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Employee Benefits | 12 Months Ended
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Dec. 31, 2017
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. Contributions are intended to provide for benefits attributed to employee service to date and for those benefits expected to be earned in the future. On January 25, 2016, the Board of Directors approved an amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016. This change will result in no additional benefits being earned by participants in those plans based on service or pay after March 31, 2016. The Plan was previously closed to new participants effective December 31, 2007. The following table summarizes the activity in the benefit obligation and Plan assets deriving the funded status, which is recorded in other liabilities in the Consolidated Balance Sheets:
(dollars in thousands) | 2017 |  |  | 2016 |
Change in Projected Benefit Obligation |  |  |
Projected benefit obligation at beginning of year | $ | 105,834 |  |  | $ | 109,747 |
Service cost | — |  |  | 463 |
Interest cost | 4,100 |  |  | 4,296 |
Actuarial loss | 4,974 |  |  | 3,575 |
Curtailments | — |  |  | (6,997 | )
Benefits paid | (8,244 | ) |  | (5,250 | )
Projected Benefit Obligation at End of Year | $ | 106,664 |  |  | $ | 105,834 |
Change in Plan Assets |  |  |
Fair value of plan assets at beginning of year | $ | 87,711 |  |  | $ | 84,585 |
Actual return on plan assets | 7,687 |  |  | 8,376 |
Benefits paid | (8,244 | ) |  | (5,250 | )
Fair Value of Plan Assets at End of Year | $ | 87,154 |  |  | $ | 87,711 |
Funded Status | $ | (19,510 | ) |  | $ | (18,123 | )
The following table sets forth the amounts recognized in accumulated other comprehensive (loss) income at December 31:
(dollars in thousands) | 2017 |  |  | 2016 |
Prior service credit | $ | — |  |  | $ | — |
Net actuarial loss | (27,825 | ) |  | (26,013 | )
Total (Before Tax Effects) | $ | (27,825 | ) |  | $ | (26,013 | )
Below are the actuarial weighted average assumptions used in determining the benefit obligation:
| 2017 |  |  | 2016 |
Discount rate | 3.75 | % |  | 4.00 | %
Rate of compensation increase(1) | — | % |  | — | %
(1)Rate of compensation increase is not applicable for 2017 and 2016 due to the 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 income (loss) for the years ended December 31:
(dollars in thousands) | 2017 |  |  | 2016 |  |  | 2015 |
Components of Net Periodic Pension Cost |  |  |  |  |
Service cost—benefits earned during the period | $ | — |  |  | $ | 463 |  |  | $ | 2,601 |
Interest cost on projected benefit obligation | 4,100 |  |  | 4,296 |  |  | 4,425 |
Expected return on plan assets | (6,313 | ) |  | (5,780 | ) |  | (7,180 | )
Amortization of prior service credit | — |  |  | (11 | ) |  | (138 | )
Recognized net actuarial loss | 1,866 |  |  | 2,345 |  |  | 2,028 |
Curtailment gain | — |  |  | (1,017 | ) |  | — |
Net Periodic Pension Expense | $ | (347 | ) |  | $ | 296 |  |  | $ | 1,736 |
Other Changes in Plan Assets and Benefit Obligation Recognized in Other Comprehensive Income (Loss) |  |  |  |  |
Net actuarial (gain) loss | $ | 3,678 |  |  | $ | (6,018 | ) |  | $ | 5,678 |
Recognized net actuarial loss | (1,866 | ) |  | (2,345 | ) |  | (2,028 | )
Recognized prior service credit | — |  |  | 1,029 |  |  | 138 |
Total (Before Tax Effects) | $ | 1,812 |  |  | $ | (7,334 | ) |  | $ | 3,788 |
Total Recognized in Net Benefit Cost and Other Comprehensive (Loss)/Income (Before Tax Effects) | $ | 1,465 |  |  | $ | (7,038 | ) |  | $ | 5,524 |
The following table summarizes the actuarial weighted average assumptions used in determining net periodic pension cost:
| 2017 |  |  | 2016 |  |  | 2015 |
Discount rate | 4.00 | % |  | 4.25 | % |  | 4.00 | %
Rate of compensation increase(1) | — | % |  | 3.00 | % |  | 3.00 | %
Expected return on assets | 7.50 | % |  | 7.50 | % |  | 8.00 | %
