S&T BANCORP INCSTBA
S&T BANCORP INC Income Taxes Disclosure
INCOME TAXES
[1]With the adoption of PAM on January 1, 2024, the amortization related to LIHTC and HTC equity investments is recognized in income tax expense in the Consolidated Statements of Net Income in 2025 and 2024 and other noninterest expense in 2023.
The following table presents the composition of income tax expense (benefit) for the years ended December 31:
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | |||||||||||||||||
| Current | $ | 32,403 | $ | 32,536 | $ | 33,070 | |||||||||||
| Deferred | 185 | (31) | 459 | ||||||||||||||
| Total Federal | 32,588 | 32,505 | 33,529 | ||||||||||||||
| State and Local | |||||||||||||||||
| Current | 1,132 | 1,313 | 352 | ||||||||||||||
| Deferred | (10) | (265) | 142 | ||||||||||||||
| Total State and Local | 1,122 | 1,048 | 494 | ||||||||||||||
Total Federal and State(1) | $ | 33,710 | $ | 33,553 | $ | 34,023 | |||||||||||
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. We ordinarily generate an annual effective tax rate that is less than the statutory rate of 21 percent primarily due to benefits resulting from certain partnership investments, such as low income housing and historic rehabilitation projects, tax-exempt interest, excludable dividend income and tax-exempt income on BOLI.
ASU 2023-09 was adopted effective January 1, 2025. This ASU requires enhanced disclosures and disaggregation of the effective tax rate. This ASU was adopted on a prospective basis, therefore prior period disclosures have not been adjusted. The following tables present a reconciliation of the statutory tax rate to the effective tax rate under the applicable disclosure guidance for the years ended December 31:
(dollars in thousands) | 2025 | |||||||
| $ | 35,267 | 21.0 | % | |||||
State and Local Tax, net of federal income tax effect(1) | 829 | 0.5 | % | |||||
| Tax Credits | ||||||||
Low income housing and historic tax credits(2) | (1,032) | (0.6) | % | |||||
| Nontaxable or Nondeductible Items | ||||||||
| Tax-exempt interest, net | (1,295) | (0.8) | % | |||||
| Bank owned life insurance | (451) | (0.3) | % | |||||
| Changes in Unrecognized Tax Benefits | 58 | — | % | |||||
| Other Adjustments | ||||||||
| Other | 334 | 0.2 | % | |||||
| Effective Tax Rate | $ | 33,710 | 20.1 | % | ||||
(1) State taxes in Maryland and New York made up the majority (greater than 50 percent) of the tax effect in this category.
(2) Includes tax credits net of amortization and other tax benefits.
| 2024 | 2023 | |||||||
| Statutory tax rate | 21.0 | % | 21.0 | % | ||||
| Tax-exempt interest, net | (0.8) | % | (0.8) | % | ||||
Low income housing tax credits, net(1) | (0.2) | % | (1.5) | % | ||||
| Bank owned life insurance | (0.3) | % | (0.2) | % | ||||
| Other | 0.7 | % | 0.5 | % | ||||
Effective Tax Rate(1) | 20.4 | % | 19.0 | % | ||||
[1] With the adoption of PAM on January 1, 2024, the amortization related to LIHTC and HTC equity investments is recognized in income tax expense in the Consolidated Statements of Net Income in 2024 and other noninterest expense in 2023.
The following table presents significant components of our temporary differences as of the dates presented:
| December 31, | |||||||||||
| (dollars in thousands) | 2025 | 2024 | |||||||||
| Deferred Tax Assets: | |||||||||||
| Allowance for credit losses and other reserves | $ | 21,455 | $ | 22,953 | |||||||
| Net unrealized holding losses on securities available-for-sale | 7,509 | 15,431 | |||||||||
| Lease liabilities | 9,824 | 10,271 | |||||||||
| State net operating loss carryforwards | 4,105 | 3,782 | |||||||||
| Net unrealized losses on interest rate swaps | 436 | 2,063 | |||||||||
| Cumulative adjustment to funded status of pension | 3,495 | 3,606 | |||||||||
| Other employee benefits | 5,450 | 4,688 | |||||||||
| Depreciation on premises and equipment | 64 | 5 | |||||||||
| Capital loss carryforward | 1,125 | 1,300 | |||||||||
| Other | 1,225 | 1,243 | |||||||||
| Deferred Tax Assets | 54,688 | 65,342 | |||||||||
| Less: Valuation allowance | (4,105) | (3,782) | |||||||||
| Total Deferred Tax Assets | 50,583 | 61,560 | |||||||||
| Deferred Tax Liabilities: | |||||||||||
| Right-of-use lease assets | (8,323) | (8,825) | |||||||||
| Deferred loan income, net | (5,132) | (5,216) | |||||||||
| Prepaid pension | (2,780) | (3,131) | |||||||||
| Purchase accounting adjustments | (1,477) | (1,650) | |||||||||
| Mortgage servicing rights | (122) | (61) | |||||||||
Partnership investments | (354) | (491) | |||||||||
| Other | (157) | (113) | |||||||||
| Total Deferred Tax liabilities | (18,345) | (19,487) | |||||||||
| Net Deferred Tax Asset | $ | 32,238 | $ | 42,073 | |||||||
We establish a valuation allowance when it is more likely than not that we will not be able to realize the benefit of the deferred tax assets. The valuation allowance is reviewed quarterly and adjusted based on management’s assessment of realizable deferred tax assets. Management believes it is more likely than not that our deferred tax assets will be realized in future periods, except for the Pennsylvania net operating losses, or NOLs. Gross deferred tax assets were reduced by a valuation allowance of $4.1 million in 2025 compared to $3.8 million in 2024 related to Pennsylvania income tax NOLs. The Pennsylvania NOL carryforwards total $82.3 million and will expire in the years 2026-2045.
Unrecognized Tax Benefits
The following table reconciles the change in Federal and State gross unrecognized tax benefits, or UTB, for the years ended December 31:
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of year | $ | 2,086 | $ | 1,940 | $ | 1,648 | |||||||||||
| Prior period tax positions | 33 | 146 | (434) | ||||||||||||||
| Current period tax positions | — | — | 726 | ||||||||||||||
| Balance at End of Year | $ | 2,119 | $ | 2,086 | $ | 1,940 | |||||||||||
| Amount That Would Affect the Effective Tax Rate if Recognized | $ | 1,674 | $ | 1,648 | $ | 1,551 | |||||||||||
As of December 31, 2025, we had $2.1 million of unrecognized gross tax benefits. Gross tax benefits do not reflect the federal tax effect associated with state income tax amounts. The total amount of the net unrecognized tax benefits at December 31, 2025 that would have affected the effective tax rate, if recognized, was $1.7 million.
S&T and its subsidiaries are subject to income tax by U.S. federal and various state and local taxing jurisdictions. As of December 31, 2025, all income tax returns filed for the tax years 2022 - 2024 remain subject to examination by the respective taxing authorities.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 23, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.