans 1.72 % 1.74 %
Allowance for credit losses to nonperforming loans 85 % 80 %
The following table presents key ACL ratios for the periods presented:


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

*(1) Annualized

The ACL ~~decreased $2.5~~was $99.9 million, ~~to $115.1 million~~or 1.43 percent of total portfolio loans, at March 31, ~~2021~~2022 compared to ~~$117.6~~$98.6 million, or 1.41 percent of total portfolio loans, at December 31, ~~2020.~~2021. The ~~decrease~~increase in the ACL of $1.3 million was ~~mainly~~ due to a ~~reduction~~$2.7 million increase in specific reserves on loans individually assessed and ~~lower~~a $2.0 million increase in the overall qualitative ~~reserve due to an improved economic forecast. Specific~~reserve. The increase in specific reserves on loans individually assessed ~~decreased $5.4 million from December 31, 2020 primarily~~was due to a ~~charge-off on~~$2.7 million increase for a C&I relationship ~~that was previously held in specific reserve. The qualitative reserve decreased $1.8 million from the prior quarter primarily~~ due to ~~a $2.5 million reduction~~continued market deterioration in the ~~economic forecast component which~~estimated enterprise value of the company. The increase in the overall qualitative reserve was the result of additional segment allocations made in our healthcare and C&I portfolios due to continued uncertainty related to the COVID-19 variant and an ~~improved national unemployment forecast. The ACL as~~increase in our economic forecast due primarily to concerns with rising inflation and macroeconomic conditions. Offsetting this increase was a ~~percentage of total portfolio loans decreased 3 basis points~~$3.4 million decrease in the quantitative reserve due primarily to 1.60 percent at March 31, 2021 compared to 1.63 percent at December 31, 2020. The ACL excluding PPP loans as a percentage of total portfolio loans was 1.72 percent as of March 31, 2021 compared to 1.74 percent at December 31, 2020.improving trends in our hotel portfolio.

Net loan ~~charge-offs~~recoveries were ~~$5.8~~$2.0 million, or ~~0.33~~(0.12) percent annualized as a percentage of average loans, for the three months ended March 31, ~~2021.~~2022. The ~~most significant charge-off was~~net recoveries primarily related to a ~~$3.9~~$2.5 million recovery on a C&I relationship ~~which was previously held in specific reserve. The relationship was restructured~~ during the first quarter of ~~2021 and charged down to the fair value of the collateral.~~2022.

Substandard loans ~~increased $16.1~~decreased $25.4 million to ~~$303.2~~$209.8 million at March 31, ~~2021~~2022 compared to ~~$287.1~~$235.2 million at December 31, ~~2020~~2021. The decrease in substandard loans was primarily due to $19.7 million of loan upgrades in our hotel portfolio and ~~special~~$12.0 million of various loan payoffs and pay downs. The decrease in substandard loans was partially offset by the addition of a $10.5 million CRE relationship, which was downgraded to substandard due to financial deterioration that led to cash flow shortfalls. Special mention loans decreased ~~$4.4~~$24.5 million to ~~$265.5~~$167.8 million at March 31, ~~2021~~2022 compared to ~~$269.9~~$192.3 million at December 31, ~~2020.~~2021. The ~~increase in commercial substandard and corresponding~~ decrease in special mention loans was primarily due to the ~~downgrade~~upgrade of a $12.1 million CRE relationship from special mention to substandard due to declining revenue that led to cash flow shortfalls. The relationship matured during the first quarter and received a short term COVID deferral as the borrower and bank work towards a long term solution.three hotel relationships totaling $21.4 million.

Troubled debt restructurings, or TDRs, ~~increased $1.2~~decreased $5.6 million to ~~$47.9~~$26.1 million at March 31, ~~2021~~2022 compared to ~~$46.7~~$31.7 million at December 31, ~~2020.~~2021. The decrease in TDRs was primarily due to the payoff of a $4.2 million C&I relationship and other loan pay downs. Total TDRs of ~~$47.9~~$26.1 million included $10.7 million, or 41.0 percent, that were performing and $15.4 million, or 59.0 percent, that were nonperforming at March 31, ~~2021 included $17.9 million, or 37.4 percent, that were accruing and $30.0 million, or 62.6 percent, that were not accruing.~~2022.

