S&T BANCORP INC

Previous wording

This section reviews our financial condition for each of the past two fiscal years and results of operations for each of the past three fiscal years. 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. 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. Certain reclassifications have been made to prior periods to place them on a basis comparable with the current period presentation.

Current wording

This section reviews our financial condition for each of the past two fiscal years and results of operations for each of the past three fiscal years. Management's discussion and analysis focuses on significant factors impacting the financial condition and results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. This discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related notes within this Annual Report on Form 10-K. A similar discussion and analysis that compares the year ended December 31, 2024 to the year ended December 31, 2023 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, 2024 accepted by the Securities and Exchange Commission, or SEC, on February 28, 2025. Certain reclassifications have been made to prior periods to conform to the current period presentation.

Previous wording

This Annual Report on Form 10-Kcontains or incorporates statements that we believe are “forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result,” “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. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; 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…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Annual Report on Form 10-K contains or incorporates statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result,” “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.” Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cybersecurity concerns; rapid technological developments and changes, including the use of artificial intelligence and digital assets; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our brand 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/ser…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In conjunction with our capital stress testing process, we consider different economic scenarios that impact the ACL. 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. 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.

Current wording

In conjunction with our capital stress testing process, we consider different economic scenarios that impact the ACL. Among other balance sheet and income statement changes, our severely adverse scenario would have resulted in an increase to the ACL of approximately 107 percent. This severely adverse scenario shows how sensitive the ACL can be to key qualitative and quantitative assumptions underlying the overall ACL calculation. 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.

Previous wording

In addition to traditional financial measures presented in accordance with GAAP, our management uses, and this report contains or references, certain non-GAAP financial measures discussed below. We believe these non-GAAP financial measures provide information useful to investors in understanding our underlying business, operational performance and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Although we believe that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered alternatives to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies.

Current wording

We believe these non-GAAP financial measures provide information useful to investors in understanding our underlying business, operational performance and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Although we believe that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered alternatives to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies.

Previous wording

The interest income on interest-earning assets, net interest income and net interest margin are presented on an FTE basis (non-GAAP). The FTE basis (non-GAAP) adjusts for the tax benefit of income on certain tax-exempt loans and securities and the dividend-received deduction for equity securities using the federal statutory tax rate of 21 percent for each period. We believe this to be the preferred industry measurement of net interest income that provides a relevant comparison between taxable and non-taxable sources of interest income.

Current wording

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. The FTE basis (non-GAAP) adjusts for the tax benefit of income on certain tax-exempt loans and securities and the dividend-received deduction for equity securities using the federal statutory tax rate of 21 percent for each period. We believe this to be the preferred industry measurement of net interest income that provides a relevant comparison combining both taxable and non-taxable sources of interest income.

Previous wording

The efficiency ratio is noninterest expense divided by noninterest income plus net interest income, on an FTE basis (non-GAAP), which ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Below is a reconciliation of the non-GAAP efficiency ratio.

Current wording

The efficiency ratio is noninterest expense divided by net interest income on an FTE basis (non-GAAP) which ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice, plus noninterest income adjusted to exclude losses on sales of securities and gains on Visa exchange. Below is a reconciliation of the non-GAAP efficiency ratio.

Previous wording

We are a bank holding company that is headquartered in Indiana, Pennsylvania with assets of $9.7 billion at December 31, 2024. 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.”

Current wording

We are a bank holding company that is headquartered in Indiana, Pennsylvania with assets of $9.9 billion at December 31, 2025. 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.”

Previous wording

Our purpose is building a better future together through people-forward banking. We believe that all banking should be personal. We cultivate relationships rooted in trust, strengthened by going above and beyond and renewed with every interaction. Our strategic priorities for 2025 and beyond will be focused on growing our deposit franchise, core profitability, asset quality and talent and engagement.

Current wording

Our purpose is building our future together through people-forward banking. We believe that all banking should be personal. We cultivate relationships rooted in trust, strengthened by going above and beyond and renewed with every interaction. Our strategic priorities for 2026 and beyond will be focused on growing our deposit franchise, improving core profitability, maintaining asset quality and ensuring a high level of talent and engagement.

