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What changed in S&T BANCORP INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of S&T BANCORP INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+356 added−359 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-27)

Top changes in S&T BANCORP INC's 2024 10-K

356 paragraphs added · 359 removed · 278 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+5 added−13 removed88 unchanged
Biggest changeSince 2019, the minimum capital requirements plus the capital conservation buffer exceed the regulatory capital ratios required for an insured depository institution to be well-capitalized under prompt corrective action law, described in "Other Safety and Soundness Regulations." These regulatory capital rules also revise the calculation of risk-weighted assets, including a new framework under which the risk weight will increase for most credit exposures that are 90 days or more past due or on nonaccrual, high-volatility commercial real estate loans, mortgage servicing and deferred tax assets that are not deducted from capital and certain equity exposures.
Biggest changeSince 2019, the minimum capital requirements plus the capital conservation buffer exceed the regulatory capital ratios required for an insured depository institution to be well-capitalized under prompt corrective action law, described in "Other Safety and Soundness Regulations." Federal regulators periodically propose amendments to the regulatory capital rules and the related regulatory framework and consider changes to the capital standards that could significantly increase the amount of capital needed to meet applicable standards.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act, enacted in July 2010, has had and will continue to have a broad impact on the financial services industry, including significant regulatory and compliance changes addressing, among other things: (i) enhanced resolution authority of troubled and failing banks and their holding companies; (ii) increased capital and liquidity requirements; (iii) increased regulatory examination fees; (iv) changes to assessments to be paid to the FDIC for federal deposit insurance; (v) enhanced corporate governance and executive compensation requirements and disclosures; and (vi) numerous other provisions designed to improve supervision and oversight of, and strengthen safety and soundness for, the financial services sector.
AND SUBSIDIARIES The Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act, enacted in July 2010, has had and will continue to have a broad impact on the financial services industry, including significant regulatory and compliance changes addressing, among other things: (i) enhanced resolution authority of troubled and failing banks and their holding companies; (ii) increased capital and liquidity requirements; (iii) increased regulatory examination fees; (iv) changes to assessments to be paid to the FDIC for federal deposit insurance; (v) enhanced corporate governance and executive compensation requirements and disclosures; and (vi) numerous other provisions designed to improve supervision and oversight of, and strengthen safety and soundness for, the financial services sector.
Furthermore, in September 2023, the SEC’s Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure rules went into effect now requiring, among other disclosure obligations, companies to publicly disclose the occurrence of a material cybersecurity incident, including the material aspects of the nature, scope and timing of the incident and the material impact on the company including financial condition and results of operation beginning with any material cybersecurity incidents occurring on or after December 18, 2023.
Furthermore, in September 2023, the SEC’s Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure rules went into effect requiring, among other disclosure obligations, companies to publicly disclose the occurrence of a material cybersecurity incident, including the material aspects of the nature, scope and timing of the incident and the material impact on the company including financial condition and results of operation beginning with any material cybersecurity incidents occurring on or after December 18, 2023.
Moreover, in March 2022, the Cyber Incident Reporting for Critical Infrastructure Act was enacted and once final rules are adopted, will require certain covered entities to report a covered cyber incident to the U.S. Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency, or CISA, within 72 hours after a covered entity reasonably believes an incident has occurred.
Moreover, in March 2022, the Cyber Incident Reporting for Critical Infrastructure Act, or CIRCIA, was enacted and once final rules are adopted, will require certain covered entities to report a covered cyber incident to the U.S. Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency, or CISA, within 72 hours after a covered entity reasonably believes an incident has occurred.
The final rule also created a new category of qualified mortgage, called a seasoned qualified mortgage, for first lien, fixed rate covered loans that meet certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements.
The final rule also created a new category of qualified mortgage, called a seasoned qualified mortgage, for first lien, fixed rate covered loans that meet certain performance requirements, are held in the portfolio of the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements.
AND SUBSIDIARIES The federal banking agencies have also adopted guidelines prescribing safety and soundness standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, fees and compensation and benefits. In general, the guidelines require appropriate systems and practices to identify and manage specified risks and exposures.
The federal banking agencies have also adopted guidelines prescribing safety and soundness standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, fees and compensation and benefits. In general, the guidelines require appropriate systems and practices to identify and manage specified risks and exposures.
S&T’s total assets were below $10 billion at December 31, 2023. In November 2023, the FDIC approved a final rule to implement special assessments to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.
S&T’s total assets were below $10 billion at December 31, 2024. In November 2023, the FDIC approved a final rule to implement special assessments to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.
AND SUBSIDIARIES Supervision and Regulation General S&T is extensively regulated under federal and state law. Regulation of bank holding companies and banks is intended primarily for the protection of consumers, depositors, borrowers, the Federal Deposit Insurance Fund, or DIF, and the banking system as a whole, and not for the protection of shareholders or creditors.
Supervision and Regulation General S&T is extensively regulated under federal and state law. Regulation of bank holding companies and banks is intended primarily for the protection of consumers, depositors, borrowers, the Federal Deposit Insurance Fund, or DIF, and the banking system as a whole, and not for the protection of shareholders or creditors.
The following are our five core values that support our Purpose: Make People our Purpose Humility, empathy and a sincere desire to uplift each other and our community guide our actions every day. We are people in service of people, committed to constantly improving our communication and connection and delivering the right solutions.
The following five core values support our purpose: Make People our Purpose Humility, empathy and a sincere desire to uplift each other and our community guide our actions every day. We are people in service of people, committed to constantly improving our communication and connection and delivering the right solutions.
AND SUBSIDIARIES In addition, the Dodd-Frank Act provides that the amount of any interchange fee charged for electronic debit transactions by debit card issuers having assets over $10 billion must be reasonable and proportional to the actual cost of a transaction to the issuer.
In addition, the Dodd-Frank Act provides that the amount of any interchange fee charged for electronic debit transactions by debit card issuers having assets over $10 billion must be reasonable and proportional to the actual cost of a transaction to the issuer.
Interstate Banking and Branching The BHCA currently permits bank holding companies from any state to acquire banks and bank holding companies located in any other state, subject to certain conditions, including certain nationwide and state-imposed deposit concentration limits.
AND SUBSIDIARIES Interstate Banking and Branching The BHCA currently permits bank holding companies from any state to acquire banks and bank holding companies located in any other state, subject to certain conditions, including certain nationwide and state-imposed deposit concentration limits.
Access to United States Securities and Exchange Commission Filings All of our reports filed electronically with the United States Securities and Exchange Commission, or the SEC, including this Annual Report on Form 10-K for the fiscal year ended December 31, 2023, our prior annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and our annual proxy statements, as well as any amendments to those reports, are accessible at no cost on our website at www.stbancorp.com under Financials, SEC Filings.
Access to United States Securities and Exchange Commission Filings All of our reports filed electronically with the United States Securities and Exchange Commission, or the SEC, including this Annual Report on Form 10-K for the fiscal year ended December 31, 2024, our prior annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and our annual proxy statements, as well as any amendments to those reports, are accessible at no cost on our website at www.stbancorp.com under Financials, SEC Filings.
AND SUBSIDIARIES We elected to become a financial holding company under the BHCA in 2001 and thereby may engage in a broader range of financial activities than are permissible for traditional bank holding companies.
We elected to become a financial holding company under the BHCA in 2001 and thereby may engage in a broader range of financial activities than are permissible for traditional bank holding companies.
The continuing changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, increase our operating and compliance costs, or otherwise adversely affect our business.
The continuing changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to business practices, increase our operating and compliance costs, or otherwise adversely affect our business.
Insurance of Accounts; Depositor Preference The deposits of S&T Bank are insured up to applicable limits per insured depositor by the Deposit Insurance Fund, or DIF, as administered by the FDIC. The Dodd-Frank Act codified FDIC deposit insurance coverage per separately insured depositor for all account types at $250,000.
AND SUBSIDIARIES Insurance of Accounts; Depositor Preference The deposits of S&T Bank are insured up to applicable limits per insured depositor by the Deposit Insurance Fund, or DIF, as administered by the FDIC. The Dodd-Frank Act codified FDIC deposit insurance coverage per separately insured depositor for all account types at $250,000.
AND SUBSIDIARIES S&T Bank is subject to affiliate transaction rules in Sections 23A and 23B of the Federal Reserve Act as implemented by the Federal Reserve Board's Regulation W, that limit the amount of transactions between itself and S&T or any other company or entity that controls or is under common control with any company or entity that controls S&T Bank, including for most purposes any financial or depository institution subsidiary of S&T Bank.
S&T Bank is subject to affiliate transaction rules in Sections 23A and 23B of the Federal Reserve Act as implemented by the FRB's Regulation W, that limit the amount of transactions between itself and S&T or any other company or entity that controls or is under common control with any company or entity that controls S&T Bank, including for most purposes any financial or depository institution subsidiary of S&T Bank.
AND SUBSIDIARIES With respect to consumer protection, the Dodd-Frank Act created the Consumer Financial Protection Bureau, or the CFPB, which took over rulemaking responsibility on July 21, 2011 for the principal federal consumer financial protection laws, such as those identified above.
With respect to consumer protection, the Dodd-Frank Act created the Consumer Financial Protection Bureau, or the CFPB, which took over rulemaking responsibility on July 21, 2011 for the principal federal consumer financial protection laws, such as those identified above.
Additionally, the FDIC, OCC and Federal Reserve Board issued a final rule that became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities and its federal regulator of the computer-security incident as soon as possible and no later than 36 hours after the bank determines a computer-security incident has occurred.
Additionally, the FDIC, OCC and FRB issued a final rule that became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities and its federal regulator of the computer-security incident as soon as possible and no later than 36 hours after the bank determines a computer-security incident has occurred.
In order to maintain our status as a financial holding company, we must remain “well-capitalized” and “well-managed” and the depository institutions controlled by us must remain “well-capitalized,” “well-managed” (as defined in federal law) and have at least a “satisfactory” Community Reinvestment Act, or CRA, rating.
In order to maintain our status as a financial holding company, we must remain “well-capitalized” and “well-managed” and the depository institutions controlled by us must remain “well-capitalized,” “well-managed” (as defined in federal law) and have at least a “satisfactory” Community Reinvestment Act, or CRA, rating. Refer to Note 23.
Additionally, the Dodd-Frank Act established a new framework for systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, the Federal Reserve Board, the Office of the Comptroller of the Currency and the FDIC.
Additionally, the Dodd-Frank Act established a new framework for systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, the Federal Reserve Board, or FRB, the Office of the Comptroller of the Currency, or OCC, and the FDIC.
The federal banking agencies’ prompt corrective action powers, which increase depending upon the degree to which an institution is undercapitalized, can include, among other things, requiring an insured depository institution to adopt a capital restoration plan, which cannot be approved unless guaranteed by the institution’s parent company; placing limits on asset growth and restrictions on activities, including restrictions on transactions with affiliates; restricting the interest rates the institution may pay on deposits; restricting the institution from accepting brokered deposits; prohibiting the payment of principal or interest on subordinated debt; prohibiting the holding company from making capital distributions, including payment of dividends, without prior regulatory approval; and, ultimately, appointing a receiver for the institution. 8 Table of Contents S&T BANCORP, INC.
The federal banking agencies’ prompt corrective action powers, which increase depending upon the degree to which an institution is undercapitalized, can include, among other things, requiring an insured depository institution to adopt a capital restoration plan, which cannot be approved unless guaranteed by the institution’s parent company; placing limits on asset growth and restrictions on activities, including restrictions on transactions with affiliates; restricting the interest rates the institution may pay on deposits; restricting the institution from accepting brokered deposits; prohibiting the payment of principal or interest on subordinated debt; prohibiting the holding company from making capital distributions, including payment of dividends, without prior regulatory approval; and, ultimately, appointing a receiver for the institution.
The main office of both S&T Bancorp, Inc. and S&T Bank is located at 800 Philadelphia Street, Indiana, Pennsylvania, and our phone number is (800) 325-2265. Human Capital Management Our commitment to every customer starts with a talented team.
The main office of both S&T Bancorp, Inc. and S&T Bank is located at 800 Philadelphia Street, Indiana, Pennsylvania, and our phone number is (800) 325-2265. Human Capital Management Our commitment to our customers starts with a talented team.
We also manage private investment accounts for individuals and institutions through our registered investment advisor. Total Wealth Management assets under administration, which are not accounted for as part of our assets, were $2.2 billion at December 31, 2023.
We also manage private investment accounts for individuals and institutions through our registered investment advisor. Total Wealth Management assets under administration, which are not accounted for as part of our assets, were $2.0 billion at December 31, 2024.
The Federal Reserve Board has indicated that banking organizations should generally pay dividends only if (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and (ii) the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition.
The FRB has indicated that banking organizations should generally pay dividends only if (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and (ii) the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition.
No prior regulatory approval is required for a financial holding company with total consolidated assets less than $50 billion to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board, unless the total consolidated assets to be acquired exceed $10 billion.
No prior regulatory approval is required for a financial holding company with total consolidated assets less than $50 billion to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB, unless the total consolidated assets to be acquired exceed $10 billion.
The FDIC may terminate the deposit insurance of any insured depository institution if it determines, after hearing that the institution has engaged in unsafe or unsound practices, that the institution is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or the Federal Reserve Board.
The FDIC may terminate the deposit insurance of any insured depository institution if it determines, after hearing that the institution has engaged in unsafe or unsound practices, that the institution is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or the FRB.
The BHCA identifies several activities as “financial in nature” including, among others, securities underwriting; dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and sales agency; investment advisory activities; merchant banking activities and activities that the Federal Reserve Board has determined to be closely related to banking.
The BHCA identifies several activities as “financial in nature” including, among others, securities underwriting; dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and sales agency; investment advisory activities; merchant banking activities and activities that the FRB has determined to be closely related to banking.
Refer to Note 23 Regulatory Matters to the consolidated financial statements contained in Part II, Item 8 of this Report for information concerning the current capital ratios of S&T and S&T Bank.
Regulatory Matters to the consolidated financial statements contained in Part II, Item 8 of this Report for information concerning the current capital ratios of S&T and S&T Bank.
Under the BHCA, a bank holding company may not directly or indirectly acquire ownership or control of more than five percent of the voting shares or substantially all of the assets of any additional bank, or merge or consolidate with another bank holding company, without the prior approval of the Federal Reserve Board.
Under the BHCA, a bank holding company may not directly or indirectly acquire ownership or control of more than five percent of the voting shares or substantially all of the assets of any additional bank, or merge or consolidate with another bank holding company, without the prior approval of the FRB.
Business section for capital requirements. The classification of depository institutions is primarily for the purpose of applying the federal banking agencies’ prompt corrective action provisions and is not intended to be and should not be interpreted as a representation of overall financial condition or prospects of any financial institution.
The classification of depository institutions is primarily for the purpose of applying the federal banking agencies’ prompt corrective action provisions and is not intended to be and should not be interpreted as a representation of overall financial condition or prospects of any financial institution.
The likelihood and timing of any changes and the impact such changes might have on S&T is impossible to determine with any certainty. S&T We are a bank holding company subject to regulation under the BHCA and the examination and reporting requirements of the Federal Reserve Board.
The likelihood and timing of any changes and the impact such changes might have on S&T is impossible to determine with any certainty. S&T We are a bank holding company subject to regulation under the BHCA and the examination and reporting requirements of the FRB.
The timing of adoption, ultimate form and effect of any such proposed amendments cannot be predicted. Payment of Dividends S&T is a legal entity separate and distinct from its banking and other subsidiaries. A substantial portion of our revenues consist of dividend payments we receive from S&T Bank.
The timing of adoption, ultimate form and effect of any such proposed amendments cannot be predicted. 7 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Payment of Dividends S&T is a legal entity separate and distinct from its banking and other subsidiaries. A substantial portion of our revenues consist of dividend payments we receive from S&T Bank.
AND SUBSIDIARIES Under federal law, deposits and certain claims for administrative expenses and employee compensation against insured depository institutions are afforded a priority over other general unsecured claims against such an institution, including federal funds and letters of credit, in the liquidation or other resolution of such an institution by a receiver. Such priority creditors would include the FDIC.
Under federal law, deposits and certain claims for administrative expenses and employee compensation against insured depository institutions are afforded a priority over other general unsecured claims against such an institution, including federal funds and letters of credit, in the liquidation or other resolution of such an institution by a receiver.
The discussion of the regulations applicable to S&T provided below is based on our status as an institution with less than $10 billion in assets. If S&T’s assets cross the $10 billion threshold, we will be subject to different and additional regulations than those described below.
The discussion of the regulations applicable to S&T provided below is based on our status as an institution with less than $10 billion in assets. If S&T’s assets cross the $10 billion threshold, we will be subject to different and additional regulations than those described below. 3 Table of Contents S&T BANCORP, INC.
Banking entities had until July 21, 2017 to conform their activities to the requirements of the rule. Since S&T generally does not engage in the activities prohibited by the Volcker Rule, the effectiveness of the rule has not had a material effect on S&T Bank or its affiliates. 10 Table of Contents S&T BANCORP, INC.
Banking entities had until July 21, 2017 to conform their activities to the requirements of the rule. Since S&T generally does not engage in the activities prohibited by the Volcker Rule, the effectiveness of the rule has not had a material effect on S&T Bank or its affiliates.
Thus, under certain circumstances based upon our financial condition, our ability to declare and pay quarterly dividends may require consultation with the Federal Reserve Board and may be prohibited by applicable Federal Reserve Board guidance.
Thus, under certain circumstances based upon our financial condition, our ability to declare and pay quarterly dividends may require consultation with the FRB and may be prohibited by applicable FRB guidance.
As of December 31, 2023, we had approximately $9.6 billion in assets, $7.7 billion in total loans, $7.5 billion in deposits and $1.3 billion in shareholders’ equity. S&T Bank is a full-service bank that operates in Pennsylvania and Ohio. S&T Bank deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent provided by law.
As of December 31, 2024, we had approximately $9.7 billion in assets, $7.7 billion in total loans, $7.8 billion in deposits and $1.4 billion in shareholders’ equity. S&T Bank is a full-service bank that operates in Pennsylvania and Ohio. S&T Bank deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent provided by law.
If S&T or S&T Bank ceases to be “well-capitalized” or “well-managed,” we will not be in compliance with the requirements of the BHCA regarding financial holding companies or requirements regarding the operation of financial subsidiaries by insured banks.
If S&T or S&T Bank ceases to be “well-capitalized” or “well-managed,” we will not be in compliance with the requirements of the BHCA regarding financial holding companies or requirements regarding the operation of financial subsidiaries by insured banks. 4 Table of Contents S&T BANCORP, INC.
The charters of the Audit Committee, the Compensation and Benefits Committee, the Credit Risk Committee, the Executive Committee, the Nominating and Corporate Governance Committee and the Risk Committee as well as the Complaints Regarding Accounting, Internal Accounting Controls or Auditing Matters ("Whistleblower Policy"), the Code of Conduct for the CEO and CFO, the General Code of Conduct, the Shareholder Communications Policy, and the Corporate Governance Guidelines are also available at www.stbancorp.com under Governance. 3 Table of Contents S&T BANCORP, INC.
The charters of the Audit Committee, the Compensation and Benefits Committee, the Credit Risk Committee, the Executive Committee, the Nominating and Corporate Governance Committee and the Risk Committee as well as the Complaints Regarding Accounting, Internal Accounting Controls or Auditing Matters ("Whistleblower Policy"), the Code of Conduct for the CEO and CFO, the General Code of Conduct, the Shareholder Communications Policy and the Corporate Governance Guidelines are also available at www.stbancorp.com under Governance.
In addition, pursuant to the federal Bank Merger Act, S&T Bank must obtain the prior approval of the FDIC before it can merge or consolidate with or acquire the assets or assume the deposit liabilities of another bank. 5 Table of Contents S&T BANCORP, INC.
In addition, pursuant to the Federal Bank Merger Act, S&T Bank must obtain the prior approval of the FDIC before it can merge or consolidate with or acquire the assets or assume the deposit liabilities of another bank.
In the case of a bank holding company, including a financial holding company, applying for approval to acquire a bank or bank holding company, the Federal Reserve Board will assess the record of each subsidiary bank of the applicant bank holding company in considering the application.