Our allowance for credit losses on unfunded commercial lending commitments and letters of credit provide for the risk of expected loss in these arrangements. The allowance is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a draw-down on the commitment. The provision for credit losses on unfunded loan commitments is included in the provision for credit losses on our Condensed Consolidated Statements of Comprehensive ~~Income.~~Income (Loss). The allowance for unfunded loan commitments ~~was $4.3~~increased $0.2 million to $5.4 million at March 31, ~~2021~~2022 compared to ~~$4.5~~$5.2 million at December 31, ~~2020.~~2021. This change was primarily due to higher loss rates in the construction portfolio. The allowance for unfunded commitments is included in other liabilities in the Consolidated Balance Sheets.

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Nonperforming assets consist of nonaccrual loans, nonaccrual TDRs and OREO. The following table summarizes nonperforming assets for the dates presented:

(dollars in thousands) March 31, 2021 December 31, 2020 $ Change
Nonperforming Loans
Commercial real estate $ 79,321 $ 84,416 $ (5,095)
Commercial and industrial(1)
991 7,100 (6,109)
Commercial construction 384 384 —
Business banking 14,029 16,692 (2,663)
Consumer real estate 5,542 8,798 (3,256)
Other Consumer 2,163 96 2,067
Total Nonperforming Loans 102,430 117,486 (15,056)
Nonperforming Troubled Debt Restructurings
Commercial real estate 15,754 16,654 (900)
Commercial and industrial 11,425 9,885 1,540
Commercial construction — — —
Business banking 397 430 (33)
Consumer real estate 2,407 2,319 88
Other Consumer — — —
Total Nonperforming Troubled Debt Restructurings 29,983 29,288 695
Total Nonperforming Loans 132,413 146,774 (14,361)
OREO 1,620 2,155 (535)
Total Nonperforming Assets $ 134,033 $ 148,929 $ (14,896)
Asset Quality Ratios:
Nonperforming loans as a percent of total portfolio loans 1.88 % 2.03 %
Nonperforming assets as a percent of total portfolio loans plus OREO 1.90 % 2.06 %
(1)In addition to nonperforming loans of $132.4 million, we have a $2.8 million commercial and industrial held for sale loan that is nonperforming resulting in total nonperforming loans of $135.2 million.


(dollars in thousands)	March 31, 2022				December 31, 2021				$ Change
Nonperforming Loans (Excluding TDRs)
Commercial real estate		$	24,821			$	29,791			$	(4,970)
Commercial and industrial		345				350				(5)
Commercial construction		384				384				—
Business banking		6,411				7,945				(1,534)
Consumer real estate		5,049				5,889				(840)
Other Consumer		125				158				(33)
Total Nonperforming Loans (Excluding TDRs)		37,135				44,517				(7,382)
Nonperforming Troubled Debt Restructurings
Commercial real estate		969				1,697				(728)
Commercial and industrial		10,225				14,889				(4,664)
Commercial construction		480				2,087				(1,607)
Business banking		1,586				1,696				(110)
Consumer real estate		2,129				1,405				724
Other Consumer		—				—				—
Total Nonperforming Troubled Debt Restructurings		15,389				21,774				(6,385)
Total Nonperforming Loans		52,524				66,291				(13,767)
OREO		7,028				13,313				(6,285)
Total Nonperforming Assets		$	59,552			$	79,604			$	(20,052)
Asset Quality Ratios:
Nonperforming loans as a percent of total portfolio loans		0.75		%		0.95		%
Nonperforming assets as a percent of total portfolio loans plus OREO		0.85		%		1.13		%

Our policy is to place loans in all categories in nonaccrual status when collection of interest or principal is doubtful, or generally when interest or principal payments are 90 days or more past the contractual due date. Nonperforming loans decreased ~~$11.6~~$13.8 million, or 20.8 percent, to ~~$135.2~~$52.5 million at March 31, ~~2021~~2022 compared to ~~$146.8~~$66.3 million at December 31, ~~2020.~~2021. The significant decrease in nonperforming loans primarily related to the payoff of a ~~$4.6 million CRE relationship and charge-off of a $3.9~~$4.2 million C&I relationship ~~which were previously held~~and the return to performing status of three hotel loans totaling $4.6 million. The decrease in ~~specific reserve.~~OREO during the first quarter of 2022 related to the sale of a property for $6.3 million.