Previous wording

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 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.

Current wording

We earned net income of $134.2 million for 2025 compared to net income of $131.3 million in 2024. Diluted earnings per share, or EPS, was $3.49 in 2025 compared to $3.41 in 2024. The increase in both net income and EPS in 2025 can be attributed to an increase in net interest income offset by an increase in the provision for credit losses and noninterest expenses.

Previous wording

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. 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. 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.

Current wording

Net interest income increased $15.3 million, or 4.57 percent, to $350.1 million in 2025 compared to $334.8 million in 2024. Net interest income on an FTE basis (non-GAAP) increased $15.0 million, or 4.44 percent, compared to 2024. The net interest margin, or NIM, on an FTE basis (non-GAAP) increased 8 basis points to 3.90 percent in 2025 compared to 3.82 percent in 2024. The higher NIM (FTE) (non-GAAP), despite the declining interest rate environment, reflects the strategic repositioning of the balance sheet to be more interest rate neutral. 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.

Previous wording

was mainly related to $7.9 million of realized losses in 2024 from the repositioning of securities into longer duration, higher-yielding securities. 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.

Current wording

Noninterest income increased $2.9 million, or 6.0 percent, to $52.0 million in 2025 compared to $49.1 million in 2024. The increase primarily related to lower security losses of $2.3 million in 2025 compared to $7.9 million in 2024 offset by a $3.5 million gain from the exchange offer for Visa Class B-1 common stock in 2024.

Previous wording

The provision for income taxes decreased $0.4 million to $33.6 million in 2024 compared to $34.0 million in 2023. 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 increase in the effective tax rate was primarily due to the adoption of PAM.

Current wording

The provision for income taxes remained relatively unchanged at $33.7 million in 2025 compared to $33.6 million in 2024. The effective tax rate decreased to 20.1 percent in 2025 compared to 20.4 percent in 2024. The decrease in the effective tax rate was primarily due to an increase in low income housing tax credits, or LIHTC, net of amortization.

Previous wording

Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023

Current wording

Twelve months ended months ended December 31, 2025 Compared to Twelve months ended months ended December 31, 2024

Previous wording

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. There were no new interest rates swaps entered into in 2024 or 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. 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 is an improvement of $4.1 million compared to the $11.6 million unrealized loss at December 31, 2023.

Current wording

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 maturities ranging from three to five years. There were no new interest rates swaps entered into in 2023, 2024 or 2025. 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. Interest rates increased substantially in 2022 and 2023 followed by decreases in 2024 and 2025 resulting in an unrealized loss on the cash flow hedges of $1.6 million at December 31, 2025 which is reported in Accumulated Other Comprehensive Income (Loss), or AOCI, net of applicable taxes. This is an improvement of $5.9 million compared to the $7.5 million unrealized loss at December 31, 2024.

Previous wording

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. 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. 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. Strong customer deposit growth in 2024 has helped to improve our overall funding mix by reducing borrowings.

Current wording

Net interest income on an FTE basis (non-GAAP) increased $15.0 million, or 4.44 percent, to $352.5 million in 2025 compared to $337.5 million in 2024. NIM on an FTE basis (non-GAAP) increased 8 basis points to 3.90 percent compared to 3.82 percent in 2024. The increases in net interest income on a FTE basis (non-GAAP) and NIM on an FTE basis (non-GAAP) were primarily due to the impact of lower interest rates on total interest-bearing liabilities and an improvement in our overall funding mix. Customer deposit growth in 2024 and 2025 has reduced our levels of borrowings and brokered deposits.

Previous wording

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. 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.

Current wording

Interest income on an FTE basis (non-GAAP) remained relatively unchanged in 2025 compared to 2024 due to increased yield in the securities portfolio partially offset by yield declines in the loan portfolio. The average yield on securities increased 69 basis points compared to 2024 primarily due to the repositioning of $193.6 million of securities during 2024 and 2025. The average yield on loan balances decreased 22 basis points compared to 2024 due to lower interest rates. Average loan balances increased $221.2 million to $7.9 billion in 2025 compared to $7.7 billion in 2024. Overall, the FTE rate (non-GAAP) on interest-earning assets decreased 13 basis points compared to 2024.