In the case of a bank holding company, including a financial holding company, applying for approval to acquire a bank or bank holding company, the FRB will assess the record of each subsidiary bank of the applicant bank holding company in considering the application.
If a financial holding company is notified by the Federal Reserve Board of such a change in the ratings of any of its subsidiary banks, it must take certain corrective actions within specified time frames.
AND SUBSIDIARIES If a financial holding company is notified by the FRB of such a change in the ratings of any of its subsidiary banks, it must take certain corrective actions within specified time frames.
As a bank holding company, we are expected under statutory and regulatory provisions to serve as a source of financial and managerial strength to our subsidiary bank. A bank holding company is also expected to commit resources, including capital and other funds, to support its subsidiary bank. 4 Table of Contents S&T BANCORP, INC.
As a bank holding company, we are expected under statutory and regulatory provisions to serve as a source of financial and managerial strength to our subsidiary bank. A bank holding company is also expected to commit resources, including capital and other funds, to support its subsidiary bank.
The Dodd-Frank Act also placed restrictions on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors.
The Dodd-Frank Act also placed restrictions on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors. 5 Table of Contents S&T BANCORP, INC.
At the state level, the PADBS also has broad enforcement powers over S&T Bank, including the power to impose fines and other penalties and to appoint a conservator or receiver.
At the state level, the PADBS also has broad enforcement powers over S&T Bank, including the power to impose fines and other penalties and to appoint a conservator or receiver. 8 Table of Contents S&T BANCORP, INC.
In every case, we seek the right solutions based on a holistic understanding of the opportunities ahead of us. Value Every Voice We stand for inclusivity, accessibility and opportunity. We listen for forward-looking ideas to better ourselves and improve our experience.
In every case, we seek the right solutions based on a holistic understanding of the opportunities ahead of us. 2 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Value Every Voice We stand for inclusivity, accessibility and opportunity. We listen for forward-looking ideas to better ourselves and improve our experience.
Many customers now expect 11 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES a choice of banking options for the delivery of services, including traditional banking offices, telephone, internet, mobile, ATMs, self-service branches, in-store branches and/or digital and technology based solutions.
Many customers now expect a choice of banking options for the delivery of services, including traditional banking offices, telephone, internet, mobile, ATMs, self-service branches, in-store branches and/or digital and technology based solutions.
After a phase in period beginning in 2016, these regulatory capital rules also require a banking organization to maintain a capital conservation buffer composed of common equity Tier 1 capital in an amount greater than 2.50 percent of total risk-weighted assets beginning in 2019.
Total capital is the sum of Tier 1 and Tier 2 capital. The regulatory capital rules also require a banking organization to maintain a capital conservation buffer composed of common equity Tier 1 capital in an amount greater than 2.50 percent of total risk-weighted assets beginning in 2019.
This rule also requires banking organizations to notify their customers of a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
This rule also requires banking organizations to notify 10 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES their customers of a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
We offer our employees and their families access to a variety of flexible and convenient health and welfare programs that provide resources to help them maintain and/or improve their physical and mental health.
Safety, Health and Wellness The safety, health and well-being of our employees is a top priority. We offer our employees and their families access to a variety of flexible and convenient health and welfare programs that provide resources to help them maintain and/or improve their physical and mental health.
And we always welcome an honest and open dialogue with our colleagues, customers and the community at large. 2 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Win as One Team We function as one connected team working together to deliver a seamless experience.
And we always welcome an honest and open dialogue with our colleagues, customers and the community at large. Win as One Team We function as one connected team working together to deliver a seamless experience.
Most of the final rule’s requirements will be applicable beginning in January 2026, while the remaining requirements, including data reporting requirements, will be applicable in January 2027. 9 Table of Contents S&T BANCORP, INC.
Most of the final rule’s requirements will be applicable beginning in January 2026, while the remaining requirements, including data reporting requirements, will be applicable in January 2027.
Tier 2, or supplementary, capital generally includes portions of trust preferred securities and cumulative perpetual preferred stock not otherwise counted in Tier 1 capital, as well as preferred stock, subordinated debt, total capital minority interests not included in Tier 1, and the allowance for credit losses, or ACL, in an amount not exceeding 7 Table of Contents S&T BANCORP, INC.
Tier 2, or supplementary, capital generally includes portions of trust preferred securities and cumulative perpetual preferred stock not otherwise counted in Tier 1 capital, as well as preferred stock, subordinated debt, total capital minority interests not included in Tier 1, and the allowance for credit losses, or ACL, in an amount not exceeding 1.25 percent of standardized risk-weighted assets, less applicable regulatory adjustments and deductions.
Cybersecurity We are subject to a variety of regulatory expectations and requirements regarding cybersecurity and data privacy. Federal regulators have issued statements regarding cybersecurity addressing the controls that financial institutions should design and business continuity planning and recovery processes that should be in place.
Federal regulators have issued statements regarding cybersecurity addressing the controls that financial institutions should design and business continuity planning and recovery processes that should be in place.
Capital The Federal Reserve Board and the FDIC have issued substantially similar minimum risk-based and leverage capital rules applicable to the banking organizations they supervise. On December 31, 2023, both S&T and S&T Bank met the applicable minimum regulatory capital requirements.
Such priority creditors would include the FDIC. 6 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Capital The FRB and the FDIC have issued substantially similar minimum risk-based and leverage capital rules applicable to the banking organizations they supervise. On December 31, 2024, both S&T and S&T Bank met the applicable minimum regulatory capital requirements.
If insurance of accounts is terminated, the accounts at the institution at the time of termination, less subsequent withdrawals, will continue to be insured for a period of six months to two years, as determined by the FDIC. 6 Table of Contents S&T BANCORP, INC.
It also may suspend deposit insurance temporarily during the hearing process if the institution has no tangible capital. If insurance of accounts is terminated, the accounts at the institution at the time of termination, less subsequent withdrawals, will continue to be insured for a period of six months to two years, as determined by the FDIC.
Our commitment is to a diverse, equitable and inclusive workplace where everyone utilizes their knowledge, skills, abilities and unique interests to help each other find success and drive positive results.
Our commitment is to foster an inclusive workplace where everyone utilizes their knowledge, skills, abilities and unique interests to help each other find success and drive positive results. S&T fosters an inclusive work culture where employees work together to better our company, products and services and community.
S&T Bank is required to have a fair lending program that is of sufficient scope to monitor the inherent fair lending risk of the institution and that appropriately remediates issues which are identified. During 2013, the CFPB issued a series of final rules related to mortgage loan origination and mortgage loan servicing, which became effective in 2014.
S&T Bank is required to have a fair lending program that is of sufficient scope to monitor the inherent fair lending risk of the institution and that appropriately remediates issues which are identified. 9 Table of Contents S&T BANCORP, INC.
The extent of these powers depends upon whether the institution in question is “well-capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” as defined by the law.
The extent of these powers depends upon whether the institution in question is “well-capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” as defined by the law. As of December 31, 2024, S&T Bank was classified as “well-capitalized.” Refer to the above section titled Capital within this Item 1. Business section for capital requirements.
This rule, Regulation II, was effective October 1, 2011, and then amended on October 3, 2022 to require debit card issuers to provide at least two unaffiliated payment card networks to process card-not-present debit card transactions. Regulation II does not apply to a bank that, together with its affiliates, has less than $10 billion in assets, which includes S&T.
The FRB has adopted a rule which limits the maximum permissible interchange fees that such issuers can receive for an electronic debit transaction. This rule, Regulation II, was effective October 1, 2011, and then amended on October 3, 2022 to require debit card issuers to provide at least two unaffiliated payment card networks to process card-not-present debit card transactions.
We communicate, collaborate and care enough to go the extra mile for the colleagues we work alongside, the customers we serve and the communities where we live. Diversity and Inclusion S&T fosters a diverse work culture where employees work together to better our company, services and community.
We communicate, collaborate and care enough to go the extra mile for the colleagues we work alongside, the customers we serve and the communities where we live. Talent Development and Training S&T strives to provide our employees access to comprehensive training to enhance all job positions.
The following table summarizes the leverage and risk-based capital ratios for S&T and S&T Bank: Actual Minimum Regulatory Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2023 Leverage Ratio S&T $ 1,034,828 11.21 % $ 369,297 4.00 % $ 461,621 5.00 % S&T Bank 995,824 10.79 % 369,133 4.00 % 461,416 5.00 % Common Equity Tier 1 (to Risk-Weighted Assets) S&T 1,010,828 13.37 % 340,159 4.50 % 491,341 6.50 % S&T Bank 995,824 13.18 % 339,954 4.50 % 491,045 6.50 % Tier 1 Capital (to Risk-Weighted Assets) S&T 1,034,828 13.69 % 453,545 6.00 % 604,727 8.00 % S&T Bank 995,824 13.18 % 453,272 6.00 % 604,362 8.00 % Total Capital (to Risk-Weighted Assets) S&T 1,154,376 15.27 % 604,727 8.00 % 755,909 10.00 % S&T Bank 1,115,315 14.76 % 604,362 8.00 % 755,453 10.00 % The banking regulatory agencies may from time to time require that a banking organization maintain capital above the minimum prescribed levels, whether because of its financial condition or actual or anticipated growth.
The following table summarizes the leverage and risk-based capital ratios for S&T and S&T Bank: Actual Minimum Regulatory Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2024 Leverage Ratio S&T $ 1,112,126 11.98 % $ 371,211 4.00 % $ 464,014 5.00 % S&T Bank 1,060,010 11.43 % 371,002 4.00 % 463,752 5.00 % Common Equity Tier 1 (to Risk-Weighted Assets) S&T 1,088,126 14.58 % 335,888 4.50 % 485,172 6.50 % S&T Bank 1,060,010 14.21 % 335,722 4.50 % 484,932 6.50 % Tier 1 Capital (to Risk-Weighted Assets) S&T 1,112,126 14.90 % 447,851 6.00 % 597,134 8.00 % S&T Bank 1,060,010 14.21 % 447,629 6.00 % 596,839 8.00 % Total Capital (to Risk-Weighted Assets) S&T 1,230,497 16.49 % 597,134 8.00 % 746,418 10.00 % S&T Bank 1,178,335 15.79 % 596,839 8.00 % 746,049 10.00 % The banking regulatory agencies may from time to time require that a banking organization maintain capital above the minimum prescribed levels, whether because of its financial condition or actual or anticipated growth.
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack. In April 2024, the CISA issued proposed rules under the CIRCIA that would clarify the scope of cyber incidents to be reported and would further define covered entities subject to the CIRCIA.
To attract and retain our talented team, we strive to make S&T an inclusive, safe and healthy workplace that provides our employees with opportunities to grow and develop. As of December 31, 2023, we had approximately 1,244 full time equivalent employees. Our Team and Culture Our purpose is building a better future together through people-forward banking.
We are committed to promoting a workplace that develops all people through ensuring fairness in all aspects of employment, educating our employees and fostering a culture to address employees’ and customers’ needs. As of December 31, 2024, we had approximately 1,206 full time equivalent employees. Our Team and Culture Our purpose is building a better future together through people-forward banking.
We are committed to promoting a diverse workforce and developing all people through: • Equal Opportunity Employment • Educating our employees and board of directors • Fostering a culture to address employees’ and customers’ needs • Partnering with diverse vendors The S&T mindset is to encourage, develop and inspire all employees to achieve their best, motivated by their own personal development.
To attract and retain our talented team, we strive to make S&T an inclusive workplace that provides our employees with opportunities to develop and grow. The S&T mindset is to encourage, develop and inspire all employees to achieve their best, motivated by their own personal progress and development.
Talent Development and Training Our training plan strives to provide all departments with access to comprehensive training to enhance all job positions. Our Corporate Training Department maintains oversight of all training to ensure that it is implemented and monitored properly and encourages career development for our employees.
Our corporate training department maintains oversight of trainings to ensure it is implemented and monitored properly and encourages career development for our employees. Our training programs offer a blended learning approach comprised of classroom, asynchronous online learning and synchronous online sessions. Our learning management systems and vendor relationships provide employees regulatory, compliance, skill-based, technology, leadership and career development trainings.
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Our Compensation and Benefits Committee of the Board of Directors oversees our diversity and inclusion strategy, and at least annually, measures the success of diversity and inclusion initiatives by reviewing S&T’s strategies and statistics from S&T’s Human Capital Management System.
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We encourage all employees to develop their skill sets and careers through a variety of internal and external training opportunities to align our organization for long-term success. We are dedicated to investing in and developing our managers, supervisors and future leaders of S&T.
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Diversity, equity and inclusion, or DEI, is a commitment that we are focused on through various avenues to create awareness, provide education, support our colleagues and communities, develop and improve products and services, partner with diverse vendors and drive results tied to our overall organizational strategy. As part of our DEI strategy, we launched our DEI Advisory Council during 2022.
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Our multi-tier succession plan includes replacement planning of vacancies, ongoing talent development and career path design of current employees. Additional resources that support these initiatives include S&T's annual training and recruitment plans that identify specific actionable programs and efforts. In 2024, our employees logged approximately 77,290 training hours, on average 64 hours per employee.
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The DEI Advisory Council is co-chaired by our Chief Executive Officer and Chief Human Resources Officer and is made up of colleagues from departments across our organization. We conduct an ongoing S&T Commemorates webinar series that is designed to explore a wide scope of DEI topics.
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AND SUBSIDIARIES During 2013, the CFPB issued a series of final rules related to mortgage loan origination and mortgage loan servicing, which became effective in 2014.
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Our training program offers a blended learning approach comprised of classroom and online course delivery. We have many training sessions that are a virtual format through webinars and learning management system delivery for regulatory, compliance, skill-based, technology, leadership and career development. Certain trainings are conducted live based on the needs of the program.
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Regulation II does not apply to a bank that, together with its affiliates, has less than $10 billion in assets, which includes S&T. Cybersecurity We are subject to a variety of regulatory expectations and requirements regarding cybersecurity and data privacy.
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In 2023, our employees logged approximately 78,532 training hours, on average 63 hours per employee, which is an increase of approximately 7 percent compared to 2022. Safety, Health and Wellness The safety, health and well-being of our employees is a top priority.
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Public comments were due in July 2024 and the final rules are expected to be adopted later in 2025.
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It also may suspend deposit insurance temporarily during the hearing process if the institution has no tangible capital.
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In July 2013, the federal banking agencies issued final regulatory capital rules that replaced the then existing general risk-based capital and related rules, broadly revising the basic definitions and elements of regulatory capital and making substantial changes to the risk weightings for banking and trading book assets.
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These regulatory capital rules are designed to implement Basel III (which were agreements reached in July 2010 by the international oversight body of the Basel Committee on Banking Supervision to require more and higher-quality capital) as well as the minimum leverage and risk-based capital requirements of the Dodd-Frank Act.
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These capital standards apply to all banks, regardless of size, and to all bank holding companies with consolidated assets greater than $500 million and became effective on January 1, 2015. For smaller banking organizations such as S&T and S&T Bank, the rules were subject to a transition period providing for full implementation as of January 1, 2019.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile we do not expect the transition from LIBOR and the risks related thereto to have a material adverse effect on us, there remains some uncertainty as to the ultimate impact on our business and results of operations. Our business could be negatively impacted by environmental, social and governance (ESG) matters, including climate change and related legislative and regulatory initiatives.
Biggest changeOur business could be negatively impacted by environmental, social and governance, or ESG, matters, including climate change and related legislative and regulatory initiatives. ESG standards, expectations and norms are constantly changing.
General Risk Factors We may be a defendant from time to time in a variety of litigation and other actions, which could have a material adverse effect on our financial condition and results of operations. From time to time, customers and others make claims and take legal action pertaining to the performance of our responsibilities.
AND SUBSIDIARIES General Risk Factors We may be a defendant from time to time in a variety of litigation and other actions, which could have a material adverse effect on our financial condition and results of operations. From time to time, customers and others make claims and take legal action pertaining to the performance of our responsibilities.
AND SUBSIDIARIES Risks Related to Our Operations Failure to keep pace with technological changes could have a material adverse effect on our results of operations and financial condition. The financial services industry is constantly undergoing rapid technological change with frequent introductions of new technology-driven products and services.
Risks Related to Our Operations Failure to keep pace with technological changes could have a material adverse effect on our results of operations and financial condition. The financial services industry is constantly undergoing rapid technological change with frequent introductions of new technology-driven products and services.
As a result of these recent events, we face the potential for reputational risk, deposit outflows and increased credit risk which, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations and liquidity.
As a result of these events, we face the potential for reputational risk, deposit outflows and increased credit risk which, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations and liquidity.
Risks Related to Credit Our ability to assess the credit-worthiness of our customers may diminish, which may adversely affect our results of operations. We incur credit risk by virtue of making loans and extending loan commitments and letters of credit. Credit risk is one of our most significant risks.
AND SUBSIDIARIES Risks Related to Credit Our ability to assess the credit-worthiness of our customers may diminish, which may adversely affect our results of operations. We incur credit risk by virtue of making loans and extending loan commitments and letters of credit. Credit risk is one of our most significant risks.
Our principal competitors include other local, regional and national financial services providers, such as other financial holding companies, commercial banks, credit unions, finance companies and brokerage and insurance firms, including competitors that provide their products and services online.
Our principal competitors include other local, regional and national financial services providers, such as other financial holding companies, commercial banks, financial technology companies, credit unions, finance companies and brokerage and insurance firms, including competitors that provide their products and services online.
While we maintain liquidity primarily through customer deposits and through access to other short-term funding sources, including advances from the Federal Home Loan Bank (FHLB), our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated increase or reductions in our liquidity, particularly in light of the impact of increased interest rates on the market value of investment securities.
While we maintain liquidity primarily through customer deposits and through access to other short-term funding sources, including advances from the Federal Home Loan Bank, or FHLB, our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated increases or reductions in our liquidity, particularly in light of the impact of increased interest rates on the market value of investment securities.
In addition, we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters.
In addition, we could be criticized for the scope of such initiatives or perceived as not acting responsibly in connection with these matters.
Management determines the amount of ACL through undergoing a periodic review of the loan portfolio, where it considers historical losses, the national unemployment forecast produced by the Federal Reserve combined with qualitative factors around current conditions including changes in lending policies and practices, economic conditions, changes in the loan portfolio, changes in lending management, results of internal loan reviews, asset quality trends, collateral values, concentrations of credit risk and other external factors.
Management determines the amount of allowance for credit losses, or ACL, through undergoing a periodic review of the loan portfolio, where it considers historical losses, the national unemployment forecast produced by the Federal Reserve combined with qualitative factors around current conditions including changes in lending policies and practices, economic conditions, changes in the loan portfolio, changes in lending management, results of internal loan reviews, asset quality trends, collateral values, concentrations of credit risk and other external factors.
AND SUBSIDIARIES Declines in the value of investment securities held by us could require write-downs, which would reduce our earnings. In order to diversify earnings and enhance liquidity, we own debt instruments of government agencies and municipalities.
AND SUBSIDIARIES Declines in the value of investment securities held by us could require write-downs, which would reduce our earnings. In order to diversify earnings and enhance liquidity, we own debt instruments of the U.S. government, U.S.government agencies and U.S. municipalities.
Additionally, our stock price can fluctuate significantly in response to a variety of factors including, among other things: • volatility of stock market prices and volumes in general; • changes in market valuations of similar companies; • the nature and composition of our ownership base; • investor views on the attractiveness of a given sector in the market; • the flow of capital among market sectors; • changes in the conditions of credit markets; • changes in accounting policies or procedures as required by the Financial Accounting Standards Board, or FASB, or other regulatory agencies; • legislative and regulatory actions, including the impact of the Dodd-Frank Act and related regulations, that may subject us to additional regulatory oversight which may result in increased compliance costs and/or require us to change our business model; • government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; • additions or departures of key members of management; • fluctuations in our quarterly or annual operating results; and • changes in analysts’ estimates of our financial performance.