Deposits


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

Noninterest-bearing demand		$	2,740,315		$	2,748,586		$	(8,271)
Interest-bearing demand		1,070,656			979,133			91,523
Money market		1,992,916			2,070,579			(77,663)
Savings		1,117,985			1,110,155			7,830
Certificates of deposit		1,038,586			1,088,071			(49,485)







Total Deposits		$	7,960,458		$	7,996,524		$	(36,066)

Deposits are our primary source of funds. We believe that our deposit base is stable and that we have the ability to attract new deposits. Total deposits decreased $36.1 million, or 0.5%, with an improving mix to lower yielding deposit-products compared to December 31, 2021.

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~~Deposits~~

(dollars in thousands) March 31, 2021 December 31, 2020 $ Change
Customer Deposits
Noninterest-bearing demand $ 2,539,594 $ 2,261,994 $ 277,600
Interest-bearing demand 976,225 864,510 111,715
Money market 1,997,856 1,887,051 110,805
Savings 1,036,927 969,508 67,419
Certificates of deposit 1,310,473 1,369,239 (58,766)
Total Customer Deposits 7,861,075 7,352,302 508,773
Brokered Deposits
Interest-bearing demand — — —
Money market 5,001 50,012 (45,011)
Certificates of deposit 9,952 18,224 (8,272)
Total Brokered Deposits 14,953 68,236 (53,283)
Total Deposits $ 7,876,028 $ 7,420,538 $ 455,490

Deposits are our primary source of funds. We believe that our deposit base is stable and that we have the ability to attract new deposits. Total deposits at March 31, 2021 increased $455.5 million, or 6.1 percent, from December 31, 2020. Total customer deposits increased $508.8 million from December 31, 2020. The increase in customer deposits is primarily related to government stimulus programs, PPP and our customer’s liquidity preferences. Total brokered deposits decreased $53.3 million from December 31, 2020 due to a reduced need for this funding given the customer deposit growth. Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.

Borrowings


(dollars in thousands)	(dollars in thousands)	March 31, 2021			December 31, 2020			$ Change			(dollars in thousands)	March 31, 2022			December 31, 2021			$ Change
Securities sold under repurchase agreements	Securities sold under repurchase agreements		$	67,417		$	65,163		$	2,254	Securities sold under repurchase agreements		$	70,112		$	84,491		$	(14,379)
Short-term borrowings			—			75,000			(75,000)

Long-term borrowings	Long-term borrowings		23,282			23,681			(399)		Long-term borrowings		22,171			22,430			(259)
Junior subordinated debt securities	Junior subordinated debt securities		64,097			64,083			14		Junior subordinated debt securities		54,408			54,393			15
Total Borrowings	Total Borrowings		$	154,796		$	227,927		$	(73,131)	Total Borrowings		$	146,691		$	161,314		$	(14,623)

Borrowings are an additional source of funding for us. Total borrowings decreased ~~$73.1 million, or 32.1 percent, compared to December 31, 2020 due to increased customer deposits. Total short-term borrowings decreased $75.0~~$14.6 million compared to December 31, ~~2020.~~

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

2021 related to securities sold under repurchase agreements due to normal customer activity.

Information pertaining to short-term borrowings is summarized in the tables below for the three months ended March 31, ~~2021~~2022 and for the twelve months ended December 31, ~~2020.~~2021.


		Securities Sold Under Repurchase Agreements						Securities Sold Under Repurchase Agreements
(dollars in thousands)	(dollars in thousands)	March 31, 2021		December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Balance at the period end	Balance at the period end	$	67,417	$	65,163		Balance at the period end	$	70,112		$	84,491
Average balance during the period	Average balance during the period	$	64,653	$	57,673		Average balance during the period	$	81,790		$	69,964
Average interest rate during the period	Average interest rate during the period	0.15 %		0.29		%	Average interest rate during the period	0.10		%	0.11		%
Maximum month-end balance during the period	Maximum month-end balance during the period	$	67,417	$	92,159		Maximum month-end balance during the period	$	89,366		$	84,491
Average interest rate at the period end	Average interest rate at the period end	0.10 %		0.25		%	Average interest rate at the period end	0.10		%	0.10		%

		Short-Term Borrowings
(dollars in thousands)		March 31, 2021		December 31, 2020
Balance at the period end		$	—	$	75,000
Average balance during the period		$	25,556	$	155,753
Average interest rate during the period		0.19 %		0.92		%
Maximum month-end balance during the period		$	25,000	$	410,240
Average interest rate at the period end		- %		0.19		%

Information pertaining to long-term borrowings is summarized in the tables below for the three months ended March 31, ~~2021~~2022 and for the twelve months ended December 31, ~~2020.~~2021.