Previous wording

Interest expense increased $52.6 million to $181.1 million in 2024 compared to $128.5 million in 2023. The increase in interest expense was primarily due to higher interest rates, a shift in our customer deposit mix to higher costing products and an increase in deposit balances. Average interest-bearing deposits increased $0.7 billion to $5.5 billion in 2024, with $189.7 million of brokered deposits compared to $4.8 billion in 2023. Average borrowings decreased $231.1 million to $353.2 million in 2024 compared to $584.3 in 2023 primarily due to an increase in deposits. Overall, the cost of interest-bearing liabilities increased 75 basis points in 2024 compared to 2023.

Current wording

Interest expense decreased $14.7 million to $166.4 million in 2025 compared to $181.1 million in 2024. The decrease in interest expense was primarily due to lower levels of borrowings and decreased interest rates. Average interest-bearing deposits increased $246.8 million to $5.7 billion in 2025 compared to $5.5 billion in 2024. Average borrowings decreased $141.5 million to $211.8 million in 2025 compared to $353.2 in 2024 primarily due to an increase in deposits. Overall, the cost of interest-bearing liabilities decreased 30 basis points in 2025 compared to 2024.

Previous wording

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, loan risk ratings, net loan charge-offs/recoveries, the macro environment and our Current Expected Credit Loss, or CECL, forecast.

Current wording

The provision for credit losses includes a provision for losses on loans and on unfunded loan commitments. The provision for credit losses fluctuates based on changes in loan balances, loan risk ratings, net loan charge-offs and recoveries, the macro environment and our CECL forecast.

Previous wording

The provision for credit losses decreased $17.8 million to $0.1 million for 2024 compared to $17.9 million for 2023. The decrease in the provision for credit losses was primarily due to a lower level of ACL and a decrease in net loan charge-offs. The lower level of ACL was mainly related to improved asset quality, including a decrease in criticized and classified loans of $96.2 million, or 31.1 percent, during 2024. 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.

Current wording

The provision for credit losses increased $7.3 million to $7.4 million for 2025 compared to $0.1 million for 2024. The increase was primarily due to higher net loan charge-offs and a $2.9 million increase in the reserve for unfunded loan commitments due to higher unused commitments in the construction portfolio. Partially offsetting the increase in the provision for credit losses was a lower level of ACL primarily related to a reduction in loss rates, lower criticized and classified loans and a decrease in the specific reserve for loans individually evaluated. The provision for credit losses included $1.2 million for the reserve for unfunded commitments for 2025 compared to negative $1.7 million for 2024. Net loan charge-offs for 2025 were $14.5 million, or 0.18 percent of average loans, compared to $8.3 million, or 0.11 percent of average loans, for 2024. Refer to the Credit Quality section of this MD&A for further details.

Previous wording

Noninterest income decreased $8.5 million to $49.1 million compared to $57.6 million in 2023. The decrease was mainly related to $7.9 million of realized losses from the repositioning of securities into longer duration, higher-yielding securities. Other noninterest income decreased $0.8 million primarily related to a gain of $3.9 million on the sale of OREO in 2023 compared to a $3.5 million gain from the exchange offer for Visa Class B-1 common stock in 2024.

Current wording

Noninterest income increased $2.9 million, or 6.0 percent, to $52.0 million compared to $49.1 million in 2024. The increase primarily related to lower security losses of $2.3 million in 2025 compared to $7.9 million in 2024 offset by a $3.5 million gain from the exchange offer for Visa Class B-1 common stock recognized in other noninterest income in 2024.

Previous wording

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. 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.

Current wording

The provision for income taxes was unchanged at $33.7 million in 2025 compared to $33.6 million in 2024. The effective tax rate, which is total tax expense as a percentage of income before taxes, decreased to 20.1 percent in 2025 compared to 20.4 percent in 2024. The decrease in the effective tax rate in 2025 compared to 2024 was primarily due to an increase in LIHTC, net of amortization. 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 LIHTC which is partially offset by the proportional amortization method, or PAM.