Additionally, our stock price can fluctuate significantly in response to a variety of factors including, among other things: • volatility of stock market prices and volumes in general; • changes in market valuations of similar companies; • the nature and composition of our ownership base; • investor views on the attractiveness of a given sector in the market; • the flow of capital among market sectors; • changes in the conditions of credit markets; • changes in accounting policies or procedures as required by the Financial Accounting Standards Board, or FASB, or other regulatory agencies; • legislative and regulatory actions, including the impact of the Dodd-Frank Act and related regulations, that may subject us to additional regulatory oversight which may result in increased compliance costs and/or require us to change our business model; • government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the FRB; • additions or departures of key members of management; • fluctuations in our quarterly or annual operating results; and • changes in analysts’ estimates of our financial performance. 20 Table of Contents S&T BANCORP, INC.
Risks Related to Liquidity We rely on a stable core deposit base as our primary source of liquidity. We are dependent for our funding on a stable base of core deposits.
AND SUBSIDIARIES Risks Related to Liquidity We rely on a stable core deposit base as our primary source of liquidity. We are dependent for our funding on a stable base of core deposits.
For example, denial of service attacks have been launched against a number of large financial institutions and several large retailers have disclosed substantial cyber security breaches affecting debit accounts of their customers.
For example, denial of service attacks have been launched against a number of large financial institutions and several large retailers have disclosed substantial cybersecurity breaches affecting debit accounts of their customers.
Our ability to meet contingency funding needs, in the event of a crisis that causes a disruption to our core deposit base, is dependent on access to wholesale markets, including funds provided by the FHLB of Pittsburgh and other short-term funding sources, including the Federal Reserve Discount Window and brokered deposits.
Our ability to meet contingency funding needs, in the event of a crisis that causes a disruption to our core deposit base, is dependent on access to wholesale markets, including funds provided by the Federal Reserve Borrower-in-Custody Program, the FHLB of Pittsburgh and other short-term funding sources, including brokered deposits.
There has been an increased focus from regulators, investors, customers, employees and other stakeholders concerning environmental, social and governance, or ESG, practices and disclosure, including climate change, hiring practices, the diversity of the work force, racial and social justice issues and shareholder rights.
There has been an increased focus from regulators, investors, customers, employees and other stakeholders concerning ESG practices and disclosure, including climate change, hiring practices, the diversity of the work force, diversity, equity and inclusion practices, racial and social justice issues and shareholder rights.
Although the extent and duration of these military conflicts and any future escalation of such hostilities, 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. 14 Table of Contents S&T BANCORP, INC.
Although the extent and duration of these military conflicts and any future escalation of such hostilities, 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.
However, other factors not discussed below or elsewhere in this Annual Report on Form 10-K could adversely affect our businesses, results of operations and financial condition. Therefore, the risk factors below do not necessarily include all risks that we may face.
However, other factors not discussed below or elsewhere in this Annual Report on Form 10-K could adversely affect our businesses, results of operations and financial condition. Therefore, the risk factors below do not necessarily include all risks that we may face. 11 Table of Contents S&T BANCORP, INC.
We own stock in the Federal Home Loan Bank of Pittsburgh, or FHLB, in order to qualify for membership in the FHLB system, which enables us to borrow on our line of credit with the FHLB that is secured by a blanket lien on a significant portion of our loan portfolio.
We own stock in the FHLB, in order to qualify for membership in the FHLB system, which enables us to borrow on our line of credit that is secured by a blanket lien on a significant portion of our loan portfolio.
Our loan portfolio has a significant concentration of commercial loans that have a higher risk of loss. The majority of our loans are to commercial borrowers including commercial and industrial, or C&I, CRE, and construction loans. The commercial loan portfolio typically involves a higher degree of credit risk than other types of loans.
The majority of our loans are to commercial borrowers including commercial and industrial, or C&I, CRE and construction loans. The commercial loan portfolio typically involves a higher degree of credit risk than other types of loans.
We have experienced cyber security incidents in the past, such as vendor malware attacks, phishing and other social engineering schemes designed to gain access to confidential information from our employees,customers or vendors and, although not material, we anticipate that we could experience further incidents.
We have experienced cybersecurity incidents in the past, such as vendor malware attacks, phishing and other social engineering schemes designed to gain access to confidential information from our employees, customers or vendors and, although not material, we anticipate that we could experience further incidents of that nature as well as other types of attempts or incidents.
With respect to environmental in particular, increased focus and concern over the effects of climate change have resulted in increased political and social initiatives directed toward climate change.
Environmental focus and concern over the effects of climate change have resulted in increased political and social initiatives directed toward climate change.
Our financial flexibility could be severely constrained if we were unable to maintain our access to funding or if adequate financing is not available at acceptable interest rates. 20 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Risks Related to Owning Our Stock The market price of our common stock may fluctuate significantly in response to a number of factors.
Our financial flexibility could be severely constrained if we were unable to maintain our access to funding or if adequate financing is not available at acceptable interest rates. Risks Related to Owning Our Stock The market price of our common stock may fluctuate significantly in response to a number of factors.
Any of these matters could result in our loss of customers and business opportunities, significant disruption to our operations and business, misappropriation or destruction of our confidential information and/or that of our customers, or damage to our customers’ and/or third parties’ computers or systems, and could result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, and additional compliance costs.
Any of these matters could result in failure, circumvention of our security systems, or significant disruptions to us or third parties with whom we interact, misappropriation or destruction of our confidential information and/or that of our customers, or damage to our customers’ and/or third parties’ computers or systems, loss of our customers and business opportunities, and could result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, and additional compliance costs.
This conflict, as well as further escalation of tensions between Israel and various countries in the Middle East and North Africa may cause additional detrimental effects on the global economy, including capital markets.
This conflict, as well as further escalation of tensions between Israel and various countries in the Middle East and North Africa may cause additional detrimental effects on the global economy, including financial and capital markets, which could adversely impact our earnings.
Cyber security risks for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state actors.
AND SUBSIDIARIES increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state actors.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards with respect to ESG matters could have a material adverse impact on our future results of operations, financial position, cash flows, ability to do business with certain third parties and our stock price.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards with respect to ESG matters or failure to successfully manage varied stakeholder expectations could have a material adverse impact on our future results of operations, financial position, cash flows, ability to do business with certain third parties and our stock price. 19 Table of Contents S&T BANCORP, INC.
We have other funding sources that can be used such as the Federal Reserve Borrower-in-Custody Program, as well as the Federal Reserve BTFP which is available to us through March 11, 2024 and brokered deposits. The inability to access this source of funds could have a materially adverse effect on our ability to meet our customer’s needs.
We have other funding sources that can be used such as the Federal Reserve Borrower-in-Custody Program and brokered deposits. The inability to access this source of funds could have a materially adverse effect on our ability to meet our customer’s needs.
In addition, any of the matters described above could adversely impact our results of operations and financial condition. Fraudulent activity associated with our products and services could adversely affect our results of operations, financial condition and stock price, negatively impact our brand and reputation and result in regulatory intervention or sanctions.
Cybersecurity.” Fraudulent activity associated with our products and services could adversely affect our results of operations, financial condition and stock price, negatively impact our brand and reputation and result in regulatory intervention or sanctions.
Although we were not directly affected by these bank receiverships, this news caused fear among depositors, which caused them to withdraw or attempt to withdraw their funds from these and other financial institutions.
Although we were not directly affected by these bank receiverships, this news caused fear among depositors, which caused them to withdraw or attempt to withdraw their funds from these and other 13 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES financial institutions.
Negative public opinion could result from our actual or alleged conduct in a variety of areas, including legal and regulatory compliance, lending practices, corporate governance, litigation, ethical issues or inadequate protection of customer information.
Negative public opinion could result from our actual or alleged conduct in a variety of areas, including legal and regulatory compliance, lending practices, corporate governance, cybersecurity incident or breach, failures by third parties whom we interact with, litigation, ethical issues or inadequate protection of customer information.
Any sustained period of increased payment delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, results of operations and financial condition. Moreover, we cannot give any assurance that we will benefit from any market growth or favorable economic conditions in our primary market area.
Any sustained period of increased payment delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, results of operations and financial condition.
AND SUBSIDIARIES monetary policies and interest rates or the precise effects that they may have on our activities and financial results, which could negatively impact our financial condition and results of operations.
We may not accurately predict the nature or timing of future changes in monetary policies and interest rates or the precise effects that they may have on our activities and financial results, which could negatively impact our financial condition and results of operations.
AND SUBSIDIARIES Our loan portfolio is concentrated within our market area, and our lack of geographic diversification increases our risk profile. The regional economic conditions within our market area affect the demand for our products and services as well as the ability of our customers to repay their loans and the value of the collateral securing these loans.
The regional economic conditions within our market area affect the demand for our products and services as well as the ability of our customers to repay their loans and the value of the collateral securing these loans.
Additional funding sources accessible to S&T include borrowing availability at the Federal Home Loan Bank of Pittsburgh, or FHLB, federal funds lines with other financial institutions, the Federal Reserve Borrower-in-Custody Program and the Federal Reserve Bank Term Funding Program, or BTFP.
Additional funding sources accessible to S&T include borrowing availability through the Federal Reserve Borrower-in-Custody Program, the FHLB, federal funds lines with other financial institutions and brokered deposits.
Various aspects of our business could be impacted by general macroeconomic conditions including, among others, inflation, which has increased to levels not experienced in years, interest rates, rising or elevated unemployment, declines in GDP, consumer spending, property values, supply chain complications and economic uncertainty.
Risks Related to General Economic Conditions General economic conditions may adversely impact our business, financial condition, results of operations or cash flows. Various aspects of our business could be impacted by general macroeconomic conditions including, among others, inflation, interest rates, rising or elevated unemployment, declines in GDP, consumer spending, property values, supply chain complications and economic uncertainty.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition and results of operations.
Failure to successfully keep pace with technological change affecting the financial services industry, including but not limited to changes affecting our information systems resulting in incidents, attacks or breaches in cybersecurity , could have a material adverse impact on our business, financial condition and results of operations.
Our business is highly dependent on the security and efficacy of our infrastructure, computer and data management systems, as well as those of third parties with whom we interact.
Our business is highly dependent on the security and efficacy of our infrastructure, computer and data management systems, as well as those of third parties with whom we interact. Cybersecurity risks for financial institutions have significantly 14 Table of Contents S&T BANCORP, INC.
Geopolitical tensions and conflicts between nations 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.
Geopolitical tensions and conflicts between nations has created significant economic and financial disruptions and uncertainties, which could adversely affect our business, financial condition and results of operations.
The ramifications and uncertainties of the level of government intervention in the U.S. financial system could also adversely affect us. Our controls and policies and procedures may fail or be circumvented, which may result in a material adverse effect on our business, financial condition and results of operations.
Failure to comply with the different or additional regulations could further adversely affect us. Our controls and policies and procedures may fail or be circumvented, which may result in a material adverse effect on our business, financial condition and results of operations.
Depending on the nature of the initiative, the business impacted, and the composition of loan portfolio, our business and results of operations could be negatively impacted by climate change initiatives directed at our customers.
Depending on the nature of the initiative, the business impacted, and the composition of loan portfolio, our business and results of operations could be negatively impacted by climate change initiatives directed at our customers. In January 2025, an executive order to withdraw the United States from the Paris Agreement was issued.
In addition, monetary policy actions by governmental authorities in the European Union or other countries could have an impact on global interest rates, which could affect rates in the U.S. We may not accurately predict the nature or timing of future changes in 13 Table of Contents S&T BANCORP, INC.
In addition, monetary policy actions by governmental authorities in the European Union or other countries could have an impact on global interest rates, which could affect rates in the U.S.
AND SUBSIDIARIES Furthermore, new government regulations with respect to other ESG matters could also result in new or more stringent forms of ESG oversight and expanded mandatory and voluntary reporting, diligence, disclosure and ESG-related compliance costs.
Additionally, our business and the business of our customers could be negatively impacted by disruptions in economic activity resulting from the physical impacts of climate change. Furthermore, new government regulations with respect to other ESG matters could also result in new or more stringent forms of ESG oversight and expanded mandatory and voluntary reporting, diligence, disclosure and ESG-related compliance costs.
Repayment of our commercial loans is often dependent on the cash flow of the borrower, which may become unpredictable. If the value of the assets, such as real estate, serving as collateral for the loan portfolio were to decline materially, a significant part of the loan portfolio could become under-collateralized.
If the value of the assets, such as real estate or business assets, serving as collateral for the loan portfolio were to decline materially, a significant part of the loan portfolio could become under-collateralized.
Incorrect assumptions could lead to material underestimates of expected losses and an inadequate ACL. As our assessment of expected losses changes, we may need to increase or decrease our ACL, which could significantly impact our financial results and profitability. 12 Table of Contents S&T BANCORP, INC.
Incorrect assumptions could lead to material underestimates of expected losses and an inadequate ACL. As our assessment of expected losses changes, we may need to increase or decrease our ACL, which could significantly impact our financial results and profitability. Our loan portfolio is concentrated within our market area, and our lack of geographic diversification increases our risk profile.
Decreases in real estate values, particularly with respect to our commercial real estate, or CRE, and mortgage activities, could adversely affect the value of property used as collateral for our loans and our customers’ ability to repay these loans, which in turn could impact our profitability.
Decreases in collateral values, particularly with respect to our commercial real estate, or CRE, and commercial and industrial, or C&I, could adversely affect our customers’ ability to repay these loans, which in turn could impact our profitability. Repayment of our commercial loans is often dependent on the cash flow of the borrower, which may become unpredictable.
This could result in higher charge-offs which could have a material adverse effect on our operating results and financial condition. Changes in the overall credit quality of our portfolio can have a significant impact on our earnings. Like other lenders, we face the risk that our customers will not repay their loans.
Changes in the overall credit quality of our portfolio can have a significant impact on our earnings. Like other lenders, we face the risk that our customers will not repay their loans. We reserve for losses in our loan portfolio based on our assessment of expected credit losses.
Our results of operations are largely dependent on net interest income, which is the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities.
Our results of operations are largely dependent on net interest income, which is the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities. Therefore, any change in general market interest rates, including changes resulting from the FRB’s policies, can have a significant effect on our net interest income and total income.
AND SUBSIDIARIES As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify and enhance our protective measures or to investigate and remediate any information security vulnerabilities or incidents.
As cyber threats continue to evolve, we may also be required to expend significant additional resources to continue to modify or enhance our systems or to investigate and remediate vulnerabilities. System enhancements and updates have further potential to create risks associated with implementing and integrating new systems.
Furthermore, as cybersecurity incidents increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as adequate for our operations. 15 Table of Contents S&T BANCORP, INC.
Furthermore, as cybersecurity incidents increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as adequate for our operations. For more information on how the Company manages cybersecurity risk, please refer to the discussion provided below under “Part I, Item 1C.
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We reserve for losses in our loan portfolio based on our assessment of expected credit losses.
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The underlying business assets that serve as collateral for C&I loans may be specific and unique to the borrowers industry; therefore, when the borrower encounters financial difficulties, the business assets may not have sufficient value. This could result in higher charge-offs which could have a material adverse effect on our operating results and financial condition.
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Risks Related to General Economic Conditions General economic conditions may adversely impact our business, financial condition, results of operations, or cash flows.
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Moreover, we cannot give any assurance that we will benefit from any market growth or favorable economic conditions in our primary market area. 12 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Our loan portfolio has a significant concentration of commercial loans that have a higher risk of loss.
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If the macroeconomic environment worsens, our credit portfolio and allowance for credit losses could be adversely impacted.
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Furthermore, the United States has recently enacted significant new tariffs and may enact additional tariffs. Additionally, federal agencies have been instructed to evaluate key aspects of U.S. trade policy and issue reports to the president no later than April 30, 2025.
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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 have experienced volatility and disruption as a result of this military conflict and imposition of sanctions, impacting the financial and commodities markets.
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Changes to United States tariffs and/or other trade policies may have a negative effect on the underlying credit quality of our customers, and increase the risk of our customers defaulting or becoming delinquent in their obligations to us. If the macroeconomic environment worsens, our credit portfolio and ACL could be adversely impacted.
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The continued impact on financial markets, including the level and volatility of interest rates, could impact 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.
Added
The continuing conflict resulting from Russia’s military attack on Ukraine in February 2022 and other armed conflicts such as that involving Hamas and Israel beginning in October 2023 may cause detrimental effects on the global economy.
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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. Additionally, an armed conflict began in October 2023 involving Hamas and Israel.
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We further issue debit cards which are susceptible to compromise at the point of sale via the physical terminal through which transactions are processed and by other means of hacking. The security and integrity of these transactions are dependent upon the retailers’ vigilance and willingness to invest in technology and upgrades.
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Therefore, any change in general market interest rates, including changes resulting from the Federal Reserve Board’s policies, can have a significant effect on our net interest income and total income.
Added
Issuing debit cards to our clients exposes us to potential losses, which, in the event of a data breach at one or more major retailers may adversely affect our business, financial condition, and results of operations.
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The regulatory environment of the current administration may take a more active approach to financial services regulation with respect to its major policy goals, such as climate change, racial equity, and consumer protection.
Added
We have taken and continue to take measures to design, implement and reassess our controls, backup systems and other safeguards to support our operations, but no matter how well designed or implemented, we may not be able to anticipate and prevent all potential types of security incidents and breaches, and we may not be able to implement effective preventive measures against such security breaches in a timely manner.
Removed
We are subject to remaining uncertainty associated with the transition away from LIBOR. Following publication on June 30, 2023, no settings of the London Interbank Offered Rate (“LIBOR”) continue to be published on a representative basis and publication of many non-U.S. dollar LIBOR settings has been entirely discontinued.
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Due to the complexity and interconnectedness of information technology systems, the process of enhancing our systems can itself create a risk of systems disruptions and security issues.
Removed
We had a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that were either directly or indirectly dependent on LIBOR.
Added
In addition, any of the matters described above could have a material adverse impact on our results of business operations and financial condition. Any of the foregoing risks may cause us to experience a cybersecurity incident, attack or breach.
Removed
While we believe that we have successfully managed our transition from LIBOR to alternative reference rates, given the inherent difference between LIBOR and the alternative reference rates, there remain some uncertainties regarding the transition from LIBOR.
Added
A successful security breach of our information or security systems or those of third parties whom we interact with could incur substantial costs or other negative consequences which cause us to suffer material losses.
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In addition, due in part to the limited history of the alternative reference rates, and continued uncertainty regarding their future performance, the impact on interest income and expense, the return on and market value of assets and the impact on certain derivative financial instruments may vary from expectations.
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Examples of such material losses include, but are not limited to: (1) remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives to customers in an effort to maintain relationships after an attack; (2) violations of applicable privacy and other laws; (3) loss of confidence in its security measures; (4) increased cybersecurity protection costs, such as organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants; (5) significant litigation exposure; (6) harm to our reputation; (7) financial loss; and (8) damage to our competitiveness, stock price, and long-term shareholder values.
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Additionally, our business and the business of our customers could be negatively impacted by disruptions in economic activity resulting from the physical impacts of climate change. 19 Table of Contents S&T BANCORP, INC.
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There can be no assurance we will not suffer material losses or other material consequences relating to technology failure, cyber incidents or other information or security breaches experienced by us or the third parties whom we interact.
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While we maintain a cyber insurance policy that is designed to cover a majority of loss resulting from cybersecurity breaches, there is no assurance such coverage or other protective measures we employ will be adequate to address all potential material adverse impacts as cybersecurity incidents increase in frequency and magnitude.
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Any breach of our system security 15 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES could result in disruption of our operations, unauthorized access to confidential customer information, significant regulatory costs, litigation exposure and other possible damages, loss or liability. Such costs or losses could exceed the amount of available insurance coverage, if any, and would adversely affect our earnings.
Added
The ramifications and uncertainties of the level of government intervention and regulatory changes in the U.S. financial system could also adversely affect us. The regulations that we are subject to at this time relate to institutions with assets less than $10 billion. Should our assets cross the $10 billion threshold, we will be subject to different and additional regulations.
Added
While it is not possible to predict the impact these actions may have on our business or the business of our customers, such actions could prompt more activity from state and local legislatures and administrative agencies to pass new laws or regulations on climate change that could adversely impact our business and the business of our customers.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAND SUBSIDIARIES Management’s Role At the management level, the ERM Committee, CRO, COO, CSO, Chief Information and Technology Officer, Director of Information Technology and Director of Operational Risk Management are responsible for assessing and managing material risks from cybersecurity threats. The ERM Committee reports information to the Risk Committee on a quarterly basis, or more often as needed.