		Long-Term Borrowings						Long-Term Borrowings
(dollars in thousands)	(dollars in thousands)	March 31, 2021		December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Balance at the period end	Balance at the period end	$	23,282	$	23,681		Balance at the period end	$	22,171		$	22,430
Average balance during the period	Average balance during the period	$	23,471	$	47,953		Average balance during the period	$	22,310		$	22,995
Average interest rate during the period	Average interest rate during the period	2.00 %		—		%	Average interest rate during the period	1.95		%	1.99		%
Maximum month-end balance during the period	Maximum month-end balance during the period	$	23,549	$	50,635		Maximum month-end balance during the period	$	22,344		$	23,549
Average interest rate at the period end	Average interest rate at the period end	2.00 %		2.03		%	Average interest rate at the period end	1.94		%	1.94		%

		Junior Subordinated Debt Securities						Junior Subordinated Debt Securities
(dollars in thousands)	(dollars in thousands)	March 31, 2021		December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Balance at the period end	Balance at the period end	$	64,097	$	64,083		Balance at the period end	$	54,408		$	54,393
Average balance during the period	Average balance during the period	$	64,088	$	64,092		Average balance during the period	$	54,398		$	61,653
Average interest rate during the period	Average interest rate during the period	3.09 %		3.57		%	Average interest rate during the period	2.95		%	2.99		%
Maximum month-end balance during the period	Maximum month-end balance during the period	$	64,097	$	64,848		Maximum month-end balance during the period	$	54,408		$	64,128
Average interest rate at the period end	Average interest rate at the period end	2.97 %		3.01		%	Average interest rate at the period end	3.26		%	2.69		%

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Liquidity and Capital Resources

Liquidity is defined as a financial institution’s ability to meet its cash and collateral obligations at a reasonable cost. ~~This includes~~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.~~needs and (ii) to meet our future cash commitments under contractual obligations with third parties. In order to manage liquidity risk, our Board of Directors has delegated authority to ALCO for the formulation, implementation, and oversight of liquidity risk management for S&T. The ALCO’s goal is to maintain adequate levels of liquidity at a reasonable cost to meet funding needs in both a normal operating environment and for potential liquidity stress events. The ALCO monitors and manages liquidity through various ratios, reviewing cash flow projections, performing stress tests and having a detailed contingency funding plan. The ALCO policy guidelines define graduated risk tolerance levels. If our liquidity position moves to a level that has been defined as high risk, specific actions are required, such as increased monitoring or the development of an action plan to reduce the risk position.

Our primary funding and liquidity source is a stable customer deposit base. We believe S&T has the ability to retain existing and attract new deposits, mitigating any funding dependency on other more volatile sources. Refer to the "Financial ~~Condition-Deposits"~~Condition as of March 31, 2022-Deposits" section of this MD&A, for additional discussion on deposits. Although deposits are the primary source of funds, we have identified various other funding sources that can be used as part of our normal funding program when either a structure or cost efficiency has been identified. Additional funding sources accessible to S&T include borrowing availability at the Federal Home Loan Bank, or FHLB, of Pittsburgh, federal funds lines with other financial institutions, the brokered deposit market and borrowing availability through the Federal Reserve Borrower-In-Custody program.

