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Business Combinations | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS On November 30, 2019, we completed our acquisition of DNB Financial Corporation, or DNB, and DNB First National Association, its wholly-owned bank subsidiary, located in Downingtown, Pennsylvania. The acquisition of DNB expanded our Eastern Pennsylvania market by adding 14 banking locations, in an all-stock transaction structured as a merger of DNB with and into S&T, with S&T being the surviving entity. The related systems conversion of DNB into S&T Bank occurred on February 7, 2020. DNB shareholders received, without interest, 1.22 shares of S&T common stock for each share of DNB common stock. The total purchase price was approximately $201.0 million, which included $0.4 million of cash and 5,318,964 S&T common shares at a fair value of $37.72 per share. The fair value of $37.72 per share of S&T common stock was based on the November 30, 2019 closing price. The Merger was accounted for under the acquisition method of accounting and our Consolidated Financial Statements include all DNB Bank transactions from December 1, 2019 through December 31, 2019. Goodwill of $84.2 million was calculated as the excess of the consideration exchanged over the preliminary fair value of the identifiable net assets acquired. All of the goodwill was assigned to our Community Banking segment. The goodwill recognized will not be deductible for tax purposes. The following table provides a summary of the assets acquired and liabilities assumed by DNB, the preliminary estimates of the fair value adjustments necessary to adjust those acquired assets and assumed liabilities to estimated fair value and the preliminary estimates of the resultant fair values of those assets and liabilities by S&T. S&T intends to finalize its accounting for the acquisition of DNB within one year from the date of acquisition. The preliminary fair value adjustments shown in the following table continue to be evaluated by management and may be subject to further adjustment.
| November 30, 2019
(dollars in thousands) | As Recorded by DNB |  | Preliminary Fair Value Adjustments(1) |  | As Recorded by S&T
Fair Value of Assets Acquired |  |  |  |  |
Cash and cash equivalents | $ | 64,119 |  |  | $ | — |  |  | $ | 64,119 |
Securities and other investments | 108,715 |  |  | 183 |  |  | 108,898 |
Loans | 917,127 |  |  | (8,143 | ) |  | 908,984 |
Allowance for loan losses | (6,487 | ) |  | 6,487 |  |  | — |
Goodwill | 15,525 |  |  | (15,525 | ) |  | — |
Premises and equipment | 6,782 |  |  | 8,090 |  |  | 14,872 |
Accrued interest receivable | 4,138 |  |  | — |  |  | 4,138 |
Deferred income taxes | 2,017 |  |  | (3,298 | ) |  | (1,281 | )
Core deposits and other intangible assets | 269 |  |  | (269 | ) |  | — |
Other assets | 24,883 |  |  | (4,278 | ) |  | 20,605 |
Total Assets Acquired | 1,137,088 |  |  | (16,753 | ) |  | 1,120,335 |
Fair Value of Liabilities Assumed |  |  |  |  |
Deposits | 966,263 |  |  | 1,002 |  |  | 967,265 |
Borrowings | 37,617 |  |  | (276 | ) |  | 37,341 |
Accrued interest payable and other liabilities | 11,157 |  |  | (3,184 | ) |  | 7,973 |
Total Liabilities Assumed | 1,015,037 |  |  | (2,458 | ) |  | 1,012,579 |
Total Net Assets Acquired | $ | 122,051 |  |  | $ | (14,295 | ) |  | $ | 107,756 |
Core Deposit Intangible Asset |  |  |  |  | $ | 7,288 |
Wealth Management Intangible Asset |  |  |  |  | 1,772 |
Total Fair Value of Net Assets Acquired and Identified |  |  |  |  | $ | 116,816 |
Consideration Paid |  |  |  |  |
Cash |  |  |  |  | $ | 360 |
Common stock |  |  |  |  | 200,631 |
Fair Value of Total Consideration |  |  |  |  | $ | 200,991 |
Goodwill |  |  |  |  | $ | 84,175 |
(1)Management is continuing to evaluate the purchase accounting fair value adjustments related to loans, including loan classification, intangible assets, premises and equipment, deferred income taxes, other assets and borrowings until the final valuations and appraisals are complete. Any changes in preliminary estimates will be adjusted in goodwill in subsequent periods, but not extending beyond one year from the date of acquisition. Loans acquired in the Merger were recorded at fair value with no carryover of the related ALL from DNB. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The preliminary fair value of the loans acquired was estimated at $909.0 million, net of a $10.5 million discount. The discount is accreted to interest income over the remaining contractual life of the loans. At December 31, 2019, acquired portfolio loans totaled $899.3 million and included $455.6 million of CRE, $85.4 million of C&I, $77.1 million of commercial construction, $219.7 million of residential mortgage, $56.4 million of home equity, $4.1 million of installment and other consumer and $1.0 million of consumer construction. Direct costs related to the DNB merger were expensed as incurred. As of December 31, 2019, we recognized $11.4 million of merger related expenses, including $4.7 million for data processing contract termination and system conversion costs, $2.8 million in legal and professional expenses, $3.4 million in severance payments and $0.5 million in other expenses. The Consolidated Statements of Net Income for 2019 include net interest income of $3.2 million and net income of $2.1 million from the DNB merger since the November 30, 2019 acquisition date. The following table presents unaudited pro forma financial information which combines the historical consolidated statements of income of S&T and DNB to give effect to the merger as if it had occurred on January 1, 2018 for the periods presented.
| Unaudited Pro Forma Information December 31
(dollars in thousands, except per share data) | 2019 |  | 2018
Total Revenue | $ | 341,117 |  |  | $ | 325,668 |
Net Income(1) | 120,964 |  |  | 116,046 |
Earnings Per Common Share:(1) |  |  |
Basic | $ | 3.03 |  |  | $ | 2.90 |
Diluted | $ | 3.03 |  |  | $ | 2.88 |
(1)Excludes non-recurring merger-related expenses of $13.6 million, net of tax at 21 percent. Total pro forma revenue is defined as net interest income plus non-interest income, excluding gains and losses on sales of investment securities available-for-sale. Pro forma adjustments include intangible amortization expense, net amortization or accretion of valuation amounts and income tax expense.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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