Biggest changeThe ERM Committee reports information to the Risk Committee on a quarterly basis, or more often as needed. Risk Management leadership, which assists the ERM Committee in assessing and managing cybersecurity threats, include our CRO, COO, CSO, Director of Information Technology and Director of Operational Risk Management.
The Risk Committee regularly reviews reports from, and has discussions with, S&T’s Chief Risk Officer, or CRO, Chief Operating Officer, or COO, CSO, Chief Information and Technology Officer and Director of Operational Risk Management regarding cybersecurity risks, the threat landscape, updates on incidents and reports on our investments in cybersecurity risk mitigation and governance.
The Risk Committee regularly reviews reports from, and has discussions with, S&T’s Chief Risk Officer, or CRO, Chief Operating Officer, or COO, CSO, and Director of Operational Risk Management regarding cybersecurity risks, the threat landscape, updates on incidents and reports on our investments in cybersecurity risk mitigation and governance.
At December 31, 2023, management has assessed known cybersecurity incidents for potential materiality and disclosure using formal documented processes and has determined that there have been no material cybersecurity incidents, individually or in aggregate.
At December 31, 2024, management has assessed known cybersecurity incidents for potential materiality and disclosure using formal documented processes and has determined that there have been no material cybersecurity incidents, individually or in aggregate.
Item 1C. CYBERSECURITY Risk Management and Strategy S&T’s Information Security Program provides policies, procedures, controls and technical measures to assess, identify and manage material cybersecurity risks. The Information Security Program is a part of S&T’s overall Enterprise Risk Management, or ERM Program. The Information Security Program is designed to achieve the following objectives: a.
Item 1C. CYBERSECURITY Risk Management and Strategy S&T’s Information Security Program provides policies, procedures, controls and technical measures to assess, identify and manage material cybersecurity risks. The Information Security Program is a part of S&T’s overall Enterprise Risk Management, or ERM Program.
S&T performs periodic risk assessments that seek to identify both technical and physical risks to information systems. The assessments incorporate cybersecurity-related principles from the Federal Financial Institutions Examination Council, or FFIEC, Information Technology Examination Handbook, regulatory guidance and concepts from other industry standards, including the NIST Cybersecurity Framework. An assessment typically includes: a.
S&T performs periodic risk assessments that seek to identify both technical and physical risks to information systems. The assessments incorporate cybersecurity-related principles from the Federal Financial Institutions Examination Council, or FFIEC, Information Technology Examination Handbook, regulatory guidance and concepts from other industry standards, including the NIST Cybersecurity Framework.
Our CSO reports to the CRO and has 17 years of information technology and cybersecurity experience, including prior roles as chief information officer, assistant director of information technology, chief information security officer and chief security officer in federal law enforcement and banking organizations. Our Chief Information and Technology Officer has nine years of information technology and cybersecurity experience.
Our CSO reports to the CRO and has 18 years of information technology and cybersecurity experience, including prior roles as chief information officer, assistant director of information technology, chief information security officer and chief security officer in federal law enforcement and banking organizations. Our Director of Information Technology has 25 years of information technology and cybersecurity experience.
We encrypt and leverage data loss prevention technology for sensitive data and use advanced transport 21 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES layer security encryption for our applications. S&T employees are required to undergo annual information security awareness training, which includes information regarding evolving threats such as phishing, malware and social engineering testing.
We encrypt and leverage data loss prevention technology for sensitive data and use advanced transport layer security encryption for our applications. S&T employees are required to undergo annual information security awareness training, which includes information regarding evolving threats such as phishing, malware and social engineering testing.
Identifying reasonably foreseeable internal and external threats that could result in a cybersecurity incident; b. Assessing the likelihood and potential impact of those threats; and c. Assessing the sufficiency of policies, procedures, practices, and technical measures in place to manage risks.
An assessment typically includes: • identifying reasonably foreseeable internal and external threats that could result in a cybersecurity incident; • assessing the likelihood and potential impact of those threats; and • assessing the sufficiency of policies, procedures, practices, and technical measures in place to manage risks.
Protecting data through the use of automated and manual processes; b. Periodically assessing and updating the program to address an evolving threat environment; c. Maintaining a team of IT security professionals that continually monitor, detect, analyze, investigate and report cybersecurity threats; and d. Ensuring business continuity and disaster recovery.
The Information Security Program is designed to achieve the following objectives: • protecting data through the use of automated and manual processes; • periodically assessing and updating the program to address an evolving threat environment; • maintaining a team of IT security professionals that continually monitor, detect, analyze, investigate and report cybersecurity threats; and • ensuring business continuity and disaster recovery.
Our CRO is a Certified Public Accountant, holds a Certification in Risk Management Assurance and has over 25 years of financial services experience. Our COO has over 20 years of banking technology and operations experience, including serving as head of digital for a business unit at a large national bank.
Our COO has over 20 years of banking technology and operations experience, including serving as head of digital for a business unit at a large national bank.
We may nevertheless be unsuccessful in the future in preventing or mitigating a cybersecurity incident that could have a material impact on our business, results of operations or financial condition.
To date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations or financial condition. We may nevertheless be unsuccessful in the future in preventing or mitigating a cybersecurity incident that could have a material impact on our business, results of operations or financial condition.
S&T also has in place incident response and business continuity plans. The Incident Response Program outlines the policies, procedures and technical measures for identifying an incident, assessing its nature and scope, minimizing and containing the impact, investigating the root cause and reporting, as applicable.
The Incident Response Program outlines the policies, procedures and technical measures for identifying an incident, assessing its nature and scope, minimizing and containing the impact, investigating the root cause and reporting, as applicable. S&T uses data from incidents to reassess risk, evaluate and implement any additional controls deemed necessary and measure the success of the incident response team.
The potential impact of the incident, individually or in aggregate, is evaluated by the Chief Security Officer, or CSO, continuously across these criteria. We have escalation procedures to notify members of senior and executive management, the Board (or an applicable subset) and regulators in a timely manner based on the criticality of the cybersecurity incident.
AND SUBSIDIARIES have escalation procedures to notify members of senior and executive management, the Board (or an applicable subset) and regulators in a timely manner based on the criticality of the cybersecurity incident. S&T also has in place incident response and business continuity plans.
S&T uses data from incidents to reassess risk, evaluate and implement any additional controls deemed necessary and measure the success of the incident response team. The Incident Response Program also includes staff training, annual updates and testing. The Business Continuity Plan defines the policies, procedures and technical measures to restore systems and critical operations.
The Incident Response Program also includes staff training, annual updates and testing. The Business Continuity Plan defines the policies, procedures and technical measures to restore systems and critical operations. S&T also maintains business continuity plans for critical systems and applications managed or hosted by third-party vendors.
Our Director of Information Technology has 25 years of information technology and cybersecurity experience. Our Director of Operational Risk Management has 10 years of information technology and cybersecurity experience, including serving as a former chief information officer for a financial institution.
Our Director of Operational Risk Management has 11 years of information technology and cybersecurity experience, including serving as a former chief information officer for a financial institution. For more information regarding the risks associated with cybersecurity that may impact our business strategy, results of operations or financial condition, see “ Part I, “Item 1A.
Risk Management leadership, which assists the ERM Committee in assessing and managing cybersecurity threats, include our CRO, COO, CSO, Chief Information and Technology Officer, Director of Information Technology and Director of Operational Risk Management. Our CRO who oversees the risk management information security program reports to our CEO, but has direct access to the Risk Committee.
Our CRO who oversees the risk management information security program reports to our CEO, but has direct access to the Risk Committee. Our CRO is a Certified Public Accountant, holds a Certification in Risk Management Assurance and has over 25 years of financial services experience.
A special meeting of the Board will be held, as deemed necessary by the Chairperson of the Board in consultation with the Chair of the Risk Committee. 22 Table of Contents S&T BANCORP, INC.
A special meeting of the Board will be held, as deemed necessary by the Chairperson of the Board in consultation with the Chair of the Risk Committee. Management’s Role At the management level, the ERM Committee, CRO, COO, CSO, Director of Information Technology and Director of Operational Risk Management are responsible for assessing and managing material risks from cybersecurity threats.
For more information regarding the risks associated with cybersecurity that may impact our business strategy, results of operations or financial condition, see “ Part I, “Item 1A. Risk Factors” of this Annual Report on Form10-K. Item 2. PROPERTIES S&T Bancorp, Inc. headquarters is located in Indiana, Pennsylvania. We operate in Pennsylvania and Ohio.
Risk Factors” of this Annual Report on Form10-K. Item 2. PROPERTIES S&T Bancorp, Inc. headquarters is located in Indiana, Pennsylvania. We operate in Pennsylvania and Ohio. At December 31, 2024, we operate 71 banking branches and three loan production offices, of which 41 are leased facilities.
Removed
S&T also maintains business continuity plans for critical systems and applications managed or hosted by third-party vendors. To date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations or financial condition.
Added
The potential impact of the incident, individually or in aggregate, is evaluated by the Chief Security Officer, or CSO, continuously across these criteria. We 21 Table of Contents S&T BANCORP, INC.
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At December 31, 2023, we operate 73 banking branches and four loan production offices, of which 43 are leased facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn addition, no material proceedings are pending nor are known to be threatened or contemplated against us by governmental authorities or other parties. Item 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES PART II
Biggest changeIn addition, no material proceedings are pending nor are known to be threatened or contemplated against us by governmental authorities or other parties. 22 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

38 edited+10 added−13 removed35 unchanged
Biggest changeThe 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.
Biggest changeNet 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.
Average Balance Sheet and Net Interest Income Analysis (FTE) (non-GAAP) The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets and the average balances, interest and rates paid on interest-bearing liabilities for the periods presented: 31 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES
Average Balance Sheet and Net Interest Income Analysis (FTE) (non-GAAP) The following tables provide information regarding the average balances, interest and rates earned on interest-earning assets, and interest and rates paid on interest-bearing liabilities for the periods presented: 31 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES
(2) The NASDAQ Bank Index contains securities of NASDAQ-listed companies classified according to the Industry Classification Benchmark as Banks. These companies include banks providing a broad range of financial services, including retail banking, loans and money transmissions. Item 6. [RESERVED] 25 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
(2) The NASDAQ Bank Index contains securities of NASDAQ-listed companies classified according to the Industry Classification Benchmark as Banks. These companies include banks providing a broad range of financial services, including retail banking, loans and money transmissions. Item 6. [RESERVED] Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment, 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; any remaining uncertainties with the transition from LIBOR as a reference rate; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; changes in accounting policies, practices or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and employees; general economic or business conditions, including the strength of regional economic conditions in our market area; ESG practices and disclosures, including climate change, hiring practices, the diversity of the work force, and racial and social justice issues; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses and geopolitical tensions and conflicts between nations.
The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cybersecurity 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, 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; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; changes in accounting policies, practices or guidance; legislation affecting the financial services industry as a whole, and S&T, in particular; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and other employees; general economic or business conditions, including the strength of regional economic conditions in our market area; ESG practices and disclosures, including climate change, hiring practices, the diversity of the work force and racial and social justice issues; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses and geopolitical tensions and conflicts between nations.
Forward-looking statements are typically identified by words or phrases such as “will likely result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “comfortable,” “current,” “position,” “maintain,” “sustain,” “seek,” “achieve,” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may.
Forward-looking statements are typically identified by words or phrases such as “will likely result,” “expect,” “anticipate,” “estimate,” “forecast,” “project,” “intend,” “believe,” “assume,” “strategy,” “trend,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “potential,” “opportunity,” “comfortable,” “current,” “position,” “maintain,” “sustain,” “seek,” “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may.
The Company's discussion and analysis focuses on significant factors impacting the financial condition and results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This discussion and analysis should be read in conjunction with our Consolidated Financial Statements and Supplementary Data and related notes within this Annual Report on Form 10-K.
The Company's discussion and analysis focuses on significant factors impacting the financial condition and results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023. This discussion and analysis should be read in conjunction with our Consolidated Financial Statements and Supplementary Data and related notes within this Annual Report on Form 10-K.
Among other balance sheet and income statement changes, our severely adverse scenario would have resulted in an increase to the ACL of approximately 70 percent. This severely adverse scenario shows how sensitive the ACL can be to key qualitative and quantitative assumptions underlying the overall ACL calculation.
Among other balance sheet and income statement changes, our severely adverse scenario would have resulted in an increase to the ACL of approximately 75 percent. This severely adverse scenario shows how sensitive the ACL can be to key qualitative and quantitative assumptions underlying the overall ACL calculation.
AND SUBSIDIARIES Five-Year Cumulative Total Return The following chart compares the cumulative total shareholder return on our common stock with the cumulative total shareholder return of the NASDAQ Composite Index (1) and the NASDAQ Bank Index (2) assuming a $100 investment in each on December 31, 2018 and the reinvestment of dividends.
AND SUBSIDIARIES Five-Year Cumulative Total Return The following chart compares the cumulative total shareholder return on our common stock with the cumulative total shareholder return of the NASDAQ Composite Index (1) and the NASDAQ Bank Index (2) assuming a $100 investment in each on December 31, 2019 and the reinvestment of dividends.
We operate in Pennsylvania and Ohio providing 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 operate in Pennsylvania and Ohio providing 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.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock Prices and Dividend Information Our common stock is listed on the NASDAQ Global Select Market System, or NASDAQ, under the symbol STBA. As of the close of business on January 31, 2024, we had approximately 2,539 shareholders of record.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock Prices and Dividend Information Our common stock is listed on the NASDAQ Global Select Market System, or NASDAQ, under the symbol STBA. As of the close of business on January 31, 2025, we had approximately 2,328 shareholders of record.
Recent Accounting Pronouncements and Developments Note 1 Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements, which is included in Part II, Item 8 Financial Statements and Supplementary Data of this Report, discusses new accounting pronouncements that we have adopted and the expected impact of accounting pronouncements recently issued or proposed, but not yet required to be adopted.
Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements, which is included in Part II, Item 8 Financial Statements and Supplementary Data of this Report, discusses new accounting pronouncements that we have adopted and the expected impact of accounting pronouncements recently issued or proposed, but not yet required to be adopted.
A similar discussion and analysis that compares the year ended December 31, 2022 to the year ended December 31, 2021 may be found in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations” on our Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission, or SEC, on February 24, 2023.
A similar discussion and analysis that compares the year ended December 31, 2023 to the year ended December 31, 2022 may be found in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations” on our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or SEC, on February 27, 2024.
To the extent actual losses are higher than management estimates, additional provision for credit losses could be required and could adversely affect our earnings or financial position in future periods. Goodwill and Other Intangible Assets As a result of acquisitions, we have recorded goodwill and identifiable intangible assets in our Consolidated Balance Sheets.
To the extent actual losses are higher than management estimates, additional provision for credit losses could be required and could adversely affect our earnings or financial position in future periods. Goodwill As a result of acquisitions, we have recorded goodwill in our Consolidated Balance Sheets.
A reconciliation of the efficiency ratio (non-GAAP) is provided above in the "Explanation of Use of Non-GAAP Financial Measures" section of this MD&A. The provision for income taxes increased $0.6 million to $34.0 million in 2023 compared to $33.4 million in 2022.
A reconciliation of the efficiency ratio (non-GAAP) is provided above in the "Explanation of Use of Non-GAAP Financial Measures" section of this MD&A. The provision for income taxes decreased $0.4 million to $33.6 million in 2024 compared to $34.0 million in 2023.
The amount of any future dividends will depend on economic and market conditions, our financial condition and operating results and other factors, including applicable government regulations and policies. S&T’s Board of Directors approved a quarterly cash dividend of $0.33 per share on January 24, 2024.
The amount of any future dividends will depend on economic and market conditions, our financial condition and operating results and other factors, including applicable government regulations and policies. S&T’s Board of Directors approved a quarterly cash dividend of $0.34 per share on January 29, 2025.
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.
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. We currently view the determination of the ACL and goodwill to be critical accounting policies.
The fair values of each method are then weighted based on the relevance and reliability in the current economic environment. Based upon our qualitative assessment performed for our annual impairment analysis as of October 1, 2023, we concluded that goodwill is not impaired.
The fair values of each method are then weighted based on the relevance and reliability in the current economic environment. Based upon our qualitative assessment performed for our annual impairment analysis as of October 1, 2024, we concluded that goodwill is not impaired. Recent Accounting Pronouncements and Developments Note 1.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Year Ended December 31, 2023 Earnings Summary The following table presents a summary of key profitability metrics for the periods presented: Years ended December 31, (dollars in thousands) 2023 2022 2021 Net income $ 144,781 $ 135,520 $ 110,343 Earnings per share - diluted $ 3.74 $ 3.46 $ 2.81 Return on average assets 1.56 % 1.48 % 1.18 % Return on average shareholders' equity 11.80 % 11.47 % 9.30 % Return on average tangible shareholders' equity (non-GAAP) (1) 17.15 % 17.02 % 13.85 % (1) Reconciled to GAAP in the "Explanation of Use of Non-GAAP Financial Measures" section of this MD&A.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Earnings Summary The following table presents a summary of key profitability metrics for the periods presented: Years ended December 31, (dollars in thousands) 2024 2023 2022 Net income $ 131,265 $ 144,781 $ 135,520 Earnings per share - diluted $ 3.41 $ 3.74 $ 3.46 Return on average assets 1.37 % 1.56 % 1.48 % Return on average shareholders' equity 9.86 % 11.80 % 11.47 % Return on average tangible shareholders' equity (non-GAAP) (1) 13.84 % 17.15 % 17.02 % (1) Reconciled to GAAP in the "Explanation of Use of Non-GAAP Financial Measures" section of this MD&A.
Certain policies are based, to a greater extent, on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally reported.
Certain policies are based, to a greater extent, on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally reported. Our most significant accounting policies are presented in Note 1.
The following table provides a reconciliation of return on average tangible shareholders' equity (non-GAAP) by reconciling net income (GAAP) per the Consolidated Statements of Net Income to net income before amortization and intangibles and average shareholder's equity to average tangible shareholders' equity for the periods presented: Years ended December 31, (dollars in thousands) 2023 2022 2021 Net income $ 144,781 $ 135,520 $ 110,343 Plus: amortization of intangibles, net of tax 1,042 1,199 1,400 Net income before amortization of intangibles $ 145,823 $ 136,719 $ 111,743 Average shareholders' equity $ 1,227,332 $ 1,181,788 $ 1,186,161 Less: average goodwill and other intangible assets, net of deferred tax liability (377,157) (378,303) (379,612) Average tangible shareholders' equity $ 850,175 $ 803,485 $ 806,549 Return on Average Tangible Shareholders' Equity (non-GAAP) 17.15 % 17.02 % 13.85 % Executive Overview We are a bank holding company that is headquartered in Indiana, Pennsylvania with assets of $9.6 billion at December 31, 2023.
The following table provides a reconciliation of return on average tangible shareholders' equity (non-GAAP) by reconciling net income (GAAP) per the Consolidated Statements of Net Income to net income before amortization of intangibles and average shareholder's equity to average tangible shareholders' equity for the periods presented: Years ended December 31, (dollars in thousands) 2024 2023 2022 Net income $ 131,265 $ 144,781 $ 135,520 Plus: amortization of intangibles net of tax 904 1,042 1,199 Net income before amortization of intangibles $ 132,169 $ 145,823 $ 136,719 Average shareholders' equity $ 1,330,870 $ 1,227,332 $ 1,181,788 Less: average goodwill and other intangible assets, net of deferred tax liability (376,181) (377,157) (378,303) Average tangible shareholders' equity $ 954,689 $ 850,175 $ 803,485 Return on Average Tangible Shareholders' Equity (non-GAAP) 13.84 % 17.15 % 17.02 % Executive Overview We are a bank holding company that is headquartered in Indiana, Pennsylvania with assets of $9.7 billion at December 31, 2024.
Purchases of Equity Securities The following table is a summary of our purchases of common stock during the fourth quarter of 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plan (1) Approximate dollar value of shares that may yet be purchased under the plan (2) 10/1/2023 - 10/31/2023 — $ — — $ 9,807,925 11/1/2023 - 11/30/2023 — — — 9,807,925 12/1/2023 - 12/31/2023 — — — 9,807,925 Total — $ — — $ 9,807,925 ( 1) On January 25, 2023, our Board of Directors authorized an extension of its $50 million share repurchase plan, which was set to expire March 31, 2023.
