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Employee Benefits
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
EMPLOYEE BENEFITS EMPLOYEE BENEFITS
We maintain a qualified defined benefit pension plan, or Plan, covering substantially all employees hired prior to January 1, 2008. The benefits are based on years of service and the employee’s compensation for the highest five consecutive years in the last ten years through March 31, 2016 when the Plan was frozen. Contributions are intended to provide for benefits attributed to employee service to date and for those benefits expected to be earned in the future.
Our qualified and nonqualified defined benefit plans, or Plans, were amended to freeze benefit accruals for all persons entitled to benefits under the Plans in 2016. We will continue recording pension expense related to these plans, primarily representing interest costs on the accumulated benefit obligation and amortization of actuarial losses accumulated in the Plans, as well as income from expected investment returns on pension assets. Since the Plans have been frozen, no service costs are included in net periodic pension expense.
The following table summarizes the activity in the benefit obligation and Plan assets deriving the funded status:
(dollars in thousands)20232022
Change in Projected Benefit Obligation
Projected benefit obligation at beginning of year$73,366 $104,097 
Interest cost3,812 3,160 
Actuarial gain/(loss)2,248 (23,020)
Benefits paid(6,239)(10,871)
Projected Benefit Obligation at End of Year$73,187 $73,366 
Change in Plan Assets
Fair value of plan assets at beginning of year$73,086 $107,525 
Actual gain/(loss) on plan assets4,727 (23,568)
Benefits paid(6,239)(10,871)
Fair Value of Plan Assets at End of Year$71,574 $73,086 
Funded Status$(1,613)$(280)
The following table sets forth the amounts recognized in accumulated OCI at December 31:
(dollars in thousands)20232022
Net actuarial loss19,137 19,409 
Total (Before Tax Effects)
$19,137 $19,409 
Below are the actuarial weighted average assumptions used in determining the benefit obligation:
20232022
Discount rate5.03 %5.41 %
Rate of compensation increase(1)
— %— %
(1)Rate of compensation increase is not applicable due to the plan amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016.
The following table summarizes the components of net periodic pension cost and other changes in Plan assets and benefit obligations recognized in other comprehensive loss for the years ended December 31:
(dollars in thousands)202320222021
Components of Net Periodic Pension Cost
Interest cost on projected benefit obligation$3,812 $3,160 $2,950 
Expected return on plan assets(3,932)(3,158)(2,677)
Recognized net actuarial loss1,725 1,229 1,051 
Settlement charge— 1,097 1,629 
Net Periodic Pension Expense$1,605 $2,328 $2,953 
Other Changes in Plan Assets and Benefit Obligation Recognized in Other Comprehensive Income (Loss)
Net actuarial loss
$1,453 $3,706 $1,137 
Recognized net actuarial loss(1,725)(1,229)(1,051)
Settlement loss recognized
— $(1,097)(1,629)
Total Changes in Plan Assets and Benefit Obligation Before Tax Effects$(272)$1,380 $(1,543)
Total Recognized in Net Benefit Cost and Other Comprehensive Income (Before Tax Effects)
$1,333 $3,708 $1,410 
The following table summarizes the actuarial weighted average assumptions used in determining net periodic pension cost:
202320222021
Discount rate5.41 %2.80 %2.48 %
Rate of compensation increase(1)
— %— %— %
Expected return on assets5.72 %3.29 %2.42 %
(1)Rate of compensation increase is not applicable due to the plan amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016.
The accumulated benefit obligation for the Plan was $73.2 million at December 31, 2023 and $73.4 million at December 31, 2022.
We consider many factors when setting the assumed rate of return on Plan assets. As a general guideline the assumed rate of return is equal to the weighted average of the expected returns for each asset category and is estimated based on historical returns as well as expected future returns. The weighted average discount rate is derived from corporate yield curves.
S&T Bank’s Retirement Plan Committee determines the investment policy for the Plan. In general, the targeted asset allocation is 5 percent to 15 percent equities and alternatives and 85 percent to 95 percent fixed income. A strategic allocation within each asset class is based on the Plan’s duration, time horizon, risk tolerances, performance expectations and asset class preferences. Investment managers have discretion to invest in any equity or fixed-income asset class, subject to the securities guidelines of the Plan’s Investment Policy Statement. At this time, S&T Bank is not required to make a cash contribution to the Plan in 2024.
The following table provides information regarding estimated future benefit payments to be paid in each of the next five years and in the aggregate for the five years thereafter:
(dollars in thousands)Amount
2024$6,323 
20256,192 
20266,051 
20276,037 
20285,869 
2029 - 203327,770 
We maintain a Thrift Plan, a qualified defined contribution plan, in which substantially all employees are eligible to participate. We make matching contributions to the Thrift Plan up to 3.5 percent of participants’ eligible compensation and may make additional profit-sharing contributions as provided by the Thrift Plan. Expense related to these contributions amounted to $2.7 million in 2023, $2.5 million in 2022 and $2.4 million in 2021.
Fair Value Measurements
The following tables present our Plan assets measured at fair value on a recurring basis by fair value hierarchy level at December 31, 2023 and 2022. During the years ended December 31, 2023 and 2022, there were no transfers between Level 1 and Level 2 for items of a recurring basis. There were no purchases or transfers of Level 3 plan assets in 2023 or 2022.
December 31, 2023
Fair Value Asset Classes(1)
(dollars in thousands)Level 1Level 2Level 3Total
Cash and cash equivalents(2)
$934 $— $— $934 
Fixed income(3)
63,629 — — 63,629 
Equities:
Equity index mutual funds—international(4)
2,086 — — 2,086 
Domestic individual equities(5)
4,925 — — 4,925 
Total Assets at Fair Value$71,574 $— $— $71,574 
(1)Refer to Note 1 Summary of Significant Accounting Policies, Fair Value Measurements for a description of levels within the fair value hierarchy.
(2)This asset class includes FDIC insured money market instruments.
(3)This asset class includes a variety of fixed income mutual funds which primarily invest in investment grade rated securities. Investment managers have discretion to invest in fixed income related securities including futures, options and other derivatives. Investments may be made in currencies other than the U.S. dollar.
(4)The sole investment within this asset class is the Vanguard Total International Stock Index Fund Admiral Shares.
(5)This asset class includes individual domestic equities invested in an active all-cap strategy. It may also include convertible bonds.
December 31, 2022
Fair Value Asset Classes(1)
(dollars in thousands)Level 1Level 2Level 3Total
Cash and cash equivalents(2)
$939 $— $— $939 
Fixed income(3)
64,878 — — 64,878 
Equities:
Equity index mutual funds—international(4)
2,231 — — 2,231 
Domestic individual equities(5)
5,038 — — 5,038 
Total Assets at Fair Value$73,086 $— $— $73,086 
(1)Refer to Note 1 Summary of Significant Accounting Policies, Fair Value Measurements for a description of levels within the fair value hierarchy.
(2)This asset class includes FDIC insured money market instruments.
(3)This asset class includes a variety of fixed income mutual funds which primarily invest in investment grade rated securities. Investment managers have discretion to invest in fixed income related securities including futures, options and other derivatives. Investments may be made in currencies other than the U.S. dollar.
(4)The sole investment within this asset class is Vanguard Total International Stock Index Fund Admiral Shares.
(5)This asset class includes individual domestic equities invested in an active all-cap strategy. It may also include convertible bonds.