An important component of our ability to effectively respond to potential liquidity stress events is maintaining a cushion of highly liquid assets. Highly liquid assets are those that can be converted to cash quickly, with little or no loss in value, to meet financial obligations. ALCO policy guidelines define a ratio of highly liquid assets to total assets by graduated risk tolerance levels of minimal, moderate, and high. At March 31, ~~2021,~~2022, we had ~~$1.1~~$1.3 billion in highly liquid assets, which consisted of ~~$601.0~~$750.9 million in interest-bearing deposits with banks, ~~$494.1~~$585.4 million in unpledged securities, and ~~$12.8~~$1.4 million in loans held for sale. This resulted in a highly liquid assets to total assets ratio of ~~11.9~~14.2 percent at March 31, ~~2021.~~2022. Also, at March 31, ~~2021,~~2022, we had remaining borrowing availability of ~~$2.5~~$2.6 billion with the FHLB of Pittsburgh. ~~Refer~~For more information regarding our outstanding borrowings refer to the "Financial ~~Condition-~~Condition as of March 31, 2022- Borrowings" section of this MD&A for more details.

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


(dollars in thousands)	(dollars in thousands)	Adequately Capitalized		Well- Capitalized		March 31, 2021			December 31, 2020			(dollars in thousands)	Adequately Capitalized		Well- Capitalized		March 31, 2022				December 31, 2021
						Amount		Ratio	Amount		Ratio						Amount		Ratio		Amount		Ratio
S&T Bancorp, Inc.	S&T Bancorp, Inc.											S&T Bancorp, Inc.
Tier 1 leverage	Tier 1 leverage	4.00	%	5.00	%	$	846,536	9.71 %	$	825,515	9.43 %	Tier 1 leverage	4.00	%	5.00	%	$	897,995	9.85	%	$	889,785	9.74	%
Common equity tier 1 to risk-weighted assets	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	817,536		11.84 %	796,515		11.33 %	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	868,995		12.26	%	860,785		12.03	%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	846,536		12.26 %	825,515		11.74 %	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	897,995		12.67	%	889,785		12.43	%
Total capital to risk-weighted assets	Total capital to risk-weighted assets	8.00	%	10.00	%	961,751		13.93 %	944,686		13.44 %	Total capital to risk-weighted assets	8.00	%	10.00	%	1,004,902		14.18	%	987,420		13.79	%
S&T Bank	S&T Bank											S&T Bank
Tier 1 leverage	Tier 1 leverage	4.00	%	5.00	%	$	830,633	9.54 %	$	810,636	9.27 %	Tier 1 leverage	4.00	%	5.00	%	$	870,269	9.55	%	$	864,127	9.46	%
Common equity tier 1 to risk-weighted assets	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	830,633		12.04 %	810,636		11.55 %	Common equity tier 1 to risk-weighted assets	4.50	%	6.50	%	870,269		12.29	%	864,127		12.09	%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	830,633		12.04 %	810,636		11.55 %	Tier 1 capital to risk-weighted assets	6.00	%	8.00	%	870,269		12.29	%	864,127		12.09	%
Total capital to risk-weighted assets	Total capital to risk-weighted assets	8.00	%	10.00	%	939,998		13.63 %	922,007		13.14 %	Total capital to risk-weighted assets	8.00	%	10.00	%	977,177		13.79	%	961,762		13.45	%

On March 27, 2020, the regulators issued interim final rule, or IFR, “Regulatory Capital Rule: Revised Transition of the Current Expected Credit Losses Methodology for Allowances” in response to the disrupted economic activity due to the COVID-19 pandemic. The IFR provides financial institutions that adopted CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided by the initial two-year delay (“~~five year~~five-year transition”). We adopted CECL effective January 1, 2020 and elected to implement the ~~five year~~five-year transition.

We have filed a shelf registration statement on Form S-3 under the Securities Act of 1933, as amended, with the SEC, which allows for the issuance of a variety of securities including debt and capital securities, preferred and common stock and warrants. We may use the proceeds from the sale of securities for general corporate purposes, which could include investments at the holding company level, investing in, or extending credit to subsidiaries, possible acquisitions and stock repurchases. As of March 31, ~~2021,~~2022, we had not issued any securities pursuant to this shelf registration statement.

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S&T BANCORP, INC. AND SUBSIDIARIES

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

S&T is monitoring and will continue to monitor the impact of the pandemic and has taken and will continue to take steps to mitigate the potential risks and impact on our liquidity and capital resources. Due to the economic uncertainty, we are taking a prudent approach to capital ~~management and have established access to the Federal Reserve’s PPP Lending Facility.~~management.