Purchases of Equity Securities The following table is a summary of our purchases of common stock during the fourth quarter of 2024: 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 (2) 10/1/2024 - 10/31/2024 — $ — — $ 50,000,000 11/1/2024 - 11/30/2024 — — — 50,000,000 12/1/2024 - 12/31/2024 — — — 50,000,000 Total — $ — — $ 50,000,000 ( 1) On January 24, 2024, our Board of Directors authorized a new $50 million share repurchase plan.
The following table reconciles interest and dividend income and net interest income per the Consolidated Statements of Net Income to interest income, net interest income and net interest margin on an FTE basis (non-GAAP) for the periods presented: Years ended December 31, (dollars in thousands) 2023 2022 2021 Interest and dividend income per Consolidated Statements of Net Income $ 477,901 $ 340,751 $ 289,262 Plus: taxable equivalent adjustment 2,550 2,052 2,316 Interest Income on an FTE Basis (Non-GAAP) $ 480,451 $ 342,803 $ 291,578 Interest and dividend income per Consolidated Statements of Net Income $ 477,901 $ 340,751 $ 289,262 Less: Interest expense (128,491) (24,968) (13,150) Net Interest Income per Consolidated Statements of Net Income 349,410 315,783 276,112 Plus: taxable equivalent adjustment 2,550 2,052 2,316 Net Interest Income on an FTE Basis (Non-GAAP) $ 351,960 $ 317,835 $ 278,428 Net interest margin 4.10 % 3.74 % 3.19 % Plus: taxable equivalent adjustment 0.03 % 0.02 % 0.03 % Net Interest Margin on an FTE Basis (Non-GAAP) 4.13 % 3.76 % 3.22 % 28 Table of Contents S&T BANCORP, INC.
The following table reconciles interest and dividend income and net interest income per the Consolidated Statements of Net Income to interest income, net interest income and net interest margin on an FTE basis (non-GAAP) for the periods presented: Years ended December 31, (dollars in thousands) 2024 2023 2022 Total Interest and Dividend Income $ 515,872 $ 477,901 $ 340,751 Plus: taxable equivalent adjustment 2,706 2,550 2,052 Interest and Dividend Income on an FTE Basis (Non-GAAP) $ 518,578 $ 480,451 $ 342,803 Total Interest and Dividend Income $ 515,872 $ 477,901 $ 340,751 Less: Interest expense (181,066) (128,491) (24,968) Net Interest Income 334,806 349,410 315,783 Plus: taxable equivalent adjustment 2,706 2,550 2,052 Net Interest Income on an FTE Basis (Non-GAAP) $ 337,512 $ 351,960 $ 317,835 Net interest margin 3.79 % 4.10 % 3.74 % Plus: taxable equivalent adjustment 0.03 % 0.03 % 0.02 % Net Interest Margin on an FTE Basis (Non-GAAP) 3.82 % 4.13 % 3.76 % 28 Table of Contents S&T BANCORP, INC.
There were no new interest rates swaps entered into in 2023. Our strategy is to reduce our exposure to variability in expected future cash flows related to interest payments on commercial loans that are currently indexed to the 1-month SOFR rate.
Our strategy is to reduce our exposure to variability in expected future cash flows related to interest payments on commercial loans that are currently indexed to the 1-month SOFR rate.
These policies, along with the disclosures presented in the Notes to Consolidated Financial Statements, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined.
Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report. These policies, along with the disclosures presented in the Notes to Consolidated Financial Statements, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined.
Interest rates have increased substantially in 2022 and 2023 resulting in an unrealized loss on the cash flow hedges of $11.6 million, which is reported in Other Comprehensive Income (Loss), or OCI, net of applicable taxes.
Interest rates increased substantially in 2022 and 2023 followed by decreases in 2024 resulting in an unrealized loss on the cash flow hedges of $7.5 million at December 31, 2024, which is reported in Other Comprehensive Income (Loss), or OCI, net of applicable taxes.
This repurchase authorization permits S&T to repurchase shares of S&T's common stock from time to time through a combination of open market and privately negotiated repurchases up to the authorized $50 million aggregate value of S&T's common stock.
The new plan replaced the existing share repurchase plan effective immediately and is set to expire May 30, 2025. This repurchase authorization permits S&T to repurchase shares of S&T's common stock from time to time through a combination of open market and privately negotiated repurchases up to the authorized $50 million aggregate value of S&T's common stock.
We cultivate relationships rooted in trust, strengthened by going above and beyond and renewed with every interaction. Our strategic priorities for 2024 and beyond will be focused on our deposit franchise, core profitability, asset quality and talent and engagement.
We cultivate relationships rooted in trust, strengthened by going above and beyond and renewed with every interaction. Our strategic priorities for 2025 and beyond will be focused on growing our deposit franchise, core profitability, asset quality and talent and engagement. 29 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
We currently view the determination of the ACL and goodwill and other intangible assets to be critical accounting policies. We did not significantly change the manner in which we applied our critical accounting policies or developed related assumptions or estimates during 2023. We have reviewed these critical accounting estimates and related disclosures with the Audit Committee.
We did not significantly change the manner in which we applied our critical accounting policies or developed related assumptions or estimates during 2024. We have reviewed these critical accounting estimates and related disclosures with the Audit Committee.
Years ended December 31, (dollars in thousands) 2023 2022 2021 Efficiency Ratio (Non-GAAP) Noninterest expense per Consolidated Statements of Net Income $210,334 $196,746 $188,925 Net interest income per Consolidated Statements of Net Income $349,410 $315,783 $276,112 Plus: taxable equivalent adjustment 2,550 2,052 2,316 Net interest income (FTE) (non-GAAP) 351,960 317,835 278,428 Noninterest income per Consolidated Statements of Net Income 57,620 58,259 64,696 Less: net gains on sale of securities — (198) (29) Net interest income (FTE) (non-GAAP) plus noninterest income $409,580 $375,896 $343,095 Efficiency Ratio (Non-GAAP) 51.35 % 52.34 % 55.06 % Return on average tangible shareholders' equity (non-GAAP) is a key profitability metric used by management to measure financial performance.
Years ended December 31, (dollars in thousands) 2024 2023 2022 Efficiency Ratio (Non-GAAP) Noninterest expense $218,938 $210,334 $196,746 Net interest income $334,806 $349,410 $315,783 Plus: taxable equivalent adjustment 2,706 2,550 2,052 Net interest income (FTE) (non-GAAP) 337,512 351,960 317,835 Noninterest income 49,083 57,620 58,259 Plus: net losses (gains) on sale of securities 7,938 — (198) Less: gain on Visa class B-1 exchange (3,492) — — Net interest income (FTE) (non-GAAP) plus noninterest income $391,041 $409,580 $375,896 Efficiency Ratio (Non-GAAP) 55.99 % 51.35 % 52.34 % Return on average tangible shareholders' equity (non-GAAP) is a key profitability metric used by management to measure financial performance.
Net loan charge-offs were $13.2 million, or 0.18 percent of average loans, in 2023 compared to $2.6 million, or 0.04 percent of average loans, in 2022. Noninterest income was relatively consistent at $57.6 million compared to $58.3 million in 2022.
Net loan charge-offs were $8.3 million, or 0.11 percent of average loans, in 2024 compared to $13.2 million, or 0.18 percent of average loans, in 2023. Noninterest income decreased $8.5 million to $49.1 million in 2024 compared to $57.6 million in 2023.
The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2023 and an asset sensitive balance sheet. NIM is reconciled to net interest margin adjusted to an FTE basis (non-GAAP) above in the "Explanation of Use of Non-GAAP Financial Measures" section of this Management’s Discussion and Analysis, or MD&A.
While higher interest rates positively impacted interest income and rates on interest-earning assets, it was more than offset by higher interest expense and rates on interest-bearing liabilities. NIM is reconciled to net interest margin adjusted to an FTE basis (non-GAAP) above in the "Explanation of Use of Non-GAAP Financial Measures" section of this Management’s Discussion and Analysis, or MD&A.
As part of our interest rate risk management strategy, we use interest rate swaps to add stability to net interest income by managing our exposure to interest rate movements. During 2022, we entered into interest rate swaps with a total notional amount of $500.0 million with original maturities ranging from three to five years.
During 2022, we entered into interest rate swaps with a total notional amount of $500.0 million with original maturities ranging from three to five years. There were no new interest rates swaps entered into in 2024 or 2023.
The decrease in the effective tax rate was primarily due to an increase in Low Income Housing Tax Credits, or LIHTCs, in 2023 compared to 2022. Net Interest Income Our principal source of revenue is net interest income. Net interest income represents the difference between the interest and fees earned on interest-earning assets and the interest paid on interest-bearing liabilities.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023 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.
We earned record net income of $144.8 million for the second consecutive year, representing an increase of $9.3 million or 6.83 percent, compared to net income of $135.5 million in 2022. Earnings per diluted share increased 8.1 percent to a record $3.74 in 2023 compared to $3.46 in 2022.
We earned net income of $131.3 million for 2024 compared to net income of $144.8 million in 2023. Diluted earnings per share, or EPS, was $3.41 in 2024 compared to $3.74 in 2023.
The increase in our income tax provision was primarily due to a $9.9 million increase in pretax income in 2023 compared to 2022. The effective tax rate decreased 0.8 percent to 19.0 percent in 2023 compared to 19.8 percent in 2022.
The decrease in our income tax provision was primarily due to a $14.0 million decrease in income before taxes in 2024 compared to 2023 partially offset by the adoption of PAM as explained above. The effective tax rate increased to 20.4 percent in 2024 compared to 19.0 percent in 2023.
The provision for credit losses increased $9.5 million to $17.9 million for 2023 compared to $8.4 million for 2022. The increase in the provision for credit losses was mainly due to an increase in net charge-offs in 2023 and our qualitative reserve.
The provision for credit losses decreased $17.8 million to $0.1 million for 2024 compared to $17.9 million for 2023. The significant decline in the provision for credit losses was mainly due to a lower level of ACL related to decreases in our criticized and classified loans and a decrease in net loan charge-offs.
Source: Bloomberg Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 S&T Bancorp, Inc. 100.00 109.49 70.73 93.13 104.88 107.06 NASDAQ Composite (1) 100.00 136.73 198.33 242.38 163.58 236.70 NASDAQ Bank (2) 100.00 124.38 115.04 164.41 137.65 132.92 (1) The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on the Nasdaq Stock Market.
Source: Bloomberg Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 S&T Bancorp, Inc. 100.00 64.60 85.06 95.79 97.79 116.09 NASDAQ Composite (1) 100.00 145.05 177.27 119.63 173.11 224.34 NASDAQ Bank (2) 100.00 92.50 132.19 110.67 106.87 128.85 (1) The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on the Nasdaq Stock Market.
Net interest income increased $33.6 million, or 10.65 percent, to $349.4 million compared to $315.8 million in 2022. Interest and dividend income increased $137.2 million and interest expense increased $103.5 million compared to 2022. The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 37 basis points to 4.13 percent compared to 3.76 percent in 2022.
Net interest income decreased $14.6 million, or 4.18 percent, to $334.8 million in 2024 compared to $349.4 million in 2023. Net interest income on an FTE basis (non-GAAP) decreased $14.4 million, or 4.11 percent, compared to 2023.
Removed
This authorization extended the expiration date of the repurchase plan through March 31, 2024. The plan permitted S&T to repurchase shares up to the previously authorized $50 million in aggregate value of S&T's common stock through a combination of open market and privately negotiated repurchases.
Added
The decrease in both net income and EPS in 2024 can be attributed to declining interest rates, as compared to 2023 when we had record net income and EPS due to the impact of rising interest rates on our net income.
Removed
On January 24, 2024, our Board of Directors authorized a new $50 million share repurchase plan.The new plan replaced the existing share repurchase plan effective immediately and is set to expire May 30, 2025.
Added
The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points to 3.82 percent in 2024 compared to 4.13 percent in 2023. The decreases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to the impact of higher interest rates on total interest-bearing liabilities.
Removed
Our most significant accounting policies are presented in Note 1 Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report.
Added
The decrease was mainly related to $7.9 million of realized losses in 2024 from the repositioning of securities into longer duration, higher-yielding securities.
Removed
During the first quarter of 2023, the banking industry experienced significant volatility with several high-profile bank failures and industry wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding consumer confidence in the banking system. Despite these negative industry developments, our liquidity position and balance sheet remain well-positioned.
Added
Other noninterest income decreased $0.8 million in 2024 compared to 2023 primarily due to a $3.9 million gain on the sale of other real estate owned, or OREO, in 2023 compared to a gain of $3.5 million from the exchange offer for Visa Class B-1 common stock in 2024.
Removed
We have a well-diversified deposit base with a balance mix of 56.4 percent personal, 34.1 percent business, 4.5 percent public funds and 5.0 percent brokered deposits at December 31, 2023. We have total uninsured deposits of $2.3 billion, or 30 percent of our total deposit base.
Added
Noninterest expense increased $8.6 million to $218.9 million in 2024 compared to $210.3 million in 2023. Salaries and employee benefits increased $10.5 million primarily due to higher salaries related to annual merit increases, the acquisition of new talent and higher incentives and medical costs.
Removed
At December 31, 2023, we had remaining borrowing availability of $4.1 billion, which includes $2.7 billion with the FHLB of Pittsburgh, $769.7 million from the Federal Reserve Borrower-in-Custody Program and $637.0 million from the Federal Reserve Bank Term Funding Program, or BTFP.
Added
Professional services and legal decreased $2.4 million primarily due to higher consulting expenses in 2023 compared to 2024. Other noninterest expense decreased $3.2 million primarily due to the adoption of PAM and a $2.1 million decrease in loan collection and appraisal expense compared to 2023.
Removed
Furthermore, our capital remains strong with a Common Equity Tier 1 Ratio of 13.37 percent and a total capital ratio of 15.27 percent at December 31, 2023. 29 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
Added
As a result of adopting PAM, amortization expense related to tax credit equity investments of $4.3 million is included in income tax expense for 2024 compared to $2.1 million included in other noninterest expense in 2023. The efficiency ratio (non-GAAP) for 2024 was 55.99 percent compared to 51.35 percent for 2023.
Removed
The increase in net income was primarily due to higher net interest income related to higher interest rates. Return on average assets increased 8 basis points to 1.56 percent for 2023 compared to 1.48 percent for 2022. Return on average shareholders' equity increased 33 basis points to 11.80 percent for 2023 compared to 11.47 percent for 2022.
Added
The increase in the effective tax rate was primarily due to the adoption of PAM. 30 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
Removed
Mortgage banking income decreased $1.1 million due to a decline in loan sale activity caused by rising interest rates and a shift to holding originated mortgage loans on the balance sheet. Various other customer fees were down compared to the prior year due to lower activity.
Added
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. As part of our interest rate risk management strategy, we use interest rate swaps to add stability to net interest income by managing our exposure to interest rate movements.
Removed
Offsetting these decreases was an increase of $2.5 million in other noninterest income primarily related to valuation adjustments and a $0.8 million increase in net gain on the sale of OREO partially offset by a $0.8 million decrease in fees on commercial loan swaps. Noninterest expense increased $13.6 million to $210.3 million compared to $196.7 million in 2022.
Added
This is an improvement of $4.1 million compared to the $11.6 million unrealized loss at December 31, 2023.
Removed
Salaries and employee benefits increased $8.2 million primarily due to higher salaries related to inflationary wage pressure, the acquisition of new talent and a change in the valuation adjustment on a nonqualified benefit plan. Loan-related expense increased $2.1 million primarily due to an increase in loan collection and legal expenses for the workout of criticized and classified loans.
Removed
Furniture, equipment and software expense increased $1.3 million due to new software implemented in 2023. FDIC insurance increased $1.3 million due to a two basis point increase in the assessment rate. The efficiency ratio (non-GAAP) for 2023 improved to 51.35 percent compared to 52.34 percent for 2022 due to higher revenue in 2023.
Removed
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 30 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS spreads.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2023 2022 2021 (dollars in thousands) Average Balance Interest Rate Average Balance Interest Rate Average Balance Interest Rate ASSETS Interest-bearing deposits with banks $ 141,954 $ 7,344 5.17 % $ 378,323 $ 2,952 0.78 % $ 722,057 $ 973 0.13 % Securities, at fair value (1)(2) 976,095 25,445 2.61 % 1,017,471 22,880 2.25 % 832,304 18,135 2.18 % Loans held for sale 121 8 6.71 % 1,115 49 4.38 % 4,094 124 3.03 % Commercial real estate 3,216,593 183,204 5.70 % 3,182,821 139,575 4.39 % 3,249,559 119,594 3.68 % Commercial and industrial 1,665,630 118,221 7.10 % 1,706,861 83,568 4.90 % 1,829,563 75,860 4.15 % Commercial construction 381,838 28,835 7.55 % 401,780 18,795 4.68 % 471,286 15,443 3.28 % Total Commercial Loans 5,264,061 330,260 6.27 % 5,291,462 241,938 4.57 % 5,550,407 210,897 3.80 % Residential mortgage 1,282,078 59,170 4.62 % 980,134 40,146 4.10 % 881,494 36,211 4.11 % Home equity 648,525 43,158 6.65 % 611,134 25,887 4.24 % 543,777 18,822 3.46 % Installment and other consumer 117,807 9,929 8.43 % 119,703 7,177 6.00 % 90,129 5,351 5.94 % Consumer construction 51,146 2,462 4.81 % 33,922 1,198 3.53 % 14,748 668 4.53 % Total Consumer Loans 2,099,556 114,719 5.46 % 1,744,893 74,408 4.26 % 1,530,148 61,052 3.99 % Total Portfolio Loans 7,363,617 444,979 6.04 % 7,036,355 316,346 4.50 % 7,080,555 271,949 3.84 % Total Loans (1)(3) 7,363,738 444,987 6.04 % 7,037,470 316,395 4.50 % 7,084,649 272,073 3.84 % Total other earning assets 37,988 2,675 7.04 % 12,694 576 4.54 % 10,363 397 3.83 % Total Interest-earning Assets 8,519,775 $ 480,451 5.64 % 8,445,958 $ 342,803 4.06 % 8,649,372 $ 291,578 3.37 % Noninterest-earning assets 756,481 721,080 726,478 Total Assets $ 9,276,256 $ 9,167,038 $ 9,375,850 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing demand $ 844,588 $ 6,056 0.72 % $ 918,222 $ 1,025 0.11 % $ 956,211 $ 809 0.08 % Money market 1,677,584 39,480 2.33 % 1,909,208 11,948 0.63 % 2,033,631 3,651 0.18 % Savings 1,020,314 4,352 0.43 % 1,121,818 1,121 0.10 % 1,047,855 366 0.03 % Certificates of deposit 1,302,478 42,948 3.30 % 993,722 5,813 0.58 % 1,255,370 5,930 0.47 % Total Interest-bearing Deposits 4,844,964 92,836 1.92 % 4,942,970 19,907 0.40 % 5,293,066 10,757 0.20 % Securities sold under repurchase agreements — — — % 35,836 36 0.10 % 69,964 79 0.11 % Short-term borrowings 500,421 27,238 5.44 % 40,013 1,659 4.15 % 6,301 12 0.19 % Long-term borrowings 31,706 1,332 4.20 % 19,090 411 2.15 % 22,995 458 1.99 % Junior subordinated debt securities 52,215 4,110 7.87 % 54,420 2,395 4.40 % 61,653 1,843 2.99 % Total Borrowings 584,342 32,680 5.59 % 149,359 4,501 3.01 % 160,913 2,392 1.49 % Other interest-bearing liabilities 58,135 2,975 5.12 % 15,163 560 3.69 % Total Interest-bearing Liabilities 5,487,441 128,491 2.34 % 5,107,492 24,968 0.49 % 5,453,979 13,150 0.24 % Noninterest-bearing liabilities 2,561,483 2,877,758 2,735,710 Shareholders' equity 1,227,332 1,181,788 1,186,161 Total Liabilities and Shareholders' Equity $ 9,276,256 $ 9,167,038 $ 9,375,850 Net Interest Income (1)(2) $ 351,960 $ 317,835 $ 278,428 Net Interest Margin (1)(2) 4.13 % 3.76 % 3.22 % (1) Tax-exempt interest income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent.
