AUDIT COMMITTEE CHARTER


   Pursuant to Article III, Section 303, of the By-Laws of S&T Bancorp, Inc. (S&T), the Board of Directors (the "Board") has formed the Audit Committee (the "Committee"). This Charter is intended to identify the purpose, composition, authority and responsibilities of the Committee.

PURPOSE


   
The Committee is established to oversee S&T's accounting and financial reporting processes and the audits of its financial statements and assist Board oversight of (1) S&T's compliance with legal and regulatory requirements, (2) the qualifications, independence and performance of the independent auditor, and (3) the performance of S&T's internal audit, risk management and regulatory compliance functions.


COMMITTEE MEMBERSHIP


   
Committee members are appointed annually by the Board and may be replaced by the Board. The Committee shall be comprised of three or more members. All members must meet the independence requirements of NASDAQ, the Securities and Exchange Commission and any standards of independence as may be prescribed for purposes of any applicable laws and regulations relating to the Committee's duties and responsibilities.

   All members must have the requisite ability to read fundamental financial statements, including S&T's balance sheet, income statement and cash flow statement. In addition, the Board shall determine that at least one member has past finance or accounting experience or any other comparable financial oversight experience or background which results in the member's financial sophistication, as prescribed by NASDAQ rules.

   The Board shall select one member of the Committee as its chairperson. The Committee may delegate to its chairperson such power and authority as the Committee deems to be appropriate, except such powers and authorities required by law or regulation to be exercised by the whole Committee or a subcommittee of at least two members.


MEETINGS


   The Committee shall meet at least once every fiscal quarter, or more frequently if circumstances dictate. The Committee may meet in executive session periodically at the Committee's discretion. At least annually, the Committee will meet with the senior internal auditor, the senior risk/compliance manager and the independent auditor to discuss any matters that the Committee or any of these persons or firms believes should be discussed privately, and without management present. Members of the Committee may participate in a meeting of the Committee by means of conference call or similar communications equipment by means of which all persons participating in the meeting can hear each other.


COMMITTEE AUTHORITY AND RESPONSIBILITIES


   The Committee's primary responsibility is oversight. S&T's management is responsible for the preparation, presentation and integrity of S&T's financial statements, and, with the internal audit department, is responsible for maintaining appropriate accounting and financial reporting policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations relating to disclosures and financial reporting. The independent auditor shall report directly to the Committee but is accountable to the Committee and the Board. The independent auditor is responsible for planning and executing a proper audit of S&T's annual financial statements, reviewing S&T's quarterly financial statements prior to filing of each quarterly report and performing other procedures as directed by the Committee or required by laws, regulations or accounting standards. The Committee members are not, and do not represent themselves as performing the functions of, auditors or accountants.

   The Committee's responsibilities include performance of the duties required of an audit committee at S&T's subsidiaries to the extent required and permitted by applicable laws and regulations. The Committee may meet simultaneously as a Committee of S&T and any other S&T affiliate.

   In fulfilling his or her responsibility, each member of the Committee is entitled to rely in good faith upon S&T's records and upon information, opinions, reports or statements presented by any of S&T's officers or employees, or by any other person as to matters the member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of S&T. Each member of the Committee also may rely in good faith upon actions taken by other committees of the Board as committed to such committees under the resolutions and other directives of the Board.

   To carry out this oversight responsibility, the Committee shall have the following specific duties and authority with regard to the independent auditor, internal audit, financial reporting, internal controls and risk management/compliance.


Independent Auditor

1.        Directly appoint, retain, compensate, evaluate and terminate the independent auditor, and retain the sole authority to approve all audit engagement fees and terms.

  1. Pre-approve, or adopt appropriate procedures to pre-approve, all audit and non-audit services to be provided by the independent auditor.
  2. Review, at least annually, the qualifications, performance and independence of the independent auditor. In conducting such a review, the Committee shall obtain and review a report prepared by the independent auditor, describing:

a.        The independent auditor's internal quality control procedures.

    1. Any material issues raised by:

                                                         i.            The most recent internal quality control review, or peer review, of the independent auditors, or

      1. Any inquiry or investigation by governmental or professional authorities, within the previous 5 years, respecting any independent audits conducted by the independent auditor.
    1. All relationships between the independent auditor and S&T consistent with Independence Standards Board Standard 1, including a statement of the fees billed in each of the last two fiscal years by category of service.
  1. Discuss with the independent auditor any disclosed relationships or services that may impact the objectivity and independence of the auditor.
  2. Ensure that rotation of the independent auditor's audit partners satisfies applicable regulatory requirements.

 Internal Audit

1.        Review the performance of the internal audit department, including the proposed audit plans for the coming year and the results of internal audits and management's responses thereto.

  1. Concur in the appointment and replacement of the senior internal auditor.
  2. Review activities, organizational structure and resources of the internal audit function.

Financial Reporting and Internal Controls

1.        Discuss with management and/or the independent auditor:

a.        The scope of the annual audit and the annual audited financial statements and quarterly financial statements, as applicable, including S&T's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and financial control disclosure procedures;

    1. The matters required to be discussed by Statement of Accounting Standards 61, as it may be modified or supplemented; and
    2. Any difficulties the independent auditors encountered in the course of the audit, including any restrictions on the scope of their activities, difficulties accessing information and any significant disagreements with management.
  1. Review any major issues regarding accounting principles and financial statement presentations, including any significant changes in S&T's selection or application of accounting principles, and major issues as to the adequacy of S&T's internal controls.
  2. Discuss S&T's earnings announcements prior to release.
  3. Inquire of S&T's chief executive officer and chief financial officer as to the existence of any significant deficiencies in the design or operation of internal controls that could adversely affect S&T's ability to record, process, summarize and report financial data, any material weaknesses in internal controls, and any fraud, whether or not material, that involves management or other employees who have a significant role in S&T's internal controls.

Risk Management/Compliance

1.        Review the performance of the risk management/compliance department.

  1. Concur in the appointment and replacement of the senior risk/compliance manager.
  2. Review activities, organizational structure and resources of the risk management/compliance function.
  3. Discuss guidelines and policies governing the process by which S&T's senior management and relevant departments assess and manage S&T's exposure to major financial and non-financial risks and the steps management has taken to monitor and control such exposures.
  4. Discuss with S&T's legal counsel and/or the senior risk/compliance manager any significant legal, compliance or regulatory matters that may have a material effect on the financial statements or S&T's business, financial statements or compliance policies, including material notices to or inquiries received from governmental agencies.
  5. Establish and ensure the maintenance of adequate and effective procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by S&T's employees of concerns regarding questionable accounting or auditing matters.

 

Reporting and Recommendations

1.        Prepare any report or other disclosures required by the rules of the SEC to be included in S&T's annual proxy statement.

  1. Review this Charter at least annually and recommend any changes to the Board.
  2. Report the Committee's activities to the Board on a regular basis and make such recommendations with respect to the matters covered by this Charter and other matters as the Committee may deem necessary or appropriate.
  3. Annually review the Committee's own performance.


Other


   In addition to the foregoing, the Committee will perform such other functions as may be committed to it under the resolutions and other directives of the Board.


RESOURCES AND AUTHORITY


The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special or independent counsel, accountants or other experts and advisors, as it deems necessary or appropriate, without seeking approval of the Board or management. S&T will provide appropriate funding to the Committee to compensate the independent auditor, to compensate any advisors retained by the Committee and to pay for ordinary administrative expenses of the Committee.