Previous wording

Securities remained unchanged at $1.0 billion at December 31, 2024 and December 31, 2023. 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. The improvement in the net unrealized loss position of $10.3 million was primarily due to realized losses of $7.9 million during 2024 as a result of repositioning $144.3 million of our securities portfolio into longer-duration, higher yielding securities.

Current wording

Securities remained relatively flat at December 31, 2025 compared to December 31, 2024. The securities portfolio was in a net unrealized loss position of $34.9 million at December 31, 2025 compared to a net unrealized loss position of $71.7 million at December 31, 2024. The improvement in the net unrealized loss position of the securities portfolio was primarily due to a decline in interest rates from December 31, 2024.

Previous wording

Total borrowings decreased $253.3 million, or 50.3 percent, to $250.3 million at December 31, 2024 compared to $503.6 million at December 31, 2023, primarily due to strong growth in customer deposits.

Current wording

Total borrowings increased $15.0 million to $265.3 million at December 31, 2025 compared to $250.3 million at December 31, 2024.

Previous wording

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.

Current wording

Total shareholders’ equity increased by $83.6 million to $1.5 billion at December 31, 2025 compared to December 31, 2024. The increase was primarily due to net income of $134.2 million and other comprehensive income of $35.3 million offset by dividends of $53.0 million and repurchases of S&T common stock of $36.6 million which includes excise tax and commissions of $0.4 million. During the fourth quarter of 2025, 948,270 common shares were repurchased at an average price of $38.20 per share.

Previous wording

We invest in various securities in order to maintain a source of liquidity, to satisfy various pledging requirements, to increase net interest income and as a tool of ALCO to reposition the balance sheet for interest rate risk purposes. Securities are subject to market risks that could negatively affect the level of liquidity available to us. Security purchases are subject to an investment policy approved annually by our Board of Directors and administered through ALCO and our treasury function. Our entire securities portfolio is classified as available for sale. The portfolio primarily consists of structured agency-backed, fixed-income securities with limited credit exposure. Total securities available for sale increased to $987.6 million at December 31, 2024 compared to $970.4 million at December 31, 2023.

Current wording

We invest in various securities in order to maintain a source of liquidity, to satisfy various pledging requirements, to increase net interest income and as a tool of ALCO to reposition the balance sheet for interest rate risk purposes. Securities are subject to market risks that could negatively affect the level of liquidity available to us. Security purchases are subject to an investment policy approved annually by our Board of Directors and administered through ALCO and our treasury function. Our entire securities portfolio is classified as available for sale. The portfolio primarily consists of structured agency-backed, fixed-income securities with limited credit exposure. Total securities available for sale at December 31, 2025 remained relatively flat compared to December 31, 2024.

Previous wording

At December 31, 2024, our bond portfolio was in a net unrealized loss position of $71.7 million compared to a net unrealized loss position of $82.0 million at December 31, 2023. 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.

Current wording

At December 31, 2025, our securities portfolio was in a net unrealized loss position of $34.9 million compared to a net unrealized loss position of $71.7 million at December 31, 2024. At December 31, 2025, our securities portfolio had gross unrealized losses of $42.4 million offset by $7.5 million in gross unrealized gains compared to December 31, 2024, when total gross unrealized losses were $72.7 million offset by gross unrealized gains of $1.0 million.

Previous wording

We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we 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. 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.

Current wording

We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we 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 68.5 percent of total portfolio loans at December 31, 2025 compared to 68.2 percent at December 31, 2024. Within our commercial portfolio, the CRE and commercial construction portfolios combined comprised $4.0 billion, or 72.5 percent, of total commercial loans and 49.6 percent of total portfolio loans at December 31, 2025 compared to $3.7 billion, or 70.8 percent, of total commercial loans and 48.3 percent of total portfolio loans at December 31, 2024.

Previous wording

We lend primarily in Pennsylvania and the contiguous states of Ohio, New York, West Virginia, New Jersey, Delaware and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in these states resulting in a geographic concentration. We believe our knowledge of these markets outweighs the geographic concentration risk. Our operating knowledge at the local and regional level is derived from our front-line connection to the customer and our understanding of their businesses. 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. 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.