1)Rate of compensation increase is not applicable for 2017 and 2016 due to the amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans effective March 31, 2016. The net actuarial loss included in accumulated other comprehensive income (loss) expected to be recognized in net periodic pension cost during the year ended December 31, 2018 is $2.2 million. There will be no prior service credit recognized due to the amendment to freeze benefit accruals under the qualified and nonqualified defined benefit pension plans. The accumulated benefit obligation for the Plan was $106.7 million at December 31, 2017 and $105.8 million at December 31, 2016. 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 50 percent to 70 percent equities and 30 percent to 50 percent fixed income. A strategic allocation within each asset class is employed based on the Plan’s 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. On December 19, 2017, S&T Bank, as Plan Sponsor, entered into an agreement with an insurance company to purchase a single premium annuity contract for 124 retired Plan participants and their beneficiaries. Of these participants, 30 are receiving a $2,000 death benefit only. The total premium of $1.5 million was paid out of the Plan's assets, and the effective date of the annuity payments was January 1, 2018. The annuity purchase resulted in a reduction in the associated pension liability. At this time, S&T Bank is not required to make a cash contribution to the Plan in 2018. No contributions were made during 2017. 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 |
2018 | $ | 7,175 |
2019 | 7,090 |
2020 | 6,956 |
2021 | 7,157 |
2022 | 7,106 |
2023 - 2027 | 32,658 |
We also have nonqualified supplemental executive pension plans, or SERPs, for certain key employees. The SERPs are unfunded. The projected benefit obligations related to the SERPs were $5.3 million and $4.7 million at December 31, 2017 and 2016. These amounts also represent the net amount recognized in the statement of financial position for the SERPs. Net periodic benefit costs for the SERPs were $0.5 million, $0.5 million and $0.6 million for each of the years ended December 31, 2017, 2016 and 2015. Additionally, $2.7 million, $2.5 million and $2.1 million before tax was reflected in accumulated other comprehensive income (loss) at December 31, 2017, 2016 and 2015, in relation to the SERPs. The actuarial assumptions used for the SERPs are the same as those used for the Plan. 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 $1.8 million in 2017, $1.7 million in 2016 and $1.5 million in 2015. 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, 2017 and 2016. There were no transfers between Level 1 and Level 2 for items of a recurring basis during the periods presented. There were no purchases or transfers of Level 3 plan assets in 2017.
| December 31, 2017
| Fair Value Asset Classes(1)
(dollars in thousands) | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and cash equivalents(2) | $ | — |  |  | $ | 1,780 |  |  | $ | — |  |  | $ | 1,780 |
Fixed income(3) | 27,738 |  |  | — |  |  | — |  |  | 27,738 |
Equities: |  |  |  |  |  |  |
Equity index mutual funds—international(4) | 4,016 |  |  | — |  |  | — |  |  | 4,016 |
Domestic individual equities(5) | 53,540 |  |  | — |  |  | — |  |  | 53,540 |
Total Assets at Fair Value | $ | 85,294 |  |  | $ | 1,780 |  |  | $ | — |  |  | $ | 87,074 |
(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 Harbor International Institutional Fund. (5)This asset class includes individual domestic equities invested in an active all-cap strategy. It may also include convertible bonds.
| December 31, 2016
| Fair Value Asset Classes(1)
(dollars in thousands) | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and cash equivalents(2) | $ | — |  |  | $ | 3,336 |  |  | $ | — |  |  | $ | 3,336 |
Fixed income(3) | 27,279 |  |  | — |  |  | — |  |  | 27,279 |
Equities: |  |  |  |  |  |  |
Equity index mutual funds—international(4) | 3,362 |  |  | — |  |  | — |  |  | 3,362 |
Domestic individual equities(5) | 53,636 |  |  | — |  |  | — |  |  | 53,636 |
Total Assets at Fair Value | $ | 84,277 |  |  | $ | 3,336 |  |  | $ | — |  |  | $ | 87,613 |
(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 MSCI EAFE Index iShares. (5)This asset class includes individual domestic equities invested in an active all-cap strategy. It may also include convertible bonds.

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