Regulatory Restrictions and Capital Adequacy

12 Months Ended

Dec. 31, 2014

Regulatory Capital Requirements [Abstract]

Regulatory Restrictions and Capital Adequacy

Regulatory Restrictions and Capital Adequacy

The amount of funds available to the parent from its subsidiary bank is limited by restrictions imposed on all depository institutions by banking regulation that restricts and limits the payment of dividends and the ability of depository institutions to engage in transactions, including lending transactions and asset purchases, with affiliates.

First Commonwealth is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators which, if undertaken, could have a direct material effect on First Commonwealth’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First Commonwealth and its banking subsidiary must meet specific capital guidelines that involve quantitative measures of First Commonwealth’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. First Commonwealth’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

First Commonwealth maintains capital to absorb unexpected losses. In order to provide assurance that our capital levels are adequate for our risk exposure we test our capital position under several stress scenarios on a bi-annual basis. This analysis is reviewed with our Board of Directors. Our most recent capital stress test was completed in December 2013.

On July 9, 2013, federal banking agencies approved changes to the regulatory capital framework, which are effective beginning on January 1, 2015, with some items phasing in over a period of time. The most significant of these changes include higher minimum capital requirements, as the minimum tier I capital ratio increased from 4.0% to 6.0% and the establishment of a new common equity tier I capital ratio was established with a minimum level of 4.5%. Additionally, the new rules improve the quality of capital by providing stricter eligibility criteria for regulatory capital instruments and provide for a phase-in, beginning January 1, 2016, of a capital conservation buffer of 2.5% of risk-weighted assets. This buffer provides a requirement to hold common equity tier 1 capital above the minimum risk-based capital requirements. Management currently expects that First Commonwealth will remain well-capitalized after the adoption of these changes.

Under regulations in effect through December 31, 2014, quantitative measures established by regulation to ensure capital adequacy require First Commonwealth to maintain minimum amounts and ratios of Total and Tier I capital (common and certain other “core” equity capital) to risk weighted assets, and of Tier I capital to average assets. As of December 31, 2014, First Commonwealth and its banking subsidiary met all capital adequacy requirements to which they are subject.

As of December 31, 2014, First Commonwealth Bank was considered well capitalized under the regulatory framework for prompt corrective action as in effect on that date. To be considered well capitalized under the rules in effect through December 31, 2014, the bank must maintain minimum Total risk-based capital, Tier I risk-based capital and Tier I leverage ratios as set forth in the table below:

	Actual				Regulatory Minimum				Well Capitalized Regulatory Guidelines
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
	(dollars in thousands)
As of December 31, 2014
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	662,733	12.79	%	$	414,460	8.00	%	N/A		N/A
First Commonwealth Bank	647,500		12.48		415,217		8.00		$	519,021	10.00	%
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	607,602	11.73	%	$	207,230	4.00	%	N/A		N/A
First Commonwealth Bank	592,369		11.41		207,608		4.00		$	311,413	6.00	%
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	607,602	9.85	%	$	246,738	4.00	%	N/A		N/A
First Commonwealth Bank	592,369		9.66		245,276		4.00		$	306,595	5.00	%
As of December 31, 2013
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	656,235	13.26	%	$	396,009	8.00	%	N/A		N/A
First Commonwealth Bank	637,415		12.87		396,275		8.00		$	495,344	10.00	%
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	598,851	12.10	%	$	198,004	4.00	%	N/A		N/A
First Commonwealth Bank	580,031		11.71		198,138		4.00		$	297,206	6.00	%
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	598,851	10.00	%	$	239,430	4.00	%	N/A		N/A
First Commonwealth Bank	580,031		9.75		237,993		4.00		$	297,491	5.00	%