Current wording

We lend primarily in Pennsylvania and the contiguous states of Ohio, New York, West Virginia, New Jersey, Delaware and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in these states resulting in a geographic concentration. We believe our knowledge of these markets outweighs the geographic concentration risk. Our operating knowledge at the local and regional level is derived from our front-line connection to the customer and our understanding of their businesses. 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. Our CRE and commercial construction portfolios have exposure outside of the primary states in which we operate of 3.5 percent of the combined portfolios and 1.7 percent of total portfolio loans at December 31, 2025 and 3.9 percent of the combined portfolios and 1.9 percent of total portfolio loans at December 31, 2024.

Previous wording

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. 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.

Current wording

Total portfolio loans increased $329.0 million, or 4.2 percent, to $8.1 billion at December 31, 2025 compared to $7.7 billion at December 31, 2024. As of December 31, 2025, 60.0 percent of our total loans were variable rate loans and 40.0 percent were fixed rate loans compared to 62.0 percent variable rate loans and 38.0 percent fixed rate loans at December 31, 2024.

Previous wording

Consumer loans represented 31.8 percent of our total portfolio loans at December 31, 2024 and 29.9 percent at December 31, 2023. Consumer loans increased $171.3 million to $2.5 billion at December 31, 2024 compared to $2.3 billion at December 31, 2023 primarily due to an increase of $181.4 million in consumer real estate offset by a decrease of $10.1 million in consumer installment loans. Beginning in 2022, we shifted from selling mortgages in the secondary market to holding mortgages in our portfolio.

Current wording

Consumer loans represented 31.5 percent of our total portfolio loans at December 31, 2025 and 31.8 percent at December 31, 2024. Consumer loans increased $84.1 million to $2.5 billion at December 31, 2025 compared to $2.5 billion at December 31, 2024 primarily due to an increase of $97.6 million in consumer real estate offset by a decrease of $13.5 million in consumer installment loans.

Previous wording

We typically originate and sell loans into the secondary market, primarily to Fannie Mae. 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. 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. 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.

Current wording

We had historically originated and sold loans to the secondary market, primarily to Fannie Mae, 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. This shift in strategy was due to pricing in the secondary mortgage market and the desire to shift the mix of our loan portfolio to more fixed rate loans. We continue to monitor our strategy and may shift back to selling more residential mortgages into the secondary market in future periods. At December 31, 2025, our servicing portfolio of mortgage loans that we originated and sold into the secondary market was $591.6 million compared to $648.9 million at December 31, 2024.

Previous wording

Additional credit risk management practices include periodic loan reviews, 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 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. 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. 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.

Current wording

Additional credit risk management practices include periodic loan reviews, at least annually, and updates of our lending policies and procedures to support sound underwriting practices and portfolio management through portfolio stress testing. Our business banking relationships are monitored through portfolio management software that identifies credit risk indicators. We have portfolio monitoring groups that perform annual reviews of all commercial and business banking relationships greater than $1.5 million and a quarterly review of our watch rated portfolio. 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. 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.

Previous wording

Nonaccrual loans remain low at $27.9 million at December 31, 2024 compared to $22.9 million at December 31, 2023. The increase in nonaccrual loans was due to the addition of a $10.7 million commercial and industrial, or C&I, relationship during the three months ended December 31, 2024. A specific reserve of $4.2 million was added for this relationship based on the uncertainty of timing surrounding the execution of the resolution strategy. Partially offsetting the increase in nonaccrual loans were payoffs in our commercial construction and CRE portfolios.

Current wording

Nonaccrual loans increased to $55.6 million at December 31, 2025 compared to $27.9 million at December 31, 2024. The increase in nonaccrual loans was primarily due to the addition of three commercial relationships totaling $25.3 million that were placed on nonaccrual during the three months ended December 31, 2025. A specific reserve of $1.6 million was added for one of the commercial relationships based on an updated collateral evaluation.

Previous wording

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. 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.

Current wording

Net loan charge-offs for 2025 were $14.5 million, or 0.18 percent of average loans compared to $8.3 million, or 0.11 percent of average loans, for 2024. The most significant charge-offs during 2025 were to two CRE relationships totaling $7.2 million and two C&I relationships totaling $6.1 million. Offsetting loan charge-offs during 2025 were $3.6 million in recoveries compared to $3.9 million in recoveries in 2024.

