Fair Values of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Inputs, Assets, Quantitative Information

In accordance with ASU No. 2011-4, the following table provides information related to quantitative inputs and assumptions used in March 31, 2019 Level 3 fair value measurements.



	Fair Value (dollars in thousands)			Valuation Technique	Unobservable Inputs	Range / (weighted average)
Other Investments	$	1,670		CarryingValue	N/A	N/A
Impaired Loans	1,044		(a)	Reserve study	Discount rate	10.00%
					Gas per MMBTU	$2.61 - $3.49 (b)
					Oil per BBL/d	$47.09 - $53.14 (b)
	3,187		(a)	Discounted Cash Flow	Discount Rate	1.9% - 9.5%
Limited Partnership Investments	3,200			Par Value	N/A	N/A


(a)	The remainder of impaired loans valued using Level 3 inputs are not included in this disclosure as the values of those loans are based on bankruptcy agreement documentation.


(b)	Unobservable inputs are defined as follows: MMBTU - million British thermal units; BBL/d - barrels per day.

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The tables below present the balances of assets and liabilities measured at fair value on a recurring basis:



	March 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential	$	—	$	9,246	$	—	$	9,246
Mortgage-Backed Securities - Commercial	—		168,120		—		168,120
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential	—		653,966		—		653,966
Other Government-Sponsored Enterprises	—		10,006		—		10,006
Obligations of States and Political Subdivisions	—		28,214		—		28,214
Corporate Securities	—		23,549		—		23,549
Total Securities Available for Sale	—		893,101		—		893,101
Other Investments	—		23,708		1,670		25,378
Loans Held for Sale	—		9,627		—		9,627
Other Assets(a)	—		7,613		3,200		10,813
Total Assets	$	—	$	934,049	$	4,870	$	938,919
Other Liabilities(a)	$	—	$	7,868	$	—	$	7,868
Total Liabilities	$	—	$	7,868	$	—	$	7,868


(a)	Hedging and non-hedging interest rate derivatives and limited partnership investments



	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential	$	—	$	9,406	$	—	$	9,406
Mortgage-Backed Securities - Commercial	—		167,744		—		167,744
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential	—		673,361		—		673,361
Other Government-Sponsored Enterprises	—		10,012		—		10,012
Obligations of States and Political Subdivisions	—		27,712		—		27,712
Corporate Securities	—		21,012		—		21,012
Total Securities Available for Sale	—		909,247		—		909,247
Other Investments	—		30,456		1,670		32,126
Loans Held for Sale	—		11,881		—		11,881
Other Assets(a)	—		1,769		2,696		4,465
Total Assets	$	—	$	953,353	$	4,366	$	957,719
Other Liabilities(a)	$	—	$	2,081	$	—	$	2,081
Total Liabilities	$	—	$	2,081	$	—	$	2,081


(a)	Hedging and non-hedging interest rate derivatives

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

For the three months ended March 31, changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:



	2019
	Other Investments		Other Assets			Total
	(dollars in thousands)
Balance, beginning of period	$	1,670	$	2,696		$	4,366
Total gains or losses
Included in earnings	—		—			—
Included in other comprehensive income	—		(47		)	(47		)
Purchases, issuances, sales and settlements
Purchases	—		551			551
Issuances	—		—			—
Sales	—		—			—
Settlements	—		—			—
Transfers from Level 3	—		—			—
Transfers into Level 3	—		—			—
Balance, end of period	$	1,670	$	3,200		$	4,870



	2018
	Pooled Trust Preferred Collateralized Debt Obligations			Other Investments		Other Assets		Total
	(dollars in thousands)
Balance, beginning of period	$	23,646		$	1,670	$	2,143	$	27,459
Total gains or losses
Included in earnings	2,840			—		—		2,840
Included in other comprehensive income	4,529			—		—		4,529
Purchases, issuances, sales and settlements
Purchases	—			—		149		149
Issuances	—			—		—		—
Sales	—			—		—		—
Settlements	(16,883		)	—		—		(16,883		)
Transfers from Level 3	—			—		—		—
Transfers into Level 3	—			—		—		—
Balance, end of period	$	14,132		$	1,670	$	2,292	$	18,094

During the three months ended March 31, 2019 and 2018, there were no transfers between fair value Levels 1, 2 or 3. There were no gains or losses included in earnings for the periods presented that are attributable to the change in realized gains (losses) relating to assets held at March 31, 2019 and 2018.

Schedule of Assets Measured on Non-Recurring Basis

The tables below present the balances of assets measured at fair value on a nonrecurring basis at:



	March 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Impaired loans	$	—	$	14,391	$	14,849	$	29,240
Other real estate owned	—		4,300		—		4,300
Total Assets	$	—	$	18,691	$	14,849	$	33,540



	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Impaired loans	$	—	$	15,076	$	15,320	$	30,396
Other real estate owned	—		4,035		—		4,035
Total Assets	$	—	$	19,111	$	15,320	$	34,431

Losses Realized on Assets Measured on Non-Recurring Basis

The following gains(losses) were realized on the assets measured on a nonrecurring basis:



	For the Three Months Ended March 31,
	2019			2018
	(dollars in thousands)
Impaired loans	$	(969	)	$	(7,850	)
Other real estate owned	(49		)	(30		)
Total losses	$	(1,018	)	$	(7,880	)

Carrying Amounts and Fair Values of Financial Instruments

The following table presents carrying amounts and fair values of First Commonwealth’s financial instruments:



	March 31, 2019
			Fair Value Measurements Using:
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(dollars in thousands)
Financial assets
Cash and due from banks	$	100,724	$	100,724	$	100,724	$	—	$	—
Interest-bearing deposits	23,168		23,168		23,168		—		—
Securities available for sale	893,101		893,101		—		893,101		—
Securities held to maturity	384,909		380,443		—		380,443		—
Other investments	25,378		25,378		—		23,708		1,670
Loans held for sale	9,627		9,627		—		9,627		—
Loans	5,871,070		5,921,319		—		14,391		5,906,928
Financial liabilities
Deposits	6,130,760		6,135,980		—		6,135,980		—
Short-term borrowings	565,616		565,522		—		565,522		—
Subordinated debt	170,328		169,764		—		—		169,764
Long-term debt	7,395		7,701		—		7,701		—
Capital lease obligation	7,118		7,118		—		7,118		—



	December 31, 2018
			Fair Value Measurements Using:
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(dollars in thousands)
Financial assets
Cash and due from banks	$	95,934	$	95,934	$	95,934	$	—	$	—
Interest-bearing deposits	3,013		3,013		3,013		—		—
Securities available for sale	909,247		909,247		—		909,247		—
Securities held to maturity	393,855		383,993		—		383,993		—
Other investments	32,126		32,126		—		30,456		1,670
Loans held for sale	11,881		11,881		—		11,881		—
Loans	5,774,139		5,821,791		—		15,076		5,806,715
Financial liabilities
Deposits	5,897,992		5,904,147		—		5,904,147		—
Short-term borrowings	721,823		721,532		—		721,532		—
Subordinated debt	170,288		168,067		—		—		168,067
Long-term debt	7,551		7,720		—		7,720		—
Capital lease obligation	7,217		7,217		—		7,217		—