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

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is defined as the degree to which changes in interest rates, foreign exchange rates, commodity prices or equity prices can adversely affect a financial institution’s earnings or capital. For most financial institutions, including S&T, market risk primarily reflects exposures to changes in interest rates. Interest rate fluctuations affect earnings by changing net interest income and other interest-sensitive income and expense levels. Interest rate changes also affect capital by changing the net present value of a bank’s future cash flows, and the cash flows themselves, as rates change. Accepting this risk is a normal part of banking and can be an important source of profitability and enhancing shareholder value. However, excessive interest rate risk can threaten a bank’s earnings, capital, liquidity and solvency. Our sensitivity to changes in interest rate movements is continually monitored by the ~~Asset and Liability Committee, or~~ ALCO. The ALCO monitors and manages market risk through rate shock analyses, economic value of equity, or EVE, analyses and by performing stress tests and simulations to mitigate earnings and market value fluctuations due to changes in interest rates.

Rate shock analyses results are compared to a base case to provide an estimate of the impact that market rate changes may have on 12 and 24 months of pretax net interest income. The base case and rate shock analyses are performed on a static balance sheet. A static balance sheet is a no growth balance sheet in which all maturing and/or repricing cash flows are reinvested in the same product at the existing product spread. Rate shock analyses assume an immediate parallel shift in market interest rates and also include management assumptions regarding the impact of interest rate changes on non-maturity deposit products (noninterest-bearing demand, interest-bearing demand, money market and savings) and changes in the prepayment behavior of loans and securities with optionality. S&T policy guidelines limit the change in pretax net interest income over 12 and 24 month horizons using rate shocks in increments of +/- 100 basis points. Policy guidelines define the percentage change in pretax net interest income by graduated risk tolerance levels of minimal, moderate and high. We have temporarily suspended the analyses on downward rate shocks of 200 basis points or more because they do not provide meaningful insight into our interest rate risk position.

In order to monitor interest rate risk beyond the 24 month time horizon of rate shocks on pretax net interest income, we also perform EVE analyses. EVE represents the present value of all asset cash flows minus the present value of all liability cash flows. EVE change results are compared to a base case to determine the impact that market rate changes may have on our EVE. As with rate shock analyses on pretax net interest income, EVE analyses incorporate management assumptions regarding prepayment behavior of fixed rate loans and securities with optionality and the behavior and value of non-maturity deposit products. S&T policy guidelines limit the change in EVE using rate shocks in increments of +/- 100 basis points. Policy guidelines define the percentage change in EVE by graduated risk tolerance levels of minimal, moderate and high. We have also temporarily suspended the downward rate shocks of 200 basis points or more for EVE.

The table below reflects the rate shock analyses results for the 1-12 and 13-24 month periods of pretax net interest income and EVE.


	March 31, 2022			December 31, 2021
	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 Pretax Net Interest Income	% Change in Pretax Net Interest Income		% Change in Pretax Net Interest Income	% Change in Pretax Net Interest Income
400	37.7	44.2	6.4	30.4	40.3	18.4
300	28.2	33.2	10.4	22.5	30.0	19.9
200	18.7	22.2	11.1	14.9	20.2	18.4
100	9.1	10.9	7.7	7.0	9.9	11.9
-100	(6.5)	(9.1)	(18.9)	(4.6)	(8.4)	(26.3)

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March 31, 2021 December 31, 2020
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 Pretax
Net Interest Income % Change in
Pretax
Net Interest Income % Change in Pretax
Net Interest Income % Change in Pretax
Net Interest Income
400 24.1 % 33.6 % 18.2 % 15.8 % 28.5 % 28.5 %
300 17.9 % 25.1 % 19.8 % 11.7 % 21.3 % 29.0 %
200 11.9 % 17.1 % 18.5 % 7.7 % 14.3 % 25.6 %
100 5.4 % 8.2 % 11.6 % 4.4 % 8.0 % 17.7 %
(100) (3.7) % (7.6) % (23.9) % (2.8) % (5.7) % (28.2) %
S&T BANCORP, INC. AND SUBSIDIARIES

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The results from the rate shock analyses on net interest income are consistent with having an asset sensitive balance sheet. Having an asset sensitive balance sheet means more assets than liabilities will reprice during the measured time frames. The implications of an asset sensitive balance sheet will differ depending upon the change in market interest rates. For example, with an asset sensitive balance sheet in a declining interest rate environment, more assets than liabilities will decrease in rate. This situation could result in a decrease in net interest income and operating income. Conversely, with an asset sensitive balance sheet in a rising interest rate environment, more assets than liabilities will increase in rate. This situation could result in an increase in net interest income and operating income.

