Acquisition Acquisition (Notes)

6 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Acquisition

On April 3, 2017, the Company completed its acquisition of DCB Financial Corporation ("DCB") and its banking subsidiary, The Delaware County Bank and Trust Company, for consideration of $21.2 million in cash and 8.4 million shares of the Company's common stock. Through the acquisition, the Company obtained nine full-service banking offices which are operating under the First Commonwealth name. This acquisition expands the Company's presence in the central Ohio market and added $383.1 million in loans and $484.4 million in deposits to the Company's balance sheet.

The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the DCB acquisition (dollars in thousands):

Consideration Paid
Cash paid to shareholders	$	21,232
Shares issued to shareholders (8,356,882 shares)	110,812
Total consideration paid			$	132,044
Fair Value of Assets Acquired
Cash and cash equivalents	24,420
Investment securities	88,986
FHLB stock	3,250
Loans	383,083
Premises and other equipment	12,143
Core deposit intangible	5,998
Other real estate	68
Bank owned life insurance	20,522
Other assets	16,436
Total assets acquired	554,906
Fair Value of Liabilities Assumed
Deposits	484,366
Capital lease obligation	7,851
Other liabilities	1,182
Total liabilities assumed	493,399
Total Fair Value of Identifiable Net Assets			61,507
Goodwill			$	70,537

The goodwill of $70.5 million arising from the acquisition represents the value of synergies and economies of scale expected from combining the operations of the Company with DCB Financial Corporation.

The Company determined that this acquisition constitutes a business combination as defined in FASB ASC Topic 805, “Business Combinations.” Accordingly, as of the date of the acquisition, the Company recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Fair value is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. At the date of acquisition, none of the loans were accounted for under the guidance of ASC Topic 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality.” We acquired $390.8 million in total loans and recognized a net combined yield and credit market adjustment of $7.7 million.

The fair value of the 8,356,882 common shares issued was determined based on the market price of the Company's common shares on the acquisition date. The fair value of the acquired loans, premises and other equipment, customer deposit intangible, other assets and assumed deposits may change during the provisional period, which may last up to twelve months subsequent to the acquisition date. The Company may obtain additional information to refine the valuation of the acquired assets and liabilities and adjust the recorded fair value, although such adjustments are not expected to be significant. Adjustments recorded to the acquired assets and liabilities will be applied prospectively in accordance with ASU No. 2015-16, “Business Combinations.”

Costs related to the acquisition totaled $10.3 million. These amounts were expensed as incurred and are recorded as a merger and acquisition related expense in the Condensed Consolidated Statements of Income.

As a result of the full integration of the operations of DCB, it is not practicable to determine revenue or net income included in the Company's operating results relating to DCB since the date of acquisition as DCB’s results cannot be separately identified.