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Business Combinations | 3 Months Ended
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Mar. 31, 2020
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 beginning on December 1, 2019. Goodwill of $86.0 million at March 31, 2020 was calculated as the excess of the consideration exchanged over the fair value of the identifiable net assets acquired. All of the goodwill was assigned to our Community Banking segment. The goodwill recognized is not 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 at November 30, 2019, the acquisition date. Preliminary estimates were adjusted by $1.8 million during the three months ended March 31, 2020. These measurement period adjustments primarily related to $2.5 million reduction in the fair value of loans, $0.3 million reduction in the fair value of borrowings and $0.3 million in deferred taxes related to these valuation adjustments. Preliminary fair value adjustments continue to be evaluated by management and may be subject to further adjustment during the measurement period, which may not extend beyond one year following the acquisition. The following table presents the preliminary fair value adjustments and the measurement period adjustments as of the dates presented:
| November 30, 2019 |  | March 31, 2020
| As Recorded by DNB |  | Preliminary Fair Value Adjustments(1) |  | As Recorded by S&T |  | Measurement Period Adjustments |  | As Recorded by S&T
Fair Value of Assets Acquired |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 64,119 |  |  | $ | — |  |  | $ | 64,119 |  |  | $ | — |  |  | $ | 64,119 |
Securities and other investments | 108,715 |  |  | 183 |  |  | 108,898 |  |  | — |  |  | 108,898 |
Loans | 917,127 |  |  | (8,143 | ) |  | 908,984 |  |  | (2,496 | ) |  | 906,488 |
Allowance for credit losses | (6,487 | ) |  | 6,487 |  |  | — |  |  | — |  |  | — |
Goodwill | 15,525 |  |  | (15,525 | ) |  | — |  |  | — |  |  | — |
Premises and equipment | 6,782 |  |  | 8,090 |  |  | 14,872 |  |  | — |  |  | 14,872 |
Accrued interest receivable | 4,138 |  |  | — |  |  | 4,138 |  |  | — |  |  | 4,138 |
Deferred income taxes | 2,017 |  |  | (3,298 | ) |  | (1,281 | ) |  | 311 |  |  | (970 | )
Core deposits and other intangible assets | 269 |  |  | (269 | ) |  | — |  |  | — |  |  | — |
Other assets | 24,883 |  |  | (4,278 | ) |  | 20,605 |  |  | 40 |  |  | 20,645 |
Total Assets Acquired | 1,137,088 |  |  | (16,753 | ) |  | 1,120,335 |  |  | (2,145 | ) |  | 1,118,190 |
Fair Value of Liabilities Assumed |  |  |  |  |  |  |  |  |
Deposits | 966,263 |  |  | 1,002 |  |  | 967,265 |  |  | (12 | ) |  | 967,253 |
Borrowings | 37,617 |  |  | (276 | ) |  | 37,341 |  |  | (257 | ) |  | 37,084 |
Accrued interest payable and other liabilities | 11,157 |  |  | (3,184 | ) |  | 7,973 |  |  | (68 | ) |  | 7,905 |
Total Liabilities Assumed | 1,015,037 |  |  | (2,458 | ) |  | 1,012,579 |  |  | (337 | ) |  | 1,012,242 |
Total Net Assets Acquired | $ | 122,051 |  |  | $ | (14,295 | ) |  | $ | 107,756 |  |  | $ | (1,808 | ) |  | $ | 105,948 |
Core Deposit Intangible Asset |  |  |  |  | $ | 7,288 |  |  | $ | — |  |  | $ | 7,288 |
Wealth Management Intangible Asset |  |  |  |  | 1,772 |  |  | — |  |  | 1,772 |
Total Fair Value of Net Assets Acquired and Identified |  |  |  |  | $ | 116,816 |  |  | $ | (1,808 | ) |  | $ | 115,008 |
Consideration Paid |  |  |  |  |  |  |  |  |
Cash |  |  |  |  | $ | 360 |  |  | $ | — |  |  | $ | 360 |
Common stock |  |  |  |  | 200,631 |  |  | — |  |  | 200,631 |
Fair Value of Total Consideration |  |  |  |  | $ | 200,991 |  |  | $ | — |  |  | $ | 200,991 |
Goodwill |  |  |  |  | $ | 84,175 |  |  | $ | 1,808 |  |  | $ | 85,983 |
(1)Management is continuing to evaluate the purchase accounting fair value adjustments related to loans, including loan classification, deferred and current income taxes until the final valuations are complete and final tax returns are filed. 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 ACL 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. During the three month period ended March 31, 2020, the fair value of acquired loans was reduced by an additional $2.5 million as we continue to finalize our evaluation of the loan portfolio. As of March 31, 2020, direct costs related to the DNB merger of $13.7 million were recognized and expensed as incurred. During the three months ended March 31, 2020, we recognized $2.3 million of merger related expenses including $0.2 million in legal and professional fees, $1.4 million in severance payments and stay-bonuses, $0.4 million for data processing, and $0.3 million in other expenses. 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.

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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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