Our rate shock analyses show an improvement in the percentage change in pretax net interest income in the rates up scenarios and a decline in the rates down scenarios when comparing March 31, ~~2021~~2022 to December 31, ~~2020.~~2021. We have become more asset sensitive due to the discontinuation of our ~~increased balances at the Federal Reserve.~~indexed money market deposit product. Our EVE analyses show a decline in the percentage change in EVE in the rates up scenarios and an improvement in the rates down scenario when comparing March 31, ~~2021~~2022 to December 31, ~~2020.~~2021. The EVE decline is due to the impact of a steepened yield curve on the value of non-maturity deposits.

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

~~Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

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

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

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of S&T’s ~~Interim~~ Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO (its principal executive officer and principal financial officer, respectively), management has evaluated the effectiveness of the design and operation of S&T’s disclosure controls and procedures as of March 31, ~~2021.~~2022. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods required by the Securities and Exchange Commission, or the SEC, and that such information is accumulated and communicated to S&T’s management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Based on and as of the date of such evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls and procedures were effective in all material respects, as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, ~~2021,~~2022, there were no changes made to S&T’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, S&T’s internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

There have been no material changes to the risk factors that we have previously disclosed in Part I, Item 1A – “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as filed with the SEC on ~~March 1, 2021.~~

February 28, 2022 other than the risks described below.

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Item 1A. Risk Factors - continued

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

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

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

Purchases of Equity Securities

The following table is a summary of our purchases of common stock during the first quarter of ~~2021:~~2022:


Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plan(1)	Approximate dollar value of shares that may yet be purchased under the plan
				$37,441,683
01/01/~~2021~~2022 - 01/31/~~2021~~2022	—	$—	—	37,441,683

02/01/~~2021~~2022 - 02/28/~~2021~~2022	—	—	—	37,441,683

03/01/~~2021~~2022 - 03/31/~~2021~~2022	—	—	—	37,441,683
Total	—	$—	—	$37,441,683

(1) On March ~~15, 2021,~~21, 2022, our Board of Directors authorized an extension of the $50 million share repurchase plan, which was set to expire March 31, ~~2021.~~2022. This authorization extended the expiration date of the repurchase plan through March 31, ~~2022.~~2023. The plan permits S&T to repurchase from time to time up to the previously authorized $50 million in aggregate value of shares of S&T's common stock, with $37.4 million of capacity remaining at March 31, ~~2021,~~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. ~~Any share~~Share repurchases will not occur unless permissible under applicable laws.

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Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

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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~~	Confidentiality, Trade Secrets, Non-Solicitation and Severance Agreement, October 21, 2020, by and between George Basara and S&T Bancorp, Inc.*	~~Filed herewith~~
~~10.2~~	Severance Agreement dated April 20, 2015 by and between George Basara and S&T Bancorp, Inc.*	~~Filed herewith~~
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer.	~~Filed herewith~~
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer.	~~Filed herewith~~
32	Rule 13a-14(b) Certification of the Chief Executive Officer and Chief Financial Officer.	~~Filed herewith~~
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)

* Management Contract or Compensatory Plan or Arrangement

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S&T BANCORP, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			S&T Bancorp, Inc. (Registrant)

May ~~5, 2021~~4, 2022			/s Mark Kochvar
			Mark Kochvar Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Signatory)

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	Derivatives (included in Other Assets)						Derivatives (included in Other Liabilities)
(dollars in thousands)	March 31, 2021			December 31, 2020			March 31, 2021			December 31, 2020
Derivatives not Designated as Hedging Instruments:
Interest Rate Swap Contracts - Commercial Loans
Fair value		$	40,415		$	78,319		$	40,818		$	79,033
Notional amount		983,243			983,638			983,243			983,638
Collateral posted		0			0			43,340			77,930
Interest Rate Lock Commitments - Mortgage Loans
Fair value		1,509			2,900			0			0
Notional amount		44,519			51,053			0			0
Forward Sale Contracts - Mortgage Loans
Fair value		226			0			0			385
Notional amount		$	36,835		$	0		$	0		$	47,062