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2024 2023 2022 (dollars in thousands) Average Balance Interest Rate Average Balance Interest Rate Average Balance Interest Rate ASSETS Interest-bearing deposits with banks $ 165,275 $ 8,855 5.36 % $ 141,954 $ 7,344 5.17 % $ 378,323 $ 2,952 0.78 % Securities, at fair value (1)(2) 977,896 29,860 3.05 % 976,095 25,445 2.61 % 1,017,471 22,880 2.25 % Loans held for sale 85 6 6.95 % 121 8 6.71 % 1,115 49 4.38 % Commercial real estate 3,334,518 197,406 5.92 % 3,216,593 183,204 5.70 % 3,182,821 139,575 4.39 % Commercial and industrial 1,584,309 115,061 7.26 % 1,665,630 118,221 7.10 % 1,706,861 83,568 4.90 % Commercial construction 378,755 29,677 7.84 % 381,838 28,835 7.55 % 401,780 18,795 4.68 % Total Commercial Loans 5,297,582 342,144 6.46 % 5,264,061 330,260 6.27 % 5,291,462 241,938 4.57 % Residential mortgage 1,558,277 78,676 5.05 % 1,282,078 59,170 4.62 % 980,134 40,146 4.10 % Home equity 646,085 44,695 6.92 % 648,525 43,158 6.65 % 611,134 25,887 4.24 % Installment and other consumer 106,260 9,058 8.52 % 117,807 9,929 8.43 % 119,703 7,177 6.00 % Consumer construction 65,402 4,015 6.14 % 51,146 2,462 4.81 % 33,922 1,198 3.53 % Total Consumer Loans 2,376,024 136,444 5.74 % 2,099,556 114,719 5.46 % 1,744,893 74,408 4.26 % Total Portfolio Loans 7,673,606 478,588 6.24 % 7,363,617 444,979 6.04 % 7,036,355 316,346 4.50 % Total Loans (1)(3) 7,673,691 478,594 6.24 % 7,363,738 444,987 6.04 % 7,037,470 316,395 4.50 % Total other earning assets 18,606 1,269 6.82 % 37,988 2,675 7.04 % 12,694 576 4.54 % Total Interest-earning Assets 8,835,468 $ 518,578 5.87 % 8,519,775 $ 480,451 5.64 % 8,445,958 $ 342,803 4.06 % Noninterest-earning assets 737,366 756,481 721,080 Total Assets $ 9,572,834 $ 9,276,256 $ 9,167,038 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing demand $ 804,387 $ 8,837 1.10 % $ 844,588 $ 6,056 0.72 % $ 918,222 $ 1,025 0.11 % Money market 1,993,053 64,666 3.24 % 1,677,584 39,480 2.33 % 1,909,208 11,948 0.63 % Savings 905,351 6,273 0.69 % 1,020,314 4,352 0.43 % 1,121,818 1,121 0.10 % Certificates of deposit 1,764,661 79,635 4.51 % 1,302,478 42,948 3.30 % 993,722 5,813 0.58 % Total Interest-bearing Deposits 5,467,452 159,411 2.92 % 4,844,964 92,836 1.92 % 4,942,970 19,907 0.40 % Short-term borrowings 257,524 13,206 5.12 % 500,421 27,238 5.44 % 75,849 1,695 2.23 % Long-term borrowings 46,306 1,964 4.24 % 31,706 1,332 4.20 % 19,090 411 2.15 % Junior subordinated debt securities 49,386 3,976 8.05 % 52,215 4,110 7.87 % 54,420 2,395 4.40 % Total Borrowings 353,216 19,146 5.41 % 584,342 32,680 5.59 % 149,359 4,501 3.01 % Other interest-bearing liabilities 47,727 2,509 5.26 % 58,135 2,975 5.12 % 15,163 560 3.69 % Total Interest-bearing Liabilities 5,868,395 181,066 3.09 % 5,487,441 128,491 2.34 % 5,107,492 24,968 0.49 % Noninterest-bearing liabilities 2,373,569 2,561,483 2,877,758 Shareholders' equity 1,330,870 1,227,332 1,181,788 Total Liabilities and Shareholders' Equity $ 9,572,834 $ 9,276,256 $ 9,167,038 Net Interest Income (FTE) (non-GAAP) (1)(2) $ 337,512 $ 351,960 $ 317,835 Net Interest Margin (FTE) (non-GAAP) (1)(2) 3.82 % 4.13 % 3.76 % (1) Tax-exempt interest income is on an FTE basis (non-GAAP) using the statutory federal corporate income tax rate of 21 percent.
We sell these loans in order to mitigate interest-rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing of the loans. During 2023, our strategy changed whereby we held more mortgages on our balance sheet versus selling these loans in the secondary market.
We sell these loans in order to mitigate interest-rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing of the loans. Beginning in 2023, our strategy changed whereby we held more mortgages on our balance sheet versus selling these loans in the secondary market.
Unlike equity securities of traditional for-profit enterprises, the stock of the FHLB does not provide its holders with an opportunity for capital appreciation because, by regulation, FHLB stock can only be purchased, redeemed and transferred at par value. We reviewed and evaluated the FHLB capital stock for impairment at December 31, 2023. The FHLB exceeds all required capital ratios.
Unlike equity securities of traditional for-profit enterprises, the stock of the FHLB does not provide its holders with an opportunity for capital appreciation because, by regulation, FHLB stock can only be purchased, redeemed and transferred at par value. We reviewed and evaluated the FHLB capital stock for impairment at December 31, 2024. The FHLB exceeds all required capital ratios.
We do not intend to sell and it is more likely than not that we will not be required to sell any of the securities in an unrealized loss position before recovery of their amortized cost. We did not recognize any impairment charges on our securities portfolio in 2023, 2022 or 2021.
We do not intend to sell and it is more likely than not that we will not be required to sell any of the securities in an unrealized loss position before recovery of their amortized cost. We did not recognize any impairment charges on our securities portfolio in 2024, 2023 or 2022.
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. We maintain a General Lending Policy to control the quality of our loan portfolio.
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. We adhere to a General Lending Policy to maintain the quality of our loan portfolio.
We believe S&T has the ability to retain existing deposits and attract new deposits, mitigating any funding dependency on other more volatile funding sources. Refer to the "Financial Condition as of December 31, 2023 - Deposits" section of this MD&A, for additional discussion on deposits.
We believe S&T has the ability to retain existing deposits and attract new deposits, mitigating any funding dependency on other more volatile funding sources. Refer to the "Financial Condition as of December 31, 2024 - Deposits" section of this MD&A, for additional discussion on deposits.
This shift in strategy was mainly due to loan pricing in the secondary market and the desire to reduce our variable rate loan exposure in this interest rate environment. We continue to monitor this strategy and could shift back to selling more residential mortgages into the secondary market in future periods.
This shift in strategy was mainly due to loan pricing in the secondary market and the desire to reduce our variable rate loan exposure in this interest rate environment. We continue to monitor our strategy and may shift back to selling more residential mortgages into the secondary market in future periods.
We did not record an ACL related to the securities portfolio at December 31, 2023 or December 31, 2022. The unrealized losses on debt securities were primarily attributable to changes in interest rates and not related to the credit quality of these securities.
We did not record an ACL related to the securities portfolio at December 31, 2024 or December 31, 2023. The unrealized losses on debt securities were primarily attributable to changes in interest rates and not related to the credit quality of these securities.
All debt securities were determined to be investment grade and paying principal and interest according to the contractual terms of the security at December 31, 2023.
All debt securities were determined to be investment grade and paying principal and interest according to the contractual terms of the security at December 31, 2024.
Credit Quality On a quarterly basis, a criticized asset meeting is held to monitor all special mention and substandard loans greater than $1.5 million and all business banking special mention and substandard loans greater than $0.5 million to establish action plans for these loans. These loans typically represent the highest risk of loss to us.
Credit Quality On a quarterly basis, criticized asset meetings are held to monitor all special mention and substandard loans greater than $1.5 million and all business banking special mention and substandard loans greater than $0.5 million to establish action plans for these loans. These loans typically represent the highest risk of loss to us.
We monitor these loans through regular contact with the borrower, review of current financial information and other documentation, review of all loan or potential loan restructures or modifications and the regular re-evaluation of assets held as collateral.
We monitor these loans through regular contact with the borrower, review of current financial information and other documentation, review of all loan or potential loan restructures or modifications and the regular reevaluation of assets held as collateral.
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. Additional funding sources accessible to S&T include borrowing availability at the Federal Home Loan Bank of Pittsburgh, or FHLB, federal funds lines with other financial institutions and the brokered deposit market.
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. Additional funding sources accessible to S&T include borrowing availability at the FHLB, federal funds lines with other financial institutions and the brokered deposit market.
Federal Home Loan Bank and Other Restricted Stock At December 31, 2023, we held FHLB of Pittsburgh stock of $24.0 million compared to $22.0 million at December 31, 2022. This investment is carried at cost and evaluated for impairment based on the ultimate recoverability of the par value.
Federal Home Loan Bank and Other Restricted Stock At December 31, 2024, we held FHLB of Pittsburgh stock of $15.2 million compared to $24.0 million at December 31, 2023. This investment is carried at cost and evaluated for impairment based on the ultimate recoverability of the par value.
When concentrations exist in certain segments, we assess the credit risk within those segments to determine if additional reserve is needed in the qualitative portion of the ACL. Total commercial loans represented 70.1 percent of total portfolio loans at December 31, 2023 compared to 73.0 percent at December 31, 2022.
When concentrations exist in certain segments, we assess the credit risk within those segments to determine if additional reserve is needed in the qualitative portion of the ACL. Total commercial loans represented 68.2 percent of total portfolio loans at December 31, 2024 compared to 70.1 percent at December 31, 2023.
We may originate home equity loans with a lien position that is second to unrelated third-party lenders, but normally only to the extent that the combined LTV considering both the first and second liens does not exceed 100 percent of the fair value of the property.
Higher LTV loans may be approved within unique program guidelines. We may originate home equity loans with a lien position that is second to unrelated third-party lenders, but normally only to the extent that the combined LTV considering both the first and second liens does not exceed 100 percent of the fair value of the property.
Qualified Affordable Housing, Note 13 Deposits, Note 14 Short Term Borrowings, Note 15 Long Term Borrowings and Subordinated Debt and Note 7 Right-Of-Use Assets and Lease Liabilities to the consolidated financial statements included in Part II, Item 8. Financial Statements and Supplementary Data, and the Deposits and Borrowings section of this MD&A, for more details.
Tax Credit Equity Investments, Note 13. Deposits, Note 14. Short Term Borrowings, Note 15. Long Term Borrowings and Subordinated Debt and Note 7. Right-Of-Use Assets and Lease Liabilities to the consolidated financial statements included in Part II, Item 8. Financial Statements and Supplementary Data and the Deposits and Borrowings section of this MD&A, for more details.
We continue to maintain a strong capital position with a leverage ratio of 11.21 percent as compared to the regulatory guideline of 5.00 percent to be well-capitalized and a risk-based Common Equity Tier 1 ratio of 13.37 percent compared to the regulatory guideline of 6.50 percent to be well-capitalized.
We continue to maintain a strong capital position with a leverage ratio of 11.98 percent as compared to the regulatory guideline of 5.00 percent to be well-capitalized and a risk-based Common Equity Tier 1 ratio of 14.58 percent compared to the regulatory guideline of 6.50 percent to be well-capitalized.
At December 31, 2023, our bond portfolio had gross unrealized losses of $83.8 million offset by $1.8 million in gross unrealized gains, compared to December 31, 2022, when total gross unrealized losses were $102.6 million offset by gross unrealized gains of $0.3 million. Management evaluates the securities portfolio to determine if an ACL is needed each quarter.
At December 31, 2024, our bond portfolio had gross unrealized losses of $72.7 million offset by $1.0 million in gross unrealized gains compared to December 31, 2023, when total gross unrealized losses were $83.8 million offset by gross unrealized gains of $1.8 million. Management evaluates the securities portfolio to determine if an ACL is needed each quarter.
The other comprehensive income was primarily due to a $15.9 million improvement in unrealized losses on our available-for-sale debt securities, net of tax and an improvement of $5.2 million in unrealized losses on our interest rate swaps, net of tax.
The other comprehensive income was primarily due to a $8.2 million improvement in unrealized losses on our available-for-sale debt securities, net of tax and an improvement of $4.1 million in unrealized losses on our interest rate swaps, net of tax.
Offsetting loan charge-offs during 2023 were $11.5 million of loan recoveries which included a $9.3 million recovery related to a 2020 customer fraud compared to $9.0 million of loan recoveries during 2022.
Offsetting loan charge-offs during 2024 were $3.9 million in recoveries compared to $11.5 million in recoveries in 2023, which included a $9.3 million recovery related to a 2020 customer fraud.
Available borrowing capacity exceeds uninsured deposits of $2.3 billion at December 31, 2023 and $2.5 billion at December 31, 2022.
Available borrowing capacity exceeds uninsured deposits of $2.6 billion at December 31, 2024 and $2.3 billion at December 31, 2023.
We have generated an annual effective tax rate that is less than the statutory rate of 21 percent due to benefits resulting from tax-exempt interest, excludable dividend income, tax-exempt income on Bank Owned Life Insurance, or BOLI, and tax benefits associated with LIHTCs.
We have generated an annual effective tax rate that is less than the statutory rate of 21 percent due to benefits resulting from tax-exempt interest, excludable dividend income, tax-exempt income on Bank Owned Life Insurance, or BOLI, and tax benefits associated with Low Income Housing Tax Credits, or LIHTC, which is partially offset by PAM.
Our risk-based Tier 1 and Total capital ratios were 13.69 percent and 15.27 percent, which places us above the federal bank regulatory agencies’ well-capitalized guidelines of 8.00 percent and 10.00 percent, respectively.
Our risk-based Tier 1 and Total capital ratios were 14.90 percent and 16.49 percent, which places us above the federal bank regulatory agencies’ well-capitalized guidelines of 8.00 percent and 10.00 percent, respectively.
Short-Term Borrowings (dollars in thousands) 2023 2022 Balance at the period end $ 415,000 $ 370,000 Average balance during the period $ 500,421 $ 40,013 Average interest rate during the period 5.44 % 4.15 % Maximum month-end balance during the period $ 630,000 $ 370,000 Average interest rate at the period end 5.65 % 4.49 % Information pertaining to long-term borrowings and junior subordinated debt securities is summarized in the tables below for the years ended December 31, 2023 and December 31, 2022.
Short-Term Borrowings (dollars in thousands) December 31, 2024 December 31, 2023 Balance at the period end $ 150,000 $ 415,000 Average balance during the period $ 257,524 $ 500,421 Average interest rate during the period 5.12 % 5.44 % Maximum month-end balance during the period $ 465,000 $ 630,000 Average interest rate at the period end 4.60 % 5.65 % Information pertaining to long-term borrowings and junior subordinated debt securities is summarized in the tables below for the years ended December 31, 2024 and December 31, 2023.
The timing of adoption, ultimate form and effect of any such proposed amendments cannot be predicted. 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 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.
Consumer loans are evaluated for charge-off after the loan becomes 90 days past due. Unsecured loans are fully charged off and secured loans are charged down to the estimated fair value of the collateral less the cost to sell.
Consumer loans are evaluated for charge-off after the loan becomes 90 days past due. Unsecured loans are fully charged off and secured loans are charged down to the estimated fair value of the collateral less the cost to sell. 40 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
The following represents NPAs as of December 31: (dollars in thousands) 2023 2022 Nonaccrual Loans Commercial real estate $ 7,267 $ 7,323 Commercial and industrial 3,244 2,974 Commercial construction 4,960 384 Consumer real estate 7,146 8,093 Other consumer 330 278 Total Nonaccrual Loans 22,947 19,052 OREO 75 3,065 Total Nonperforming Assets $ 23,022 $ 22,117 Nonaccrual loans as a percent of total loans 0.30 % 0.27 % Nonperforming assets as a percent of total loans plus OREO 0.30 % 0.31 % Our policy is to place loans in all categories in nonaccrual status when collection of interest or principal is doubtful, or generally when interest or principal payments are 90 days or more past due.
The following represents NPAs as of December 31: (dollars in thousands) 2024 2023 Nonaccrual Loans Commercial real estate $ 4,173 $ 7,267 Commercial and industrial 12,570 3,244 Commercial construction — 4,960 Consumer real estate 10,964 7,146 Other consumer 230 330 Total Nonaccrual Loans 27,937 22,947 OREO 8 75 Total Nonperforming Assets $ 27,945 $ 23,022 Nonaccrual loans as a percent of total loans 0.36 % 0.30 % Nonperforming assets as a percent of total loans plus OREO 0.36 % 0.30 % 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.
In addition, our ability to access capital markets provides additional sources of funding with respect to strategic investing opportunities. Our access to and the availability of funds in the future will be affected by many factors, including, but not limited to our financial condition and prospects, the liquidity of the overall capital markets and the current state of the economy.
Our access to and the availability of funds in the future will be affected by many factors, including, but not limited to our financial condition and prospects, the liquidity of the overall capital markets and the current state of the economy.
We do so by analyzing our capability to respond to changing interest rates and our ability to manage noninterest income and expense. We monitor the mix of interest-rate sensitive assets and liabilities through our management committee, ALCO, in order to manage the impact of inflation and the level of interest rates on net interest income.
We monitor the mix of interest-rate sensitive assets and liabilities through our management committee, ALCO, in order to manage the impact of inflation and the level of interest rates on net interest income.
Lending Activity The following table summarizes our loan portfolio as of December 31: 2023 2022 2021 2020 2019 (dollars in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Commercial Commercial real estate $ 3,357,603 43.9 % $ 3,128,187 43.5 % $ 3,236,653 46.2 % $ 3,244,974 44.9 % $ 3,416,518 47.9 % Commercial and industrial 1,642,106 21.5 % 1,718,976 23.9 % $ 1,728,969 24.7 % $ 1,954,453 27.0 % $ 1,720,833 24.1 % Commercial construction 363,284 4.7 % 399,371 5.6 % 440,962 6.3 % 474,280 6.6 % 375,445 5.3 % Total Commercial Loans 5,362,993 70.1 % 5,246,534 73.0 % 5,406,584 77.2 % 5,673,706 78.5 % 5,512,796 77.2 % Consumer Consumer real estate 2,175,451 28.4 % 1,812,539 25.2 % 1,485,478 21.2 % 1,471,238 20.4 % 1,545,323 21.7 % Other consumer 114,897 1.5 % 124,896 1.7 % 107,928 1.5 % 80,915 1.1 % 79,033 1.1 % Total Consumer Loans 2,290,348 29.9 % 1,937,435 27.0 % 1,593,406 22.8 % 1,552,153 21.5 % 1,624,356 22.8 % Total Portfolio Loans $ 7,653,341 100.0 % $ 7,183,969 100.0 % $ 6,999,990 100.0 % $ 7,225,859 100.0 % $ 7,137,152 100.0 % The loan portfolio represents the most significant source of interest income for us.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Loan Composition The following table summarizes our loan portfolio as of the dates presented: 2024 2023 2022 2021 2020 (dollars in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Commercial Commercial real estate $ 3,388,017 43.8 % $ 3,357,603 43.9 % $ 3,128,187 43.5 % $ 3,236,653 46.2 % $ 3,244,974 44.9 % Commercial and industrial 1,540,397 19.9 % 1,642,106 21.5 % 1,718,976 23.9 % 1,728,969 24.7 % 1,954,453 27.0 % Commercial construction 352,886 4.5 % 363,284 4.7 % 399,371 5.6 % 440,962 6.3 % 474,280 6.6 % Total Commercial Loans 5,281,300 68.2 % 5,362,993 70.1 % 5,246,534 73.0 % 5,406,584 77.2 % 5,673,706 78.5 % Consumer Consumer real estate 2,356,901 30.4 % 2,175,451 28.4 % 1,812,539 25.2 % 1,485,478 21.2 % 1,471,238 20.4 % Other consumer 104,757 1.4 % 114,897 1.5 % 124,896 1.7 % 107,928 1.5 % 80,915 1.1 % Total Consumer Loans 2,461,658 31.8 % 2,290,348 29.9 % 1,937,435 27.0 % 1,593,406 22.8 % 1,552,153 21.5 % Total Portfolio Loans $ 7,742,958 100.0 % $ 7,653,341 100.0 % $ 7,183,969 100.0 % $ 6,999,990 100.0 % $ 7,225,859 100.0 % The loan portfolio represents the most significant source of interest income for us.