Previous wording

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. We hold FHLB stock because we are a member of the FHLB of Pittsburgh. The FHLB requires members to purchase and hold a specified level of FHLB stock based upon the members’ asset values, level of borrowings and participation in other programs offered. Stock in the FHLB is non-marketable and is redeemable at the discretion of the FHLB. Members do not purchase stock in the FHLB for the same reasons that traditional equity investors acquire stock in an investor-owned enterprise. Rather, members purchase stock to obtain access to the products and services offered by the FHLB. 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. 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.

Current wording

At December 31, 2025, we held FHLB of Pittsburgh stock of $16.0 million compared to $15.2 million at December 31, 2024. This investment is carried at cost and evaluated for impairment based on the ultimate recoverability of the par value. We hold FHLB stock because we are a member of the FHLB of Pittsburgh. The FHLB requires members to purchase and hold a specified level of FHLB stock based upon the members’ asset values, level of borrowings and participation in other programs offered. Stock in the FHLB is non-marketable and is redeemable at the discretion of the FHLB. Members do not purchase stock in the FHLB for the same reasons that traditional equity investors acquire stock in an investor-owned enterprise. Rather, members purchase stock to obtain access to the products and services offered by the FHLB. 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, 2025. The FHLB exceeds all required capital ratios. Additionally, we considered that the FHLB has been paying dividends and actively redeeming stock throughout 2025 and 2024. Accordingly, we believe sufficient evidence exists to conclude that no impairment existed at December 31, 2025.

Previous wording

The following table presents the composition of deposits at December 31:

Current wording

The following table presents the composition of deposits as of the dates presented:

Previous wording

We have a strong core deposit base with noninterest-bearing demand deposits representing 28.1 percent of total deposits at December 31, 2024 compared to 29.5 percent of total deposits at December 31, 2023. Total deposits increased $261.3 million, or 3.5 percent, at December 31, 2024 compared to December 31, 2023. Total customer deposits increased $411.7 million, or 5.8 percent, from December 31, 2023, as a result of our focus on our deposit franchise. Total brokered deposits decreased $150.4 million from December 31, 2023 due to strong growth in customer deposits. Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.

Current wording

We have a strong core deposit base with noninterest-bearing demand deposits representing 27.2 percent of total deposits at December 31, 2025 compared to 28.1 percent of total deposits at December 31, 2024. Total deposits increased $175.7 million, or 2.3 percent, at December 31, 2025 compared to December 31, 2024. Total customer deposits increased $220.5 million, or 2.9 percent, from December 31, 2024 due to growth in certificates of deposit and money market. Total brokered deposits decreased $44.8 million from December 31, 2024 due to growth in customer deposits. Brokered deposits are an additional source of funds utilized by ALCO as a way to diversify funding sources, as well as manage our funding costs and structure.

Previous wording

As a member of the IntraFi network, we are able to offer our customers insurance coverage on interest-bearing demand, money market and certificate of deposit balances in excess of the FDIC insurance limits. IntraFi balances increased $47.1 million to $324.8 million at December 31, 2024 compared to $277.7 million at December 31, 2023.

Current wording

As a member of the IntraFi network, we are able to offer our customers insurance coverage on interest-bearing demand, money market and certificate of deposit balances in excess of the FDIC insurance limits. IntraFi balances decreased $7.6 million to $317.3 million at December 31, 2025 compared to $324.8 million at December 31, 2024.

Previous wording

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. Included in uninsured deposits is $297.5 million of fully collateralized, municipal deposits, or 3.8 percent of our total deposit base.

Current wording

We have total uninsured deposits of $2.7 billion, or 33.7 percent of our total deposit base compared to $2.6 billion, or 33.5 percent, at December 31, 2024. Included in uninsured deposits is $333.6 million of fully collateralized, municipal deposits, or 4.2 percent of our total deposit base.

Previous wording

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. These primarily represent deposit relationships with local customers in our market area.

Current wording

CDs greater than $250,000 accounted for 7.3 percent and 6.2 percent of total deposits at December 31, 2025 and December 31, 2024. These primarily represent deposit relationships with local customers in our market area.