IntraFi balances increased $210.4 million to $277.7 million at December 31, 2023 compared to $67.3 million at December 31, 2022. We have total uninsured deposits of $2.3 billion, or 30.0 percent of our total deposit base, compared to $2.5 billion, or 34.0 percent, at December 31, 2022.
IntraFi balances increased $47.1 million to $324.8 million at December 31, 2024 compared to $277.7 million at December 31, 2023. We have total uninsured deposits of $2.6 billion, or 33.5 percent of our total deposit base, compared to $2.3 billion, or 30.0 percent, at December 31, 2023.
The following table presents activity in the ACL for each of the three years presented below: Years Ended December 31, (dollars in thousands) 2023 2022 2021 ACL Balance at Beginning of Year: $ 101,340 $ 98,576 $ 117,612 Charge-offs: Commercial real estate (1,706) (1,820) (13,493) Commercial and industrial (20,535) (7,801) (22,305) Commercial construction (451) — (55) Consumer real estate (446) (621) (719) Other consumer (1,500) (1,375) (952) Total (24,638) (11,617) (37,524) Recoveries: Commercial real estate 1,084 1,052 1,196 Commercial and industrial 9,796 7,366 822 Commercial construction 2 1 14 Consumer real estate 214 203 310 Other consumer 360 400 652 Total 11,456 9,022 2,994 Net Charge-offs (13,182) (2,595) (34,530) Impact of adoption of ASU 2022-02 568 — — Provision for credit losses 19,240 5,359 15,494 ACL Balance at End of Year: $ 107,966 $ 101,340 $ 98,576 Net loan charge-offs for 2023 were $13.2 million, or 0.18 percent of average loans, compared to $2.6 million, or 0.04 percent of average loans for 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents activity in the ACL for each of the three years presented below: Years Ended December 31, (dollars in thousands) 2024 2023 2022 ACL Balance at Beginning of Year: $ 107,966 $ 101,340 $ 98,576 Charge-offs: Commercial real estate (5,390) (1,706) (1,820) Commercial and industrial (3,898) (20,535) (7,801) Commercial construction — (451) — Consumer real estate (1,446) (446) (621) Other consumer (1,454) (1,500) (1,375) Total (12,188) (24,638) (11,617) Recoveries: Commercial real estate 1,921 1,084 1,052 Commercial and industrial 1,133 9,796 7,366 Commercial construction — 2 1 Consumer real estate 329 214 203 Other consumer 524 360 400 Total 3,907 11,456 9,022 Net Charge-offs (8,281) (13,182) (2,595) Impact of adoption of ASU 2022-02 — 568 — Provision for credit losses 1,809 19,240 5,359 ACL Balance at End of Year: $ 101,494 $ 107,966 $ 101,340 Net loan charge-offs for 2024 were $8.3 million, or 0.11 percent of average loans, compared to $13.2 million, or 0.18 percent of average loans for 2023.
At December 31, 2023, our bond portfolio was in a net unrealized loss position of $82.0 million compared to a net unrealized loss position of $102.3 million at December 31, 2022.
The bond portfolio was in a net unrealized loss position of $71.7 million at December 31, 2024 compared to a net unrealized loss position of $82.0 million at December 31, 2023.
Derivative contracts are carried at fair value representing the net present value of expected future cash receipts or payments based on market rates as of the balance sheet date.
Derivative contracts are carried at fair value representing the net present value of expected future cash receipts or payments based on market rates as of the balance sheet date. 45 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
(2) Taxable investment income is adjusted for the dividend-received deduction for equity securities. (3) Nonaccruing loans are included in the daily average loan amounts outstanding. Net interest income on an FTE basis (non-GAAP) increased $34.1 million, or 10.7 percent, compared to 2022.
(2) Taxable investment income is adjusted for the dividend-received deduction for equity securities. (3) Nonaccruing loans are included in the daily average loan amounts outstanding. Net interest income on an FTE basis (non-GAAP) decreased $14.4 million, or 4.11 percent to $337.5 million in 2024 compared to $351.9 million in 2023.
Financial Statements and Supplementary Data of this Report for details on allowance for credit losses on unfunded commitments.
Commitments and Contingencies in Part II, Item 8. Financial Statements and Supplementary Data of this Report for details on the allowance for credit losses on unfunded commitments.
Treasury securities $ 133,786 1.71 % $ 131,695 1.71 % $ 95,327 1.26 % Obligations of U.S. government corporations and agencies 32,513 2.28 % 41,811 2.32 % 70,348 2.29 % Collateralized mortgage obligations of U.S. government corporations and agencies 460,939 3.04 % 428,407 2.56 % 270,294 1.97 % Residential mortgage-backed securities of U.S. government corporations and agencies 38,177 1.86 % 41,587 1.86 % 56,793 1.57 % Commercial mortgage-backed securities of U.S. government corporations and agencies 273,425 2.42 % 327,313 2.28 % 341,300 2.09 % Corporate obligations — — % 500 7.67 % 500 3.22 % Obligations of states and political subdivisions 30,468 3.34 % 30,471 3.35 % 75,089 3.28 % Available-for-Sale Debt Securities 969,308 1,001,784 909,651 Equity securities 1,083 3.06 % 994 3.32 % 1,142 2.93 % Total Securities Available for Sale $ 970,391 2.62 % $ 1,002,778 2.34 % $ 910,793 2.05 % 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.
Treasury securities $ 92,768 2.72 % $ 133,786 1.71 % $ 131,695 1.71 % Obligations of U.S. government corporations and agencies 15,071 2.14 % 32,513 2.28 % 41,811 2.32 % Collateralized mortgage obligations of U.S. government corporations and agencies 596,284 3.62 % 460,939 3.04 % 428,407 2.56 % Residential mortgage-backed securities of U.S. government corporations and agencies 33,207 1.86 % 38,177 1.86 % 41,587 1.86 % Commercial mortgage-backed securities of U.S. government corporations and agencies 224,798 3.08 % 273,425 2.42 % 327,313 2.28 % Corporate obligations — — % — — % 500 7.67 % Obligations of states and political subdivisions 24,287 3.17 % 30,468 3.34 % 30,471 3.35 % Available-for-Sale Debt Securities 986,415 969,308 1,001,784 Equity securities 1,176 2.59 % 1,083 3.06 % 994 3.32 % Total Securities Available for Sale $ 987,591 3.32 % $ 970,391 2.62 % $ 1,002,778 2.34 % 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.
Financial Condition as of December 31, 2023 Total assets increased $441.0 million to $9.6 billion at December 31, 2023 compared to $9.1 billion at December 31, 2022. Total portfolio loans increased $469.4 million to $7.7 billion at December 31, 2023 compared to $7.2 billion at December 31, 2022.
Financial Condition as of December 31, 2024 Total assets were $9.7 billion at December 31, 2024 compared to $9.6 billion at December 31, 2023. Total portfolio loans increased $89.6 million, or 1.2 percent, to $7.7 billion at December 31, 2024 compared to December 31, 2023.
At December 31, 2023, S&T Bank had $897.4 million in highly liquid assets, which consisted primarily of $160.3 million in interest-bearing deposits with banks and $736.9 million in unpledged securities. This resulted in a highly liquid assets to total assets ratio of 9.4 percent at December 31, 2023 compared to 9.6 percent at December 31, 2022.
At December 31, 2024, S&T Bank had $938.2 million in highly liquid assets, which consisted primarily of $175.2 million in interest-bearing deposits with banks and $763.0 million in unpledged securities. This resulted in a highly liquid assets to total assets ratio of 9.7 percent at December 31, 2024 compared to 9.4 percent at December 31, 2023. Refer to Note 12.
The minimum capital requirements plus the capital conservation buffer exceeds the regulatory capital ratios required for an insured depository institution to be well-capitalized under the FDIC's prompt corrective action framework. 46 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
The minimum capital requirements plus the capital conservation buffer exceeds the regulatory capital ratios required for an insured depository institution to be well-capitalized under the FDIC's prompt corrective action framework.
The daily average balance of deposits and rates paid on deposits are summarized in the following table for the years ended December 31: 2023 2022 2021 (dollars in thousands) Amount Rate Amount Rate Amount Rate Noninterest-bearing demand $ 2,349,919 — $ 2,705,210 — $ 2,594,152 — Interest-bearing demand 844,588 0.72 % 918,222 0.11 % 956,211 0.08 % Money market 1,638,947 2.28 % 1,909,209 0.63 % 2,026,083 0.18 % Savings 1,020,314 0.43 % 1,121,818 0.10 % 1,047,855 0.03 % Certificates of deposit 1,226,989 3.17 % 991,396 0.58 % 1,246,499 0.46 % Brokered deposits 114,322 5.43 % 2,323 2.10 % 16,419 1.15 % Total $ 7,195,079 1.29 % $ 7,648,178 0.26 % $ 7,887,219 0.14 % CDs of $250,000 and over accounted for 4.7 percent and 3.0 percent of total deposits at December 31, 2023 and December 31, 2022.
The daily average balance of deposits and rates paid on deposits are summarized in the following table for the years ended December 31: 2024 2023 2022 (dollars in thousands) Amount Rate Amount Rate Amount Rate Noninterest-bearing demand $ 2,163,902 — $ 2,349,919 — $ 2,705,210 — Interest-bearing demand 804,387 1.10 % 844,588 0.72 % 918,222 0.11 % Money market 1,873,629 3.11 % 1,638,947 2.28 % 1,909,209 0.63 % Savings 905,351 0.69 % 1,020,314 0.43 % 1,121,818 0.10 % Certificates of deposit 1,580,025 4.41 % 1,226,989 3.17 % 991,396 0.58 % Brokered deposits 304,060 5.35 % 114,322 5.43 % 2,323 2.10 % Total $ 7,631,354 2.09 % $ 7,195,079 1.29 % $ 7,648,178 0.26 % CDs of $250,000 and over accounted for 6.2 percent and 4.7 percent of total deposits at December 31, 2024 and December 31, 2023.
Our CRE and commercial construction portfolios have exposure outside this geography of 3.9 percent of the combined portfolios and 1.9 percent of total portfolio loans at December 31, 2023. This compares to 5.8 percent of the combined portfolios and 2.9 percent of total portfolio loans at December 31, 2022.
Our CRE and commercial construction portfolios have exposure outside this geography of 3.9 percent of the combined portfolios and 1.9 percent of total portfolio loans at December 31, 2024 and 2023. Total portfolio loans increased $89.6 million, or 1.2 percent, to $7.7 billion at December 31, 2024 compared to $7.7 billion at December 31, 2023.
The increase in our income tax provision was primarily due to a $9.9 million increase in income before taxes in 2023 compared to 2022. The effective tax rate, which is total tax expense as a percentage of income before taxes, decreased to 19.0 percent in 2023 compared to 19.8 percent in 2022.
The effective tax rate, which is total tax expense as a percentage of income before taxes, increased to 20.4 percent in 2024 compared to 19.0 percent in 2023. The increase in the effective tax rate in 2024 compared to 2023 was primarily due to the adoption of PAM.
The following represents delinquency as of December 31: 2023 2022 (dollars in thousands) Amount % of Loans Amount % of Loans 90 days or more: Commercial real estate $ 7,267 0.22 % $ 7,323 0.23 % Commercial and industrial 3,244 0.20 % 2,974 0.17 % Commercial construction 4,960 1.37 % 384 0.10 % Consumer real estate 7,146 0.33 % 8,093 0.45 % Other consumer 330 0.29 % 278 0.22 % Total Loans $ 22,947 0.30 % $ 19,052 0.27 % 30 to 89 days: Commercial real estate $ 7,665 0.23 % $ 8,772 0.28 % Commercial and industrial 710 0.04 % 5,076 0.30 % Commercial construction 22 0.01 % — — % Consumer real estate 6,295 0.29 % 6,268 0.35 % Other consumer 429 0.37 % 225 0.18 % Total Loans $ 15,121 0.20 % $ 20,341 0.28 % Closed-end installment loans, amortizing loans secured by real estate and any other loans with payments scheduled monthly are reported past due when the borrower is in arrears two or more monthly payments.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following represents delinquency as of December 31: 2024 2023 (dollars in thousands) Amount % of Loans Amount % of Loans 90 days or more: Commercial real estate $ 4,173 0.12 % $ 7,267 0.22 % Commercial and industrial 12,570 0.82 % 3,244 0.20 % Commercial construction — — % 4,960 1.37 % Consumer real estate 10,964 0.47 % 7,146 0.33 % Other consumer 230 0.22 % 330 0.29 % Total Loans $ 27,937 0.36 % $ 22,947 0.30 % 30 to 89 days: Commercial real estate $ 1,846 0.05 % $ 7,665 0.23 % Commercial and industrial 2,671 0.17 % 710 0.04 % Commercial construction 1,036 0.29 % 22 0.01 % Consumer real estate 5,554 0.24 % 6,295 0.29 % Other consumer 372 0.35 % 429 0.37 % Total Loans $ 11,479 0.15 % $ 15,121 0.20 % Closed-end installment loans, amortizing loans secured by real estate and any other loans with payments scheduled monthly are reported past due when the borrower is in arrears two or more monthly payments.
Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised $3.7 billion, or 69.4 percent, of total commercial loans and 48.6 percent of total portfolio loans at December 31, 2023 compared to $3.5 billion, or 67.2 percent, of total commercial loans and 49.1 percent of total portfolio loans at December 31, 2022. 37 Table of Contents S&T BANCORP, INC.
Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised $3.7 billion, or 70.8 percent, of total commercial loans and 48.3 percent of total portfolio loans at December 31, 2024 compared to $3.7 billion, or 69.4 percent, of total commercial loans and 48.6 percent of total portfolio loans at December 31, 2023.
Capital Resources Shareholders’ equity increased $98.8 million, or 8.3 percent, to $1.3 billion at December 31, 2023 compared to $1.2 billion at December 31, 2022. The increase was primarily due to net income of $144.8 million and other comprehensive income of $21.2 million, partially offset by dividends of $49.9 million and common stock repurchases of $20.0 million.
Capital Resources Shareholders’ equity increased $96.8 million, or 7.6 percent, to $1.4 billion at December 31, 2024 compared to $1.3 billion at December 31, 2023. The increase was primarily due to net income of $131.3 million and other comprehensive income of $13.9 million, partially offset by dividends of $51.1 million.
Included in uninsured deposits is $296.0 million, or 4.0 percent of our total deposit base, of municipal deposits which are fully collateralized.
Included in uninsured deposits is $297.5 million of fully collateralized, municipal deposits, or 3.8 percent of our total deposit base.
We originate traditional fixed rate mortgage loans and adjustable rate mortgages with a maximum amortization term of 30 years. The loan to value, or LTV, policy guideline is 80 percent for residential first lien mortgages. Higher LTV loans may be approved within unique program guidelines.
Beginning in 2022, we shifted from selling mortgages in the secondary market to holding mortgages in our portfolio. We originate traditional fixed rate mortgage loans and adjustable rate mortgages with a maximum amortization term of 30 years. The loan to value, or LTV, policy guideline is 80 percent for residential first lien mortgages.
We develop and document a systematic ACL methodology based on 40 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS the following portfolio segments: 1) CRE, 2) C&I, 3) Commercial Construction, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer.
We develop and document a systematic ACL methodology based on the following portfolio segments: 1) CRE, 2) C&I, 3) Commercial Construction, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer.
Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Many of the commitments are expected to expire without being drawn upon, therefore, the total commitment amounts do not necessarily represent future cash requirements. 38 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
The increase in interest income on an FTE basis (non-GAAP) was primarily due to higher interest rates. Average loan balances increased $326.3 million compared to 2022. The average yield on loan balances increased 154 basis points compared to 2022 due to higher interest rates.
Interest income on an FTE basis (non-GAAP) increased $38.1 million to $518.6 million in 2024 compared to $480.5 million in 2023. The increase in interest income on an FTE basis (non-GAAP) was primarily due to higher interest rates on interest earning assets. The average yield on loan balances increased 20 basis points compared to 2023 due to higher interest rates.
Additionally, we considered that the FHLB has been paying dividends and actively redeeming stock throughout 2023 and 2022. Accordingly, we believe sufficient evidence exists to conclude that no impairment existed at December 31, 2023. 42 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
Additionally, we considered that the FHLB has been paying dividends and actively redeeming stock throughout 2024 and 2023. Accordingly, we believe sufficient evidence exists to conclude that no impairment existed at December 31, 2024. Deposits Deposits are our primary source of funds.
We sold $0.2 million of 1-4 family mortgages in 2023 and $28.6 million in 2022 to Fannie Mae. Our servicing portfolio of mortgage loans that we had originated and sold into the secondary market was $707.8 million at December 31, 2023 compared to $772.9 million at December 31, 2022.
At December 31, 2024, our servicing portfolio of mortgage loans that we originated and sold into the secondary market was $648.9 million at December 31, 2024 compared to $707.8 million at December 31, 2023.
We also utilize interest rate swaps to add stability and manage exposure to interest rate movements, under which we are required to either receive cash from, or pay cash to, counterparties depending on changes 45 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in interest rates.
We also utilize interest rate swaps to add stability and manage exposure to interest rate movements, under which we are required to either receive cash from, or pay cash to, counterparties depending on changes in interest rates.
The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 37 basis points to 4.13 percent compared to 3.76 percent in 2022. The increases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to higher interest rates during 2023. Interest income on an FTE basis (non-GAAP) increased $137.6 million compared to 2022.
The net interest margin, or NIM, on an FTE basis (non-GAAP) decreased 31 basis points to 3.82 percent compared to 4.13 percent in 2023. The decreases in net interest income and NIM on an FTE basis (non-GAAP) were primarily due to the impact of higher interest rates on total interest-bearing liabilities.
The credit risk review function has the primary responsibility for assessing commercial credit administration and credit decision functions of consumer and mortgage underwriting, as well as providing input to the loan risk rating process. 39 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
The credit risk review function has the primary responsibility for assessing commercial credit administration and credit decision functions of consumer and mortgage underwriting, as well as providing input to the loan risk rating process. Nonperforming assets, or NPAs, consist of nonaccrual loans and OREO.
The rule requires a banking organization to maintain a capital conservation buffer composed of common equity tier 1 capital in an amount greater than 2.50 percent of total risk-weighted assets.
We adopted CECL effective January 1, 2020 and elected to implement the five-year transition. Banking organizations are required to maintain a capital conservation buffer composed of common equity tier 1 capital in an amount greater than 2.50 percent of total risk-weighted assets.
Business banking relationships less than $1.5 million are monitored through portfolio management software that identifies credit risk indicators. Our credit risk review process serves to independently monitor credit quality and assess the effectiveness of credit risk management practices to provide oversight of all corporate lending activities.
Our credit risk review process serves to independently monitor credit quality and assess the effectiveness of credit risk management practices to provide oversight of all corporate lending activities.
Inflation Inflation can have a significant impact on interest rates and, accordingly, can impact our financial performance. Inflation can influence our asset growth, deposits, noninterest income and expense and credit quality. As a result, we closely monitor the the rate of inflation in the economy.
As of December 31, 2024, we had not issued any securities pursuant to the shelf registration statement. Inflation Inflation can have a significant impact on interest rates and, accordingly, can impact our financial performance. Inflation can influence our asset growth, deposits, noninterest income and expense and credit quality.
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: 2023 Compared to 2022 Increase (Decrease) Due to 2022 Compared to 2021 Increase (Decrease) Due to (dollars in thousands) Volume (4) Rate (4) Total Volume (4) Rate (4) Total Interest earned on: Interest-bearing deposits with banks $ (1,845) $ 6,236 $ 4,392 $ (463) $ 2,443 $ 1,980 Securities, at fair value (2)(3) (930) 3,495 2,565 4,035 710 4,745 Loans held for sale (44) 3 (41) (90) 15 (75) Commercial real estate 1,481 42,149 43,630 (2,456) 22,437 19,981 Commercial and industrial (2,019) 36,671 34,653 (5,088) 12,796 7,708 Commercial construction (933) 10,973 10,040 (2,278) 5,630 3,352 Total Commercial Loans (1,471) 89,793 88,322 (9,822) 40,863 31,041 Residential mortgage 12,368 6,656 19,024 4,052 (117) 3,935 Home equity 1,584 15,688 17,272 2,332 4,733 7,065 Installment and other consumer (114) 2,866 2,752 1,756 70 1,826 Consumer construction 608 654 1,263 868 (338) 530 Total Consumer Loans 14,446 25,864 40,311 9,008 4,348 13,356 Total Portfolio Loans 12,976 115,657 128,633 (814) 45,211 44,397 Total Loans (1)(2) 12,932 115,660 128,592 (904) 45,226 44,322 Total other earning assets 1,149 950 2,099 89 90 179 Change in Interest Earned on Interest-earning Assets $ 11,306 $ 126,341 $ 137,647 $ 2,757 $ 48,469 $ 51,226 Interest paid on: Interest-bearing demand $ (82) $ 5,114 $ 5,031 $ (32) $ 248 $ 216 Money market (1,449) 28,981 27,532 (224) 8,520 8,296 Savings (101) 3,332 3,231 26 728 754 Certificates of deposit 1,806 35,329 37,135 (1,236) 1,119 (117) Total Interest-bearing Deposits 173 72,756 72,929 (1,466) 10,615 9,149 Securities sold under repurchase agreements (36) — (36) (38) (5) (43) Short-term borrowings 19,095 6,484 25,578 65 1,582 1,647 Long-term borrowings 272 650 921 (78) 31 (47) Junior subordinated debt securities (97) 1,811 1,714 (216) 768 552 Total Borrowings 19,233 8,945 28,178 (267) 2,376 2,109 Other interest-bearing liabilities 1,587 829 2,416 560 — 560 Change in Interest Paid on Interest-bearing Liabilities 20,993 82,530 103,523 (1,173) 12,991 11,818 Change in Net Interest Income $ (9,687) $ 43,812 $ 34,124 $ 3,930 $ 35,478 $ 39,408 (1) Nonaccruing loans are included in the daily average loan amounts outstanding.
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: 2024 Compared to 2023 Increase (Decrease) Due to 2023 Compared to 2022 Increase (Decrease) Due to (dollars in thousands) Volume (4) Rate (4) Total Volume (4) Rate (4) Total Interest earned on: Interest-bearing deposits with banks $ 1,207 $ 304 $ 1,511 $ (1,845) $ 6,236 $ 4,392 Securities, at fair value (2)(3) 47 4,368 4,415 (930) 3,495 2,565 Loans held for sale (2) — (2) (44) 3 (41) Commercial real estate 6,717 7,487 14,204 1,481 42,149 43,630 Commercial and industrial (5,772) 2,612 (3,160) (2,019) 36,671 34,653 Commercial construction (233) 1,075 842 (933) 10,973 10,040 Total Commercial Loans 712 11,174 11,886 (1,471) 89,793 88,322 Residential mortgage 12,747 6,759 19,506 12,368 6,656 19,024 Home equity (162) 1,699 1,537 1,584 15,688 17,272 Installment and other consumer (973) 102 (871) (114) 2,866 2,752 Consumer construction 686 868 1,554 608 654 1,263 Total Consumer Loans 12,298 9,428 21,726 14,446 25,864 40,311 Total Portfolio Loans 13,010 20,602 33,612 12,976 115,657 128,633 Total Loans (1)(2) 13,008 20,602 33,610 12,932 115,660 128,592 Total other earning assets (1,365) (42) (1,407) 1,149 950 2,099 Change in Interest Earned on Interest-earning Assets $ 12,897 $ 25,232 $ 38,129 $ 11,306 $ 126,341 $ 137,647 Interest paid on: Interest-bearing demand $ (288) $ 3,069 $ 2,781 $ (82) $ 5,114 $ 5,031 Money market 7,424 17,763 25,187 (1,449) 28,981 27,532 Savings (490) 2,411 1,921 (101) 3,332 3,231 Certificates of deposit 15,240 21,447 36,687 1,806 35,329 37,135 Total Interest-bearing Deposits 21,886 44,690 66,576 173 72,756 72,929 Short-term borrowings (13,221) (811) (14,032) 19,058 6,484 25,542 Long-term borrowings 614 18 632 272 650 921 Junior subordinated debt securities (223) 89 (134) (97) 1,811 1,714 Total Borrowings (12,830) (704) (13,534) 19,233 8,945 28,178 Other interest-bearing liabilities (533) 66 (467) 1,587 829 2,416 Change in Interest Paid on Interest-bearing Liabilities 8,523 44,052 52,575 20,993 82,530 103,523 Change in Net Interest Income $ 4,374 $ (18,820) $ (14,446) $ (9,687) $ 43,812 $ 34,124 (1) Nonaccruing loans are included in the daily average loan amounts outstanding.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Federal regulators periodically propose amendments to the regulatory capital rules and the related regulatory framework and consider changes to the capital standards that could significantly increase the amount of capital needed to meet applicable standards.
Federal regulators periodically propose amendments to the regulatory capital rules and the related regulatory framework and consider changes to the capital standards that could significantly increase the amount of capital needed to meet applicable standards. The timing of adoption, ultimate form and effect of any such proposed amendments cannot be predicted.
Taxable-equivalent adjustments for 2023 have been made in calculating yields on obligations of state and political subdivisions. Maturing Within One Year After One But within Five Years After Five But Within Ten Years After Ten Years No Fixed Maturity (dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Available-for-Sale U.S.
Maturing Within One Year After One But within Five Years After Five But Within Ten Years After Ten Years No Fixed Maturity (dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Available-for-Sale U.S.
Total portfolio loans increased $469.4 million, or 6.5 percent, to $7.7 billion at December 31, 2023 compared to $7.2 billion at December 31, 2022. As of December 31, 2023, 65.0 percent of our total loans were variable rate loans and 35.0 percent were fixed rate loans.
As of December 31, 2024, 62.0 percent of our total loans were variable rate loans and 38.0 percent were fixed rate loans compared to 65.0 percent variable rate loans and 35.0 percent fixed rate loans at December 31, 2023.
We also have a portfolio management group that utilizes multiple data sources including customer information, publicly available data and subscription service data to assess risk on an on-going basis and strong overall risk management practices which help us understand and evaluate concentration risk.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS customer information, publicly available data and subscription service data to assess risk on an on-going basis and strong overall risk management practices which help us understand and evaluate concentration risk.
The following table sets forth our commitments and letters of credit as of the dates presented: December 31, (dollars in thousands) 2023 2022 Commitments to extend credit $ 2,566,154 $ 2,713,586 Standby letters of credit 61,889 64,356 Total $ 2,628,043 $ 2,777,942 See Note 16 Commitments and Contingencies in Part II, Item 8.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth our commitments and letters of credit as of the dates presented: December 31, (dollars in thousands) 2024 2023 Commitments to extend credit $ 2,382,847 $ 2,566,154 Standby letters of credit 69,558 61,889 Total $ 2,452,405 $ 2,628,043 See Note 16.
Total shareholders’ equity increased by $98.8 million to $1.3 billion at December 31, 2023 compared to $1.2 billion at December 31, 2022. The increase was primarily due to net income of $144.8 million and other comprehensive income of $21.2 million, offset by dividends of $49.9 million and common stock repurchases of $20.0 million. 35 Table of Contents S&T BANCORP, INC.
Total shareholders’ equity increased by $96.8 million to $1.4 billion at December 31, 2024 compared to $1.3 billion at December 31, 2023. The increase was primarily due to net income of $131.3 million and other comprehensive income of $13.9 million offset by dividends of $51.1 million.
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 December 31, 2023, we had not issued any securities pursuant to the shelf registration statement.
We may use the proceeds from the sale of securities for general corporate purposes, which could include investments 46 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS at the holding company level, investing in, or extending credit to subsidiaries, possible acquisitions and stock repurchases.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Provision for Credit Losses The provision for credit losses includes a provision for losses on loans and on unfunded commitments. The provision for credit losses fluctuates based on changes in loan balances, risk ratings, net loan charge-offs/recoveries, the macro environment and our Current Expected Credit Loss, or CECL, forecast.
The provision for credit losses fluctuates based on changes in loan balances, loan risk ratings, net loan charge-offs/recoveries, the macro environment and our Current Expected Credit Loss, or CECL, forecast. The provision for credit losses decreased $17.8 million to $0.1 million for 2024 compared to $17.9 million for 2023.
Additional credit risk management practices include periodic review, at least annually, and updates of our lending policies and procedures to support sound underwriting practices and portfolio management through portfolio stress testing. We have a portfolio monitoring group that performs an annual review of all commercial relationships greater than $1.5 million and a quarterly review of our Watch rated portfolio.
We have a portfolio monitoring group that performs an annual review of all commercial and business banking relationships greater than $1.5 million and a quarterly review of our watch rated portfolio. Business banking relationships less than $1.5 million are monitored through portfolio management software that identifies credit risk indicators.
Criticized and classified loans in the multi-family segment are minimal at only $7.4 million at December 31, 2023. The office segment represents $516.5 million, or 6.7 percent of total portfolio loans at December 31, 2023 compared to $511.8 million, or 7.1 percent at December 31, 2022.
In the CRE segment, multi-family represented $640.1 million, or 8.3 percent of total portfolio loans, at December 31, 2024 compared to $569.4 million, or 7.4 percent, at December 31, 2023.
Offsetting the increase in provision for credit losses during 2023 was a $4.4 million decrease in the provision for unfunded loan commitments primarily due to a decrease in loss rates and unused commitments in the construction portfolio. Refer to the "Credit Quality" section of this MD&A for further details.
Additionally, the provision for credit losses for the reserve for unfunded commitments was a negative $1.7 million for 2024 compared to a negative $1.4 million for 2023. The decrease in the reserve for unfunded commitments for 2024 was primarily due to lower loss rates and fewer unused commitments in the construction portfolio.
Noninterest Expense Years Ended December 31, (dollars in thousands) 2023 2022 $ Change % Change Salaries and employee benefits $ 111,462 $ 103,221 $ 8,241 8.0 % Data processing and information technology 17,437 16,918 519 3.1 % Occupancy 14,814 14,812 2 — % Furniture, equipment and software 12,912 11,606 1,306 11.3 % Professional services and legal 7,823 8,318 (495) (6.0) % Other taxes 6,813 6,620 193 2.9 % Marketing 6,488 5,600 888 15.9 % FDIC insurance 4,122 2,854 1,268 44.4 % Loan-related expense 5,391 3,337 2,054 61.6 % Other 23,072 23,460 (388) (1.7) % Total Noninterest Expense $ 210,334 $ 196,746 $ 13,588 6.9 % Noninterest expense increased $13.6 million to $210.3 million compared to $196.7 million in 2022.
Noninterest Expense Years Ended December 31, (dollars in thousands) 2024 2023 $ Change % Change Salaries and employee benefits $ 121,990 $ 111,462 $ 10,528 9.4 % Data processing and information technology 19,510 17,437 2,073 11.9 % Occupancy 15,102 14,814 288 1.9 % Furniture, equipment and software 13,559 12,912 647 5.0 % Marketing 6,351 6,488 (137) (2.1) % Other taxes 7,452 6,813 639 9.4 % Professional services and legal 5,468 7,823 (2,355) (30.1) % FDIC insurance 4,201 4,122 79 1.9 % Other 25,305 28,463 (3,158) (11.1) % Total Noninterest Expense $ 218,938 $ 210,334 $ 8,604 4.1 % Noninterest expense increased $8.6 million to $218.9 million compared to $210.3 million in 2023.
The following table summarizes borrowing funding sources available as of the dates presented: December 31, 2023 December 31, 2022 (dollars in thousands) Borrowing Capacity Balance Available Borrowing Capacity Balance Available FHLB $ 3,241,098 $ 552,136 $ 2,688,962 $ 2,925,614 $ 491,288 $ 2,434,326 Borrower-in-Custody Program $ 769,653 $ — $ 769,653 839,836 — 839,836 Federal Reserve BTFP (1) $ 636,963 $ — $ 636,963 — — — Total $ 4,647,714 $ 552,136 $ 4,095,578 $ 3,765,450 $ 491,288 $ 3,274,162 (1) Emergency lending program created by the Federal Reserve in March 2023.
The following table summarizes borrowing funding sources available as of the dates presented: December 31, 2024 December 31, 2023 (dollars in thousands) Borrowing Capacity Balance (1) Available Borrowing Capacity Balance Available FHLB $ 1,980,615 $ 304,565 $ 1,676,050 $ 3,241,098 $ 552,136 $ 2,688,962 Borrower-in-Custody Program $ 1,995,489 $ — $ 1,995,489 769,653 — 769,653 Federal Reserve BTFP (2) $ — $ — $ — 636,963 — 636,963 Total $ 3,976,104 $ 304,565 $ 3,671,539 $ 4,647,714 $ 552,136 $ 4,095,578 (1) FHLB balances include advances, letters of credit, interest due on advances and the credit enhancement obligation on mortgages sold to the FHLB.
Noninterest Income Years Ended December 31, Twelve Months Ended December 31, (dollars in thousands) 2023 2022 $ Change % Change Net gain on sale of securities $ — $ 198 $ (198) (100.0) % Debit and credit card 18,248 19,008 (760) (4.0) % Service charges on deposit accounts 16,193 16,829 (636) (3.8) % Wealth management 12,186 12,717 (531) (4.2) % Mortgage banking 1,164 2,215 (1,051) (47.4) % Other noninterest income 9,829 7,292 2,537 34.8 % Total Noninterest Income $ 57,620 $ 58,259 $ (639) (1.1) % NM - not meaningful Noninterest income decreased $0.6 million to $57.6 million compared to $58.2 million in 2022.
Noninterest Income Years Ended December 31, (dollars in thousands) 2024 2023 $ Change % Change Net loss on sale of securities $ (7,938) $ — $ (7,938) — % Debit and credit card 18,263 18,248 15 0.1 % Service charges on deposit accounts 16,273 16,193 80 0.5 % Wealth management 12,259 12,186 73 0.6 % Other noninterest income 10,226 10,993 (767) (7.0) % Total Noninterest Income $ 49,083 $ 57,620 $ (8,537) (14.8) % Noninterest income decreased $8.5 million to $49.1 million compared to $57.6 million in 2023.
These primarily represent deposit relationships with local customers in our market area. 43 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
These primarily represent deposit relationships with local customers in our market area.
Assets under administration consisted of $1.0 billion in S&T Trust, $1.0 billion in S&T Financial Services and $0.2 billion in Stewart Capital Advisors. Liquidity and Capital Resources Liquidity is defined as a financial institution’s ability to meet its cash and collateral obligations at a reasonable cost.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Liquidity is defined as a financial institution’s ability to meet its cash and collateral obligations at a reasonable cost.
The ability of borrowers to repay commercial loans is dependent upon the success of their business and general economic conditions. Due to the greater potential for loss within our commercial portfolio, we monitor the commercial loan portfolio through an internal risk rating system.
Due to the greater potential for loss within our commercial portfolio, 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.
The ACL was $108.0 million, or 1.41 percent of total portfolio loans, at December 31, 2023, compared to $101.3 million, or 1.41 percent of total portfolio loans, at December 31, 2022.
Office CRE was $453.3 million, or 5.9 percent of total portfolio loans, at December 31, 2024 compared to $480.5 million, or 6.3 percent, at December 31, 2023.
Under the BTFP, any collateral eligible for purchase by the Federal Reserve Banks in open market operations can be pledged including U.S. Treasury securities, U.S. Agencies and U.S. Agency mortgage-backed securities. Collateral advances will be equal to 100 percent of the par value of the collateral pledged with a term of up to one year.
The temporary program was intended to help assure depositors that their institutions have an additional source of liquidity to meet their needs. Under the BTFP, any collateral eligible for purchase by the Federal Reserve Banks in open market operations could be pledged including U.S. Treasury securities, U.S. Agencies and U.S. Agency mortgage-backed securities.
Average interest-bearing deposits with banks decreased $236.4 million compared to 2022 due to declines in deposit balances and loan growth. The average yield on interest-bearing deposits with banks increased 439 basis points compared to 2022 due to 32 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.
Average loan balances increased $0.3 billion to $7.7 billion in 2024 compared to $7.4 billion in 2023. Overall, the FTE rate (non-GAAP) on interest-earning assets increased 23 basis points compared to 2023. 32 Table of Contents S&T BANCORP, INC. AND SUBSIDIARIES Item 7.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−1 removed12 unchanged
Biggest changeThe changes in our percentage changes in pretax net interest income reflect our strategic efforts to reduce our exposure to changes in interest rates. Our EVE analyses show a decline in the percentage change in EVE in the rates up scenarios and an improvement in rates down scenarios when comparing December 31, 2023 to December 31, 2022.
Biggest changeOur EVE analyses show a slight decline in the rates up scenarios when comparing December 31, 2024 to December 31, 2023 primarily because of changes to interest rates, changes to our bond portfolio mix, and changes to our funding mix.
December 31, 2023 December 31, 2022 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 3.5 7.6 (31.4) 14.6 22.0 (13.2) 300 2.4 5.4 (23.5) 11.0 16.6 (8.5) 200 1.2 3.4 (15.2) 7.4 11.2 (4.6) 100 0.2 1.6 (7.3) 3.7 5.7 (1.5) -100 (3.5) (5.1) 3.7 (6.1) (8.8) (2.6) -200 (4.2) (6.7) 3.8 (10.2) (14.8) (7.7) -300 (6.6) (11.2) (0.5) (14.1) (21.0) (17.0) -400 (9.3) (15.1) (13.7) (21.1) (30.1) (32.7) 48 Table of Contents S&T BANCORP, INC.
December 31, 2024 December 31, 2023 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 3.2 8.4 (32.3) 3.5 7.6 (31.4) 300 1.9 5.8 (24.1) 2.4 5.4 (23.5) 200 0.8 3.7 (15.4) 1.2 3.4 (15.2) 100 (0.1) 1.7 (7.2) 0.2 1.6 (7.3) -100 (3.4) (5.2) 3.0 (3.5) (5.1) 3.7 -200 (6.2) (10.3) 3.5 (4.2) (6.7) 3.8 -300 (9.2) (16.2) 0.2 (6.6) (11.2) (0.5) -400 (12.9) (22.7) (7.9) (9.3) (15.1) (13.7) 48 Table of Contents S&T BANCORP, INC.
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.
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.
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.
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.
AND SUBSIDIARIES Item 7A. 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.
AND SUBSIDIARIES The results from the rate shock analyses on net interest income are generally 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.
Our rate shock analyses show less improvement in the percentage change in pretax net interest income in the rates up scenarios when comparing December 31, 2023 to December 31, 2022 primarily because we have a different deposit mix, more short-term borrowings and a larger fixed-rate loan portfolio.
Our rate shock analyses show more improvement in the percentage change in pretax net interest income in the 13-24 month rates up scenarios when comparing December 31, 2024 to December 31, 2023 primarily because of upcoming maturities within our receive-fixed balance sheet swap portfolio.
These changes are mainly the result of the impact of interest rates on the value of nonmaturity deposits and deposit valuation methodology enhancements that recognize changes in customer behavior. 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.
The percentage change in our EVE are smaller in the rates down scenarios when comparing December 31, 2024 to December 31, 2023. These changes are mainly the result of changes to interest rates. In addition to rate shocks and EVE analyses, we perform a market risk stress test at least annually.
The percentage change in pretax net interest income in the rates down scenario shows an improvement when comparing December 31, 2023 to December 31, 2022 because of our increased ability to cut liability costs as deposit rates have increased and we have more short-term borrowings.
This situation could result in an increase in net interest income and operating income. Our rate shock analyses show less improvement in the percentage change in pretax net interest income in the 1-12 month rates up scenarios when comparing December 31, 2024 to December 31, 2023 primarily because of changes to our funding mix.
Removed
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.
Added
The percentage change in pretax net interest income in the rates down scenarios show a decline when comparing December 31, 2024 to December 31, 2023 primarily due to upcoming maturities within our receive-fixed balance sheet swap portfolio, enhanced loan prepayment assumptions, and changes in our bond portfolio mix.

Other STBA 10-K year-over-year comparisons