Fair Values of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Inputs, Assets, Quantitative Information

In accordance with ASU No. 2011-4, "Fair Value Measurements (Topic 820)," the following table provides information related to quantitative inputs and assumptions used in June 30, 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	979		(a)	Reserve study	Discount rate	10.00%
					Gas per MMBTU	$2.61 - $3.49 (b)
					Oil per BBL/d	$47.09 - $53.14 (b)
	2,518		(a)	Discounted Cash Flow	Discount Rate	3.84% - 9.50%
Limited Partnership Investments	3,312			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:

	June 30, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential	$	—	$	8,953	$	—	$	8,953
Mortgage-Backed Securities - Commercial	—		170,545		—		170,545
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential	—		625,579		—		625,579
Other Government-Sponsored Enterprises	—		10,003		—		10,003
Obligations of States and Political Subdivisions	—		26,889		—		26,889
Corporate Securities	—		23,934		—		23,934
Total Securities Available for Sale	—		865,903		—		865,903
Other Investments	—		27,898		1,670		29,568
Loans Held for Sale	—		16,036		—		16,036
Other Assets(a)	—		19,529		3,312		22,841
Total Assets	$	—	$	929,366	$	4,982	$	934,348
Other Liabilities(a)	$	—	$	19,841	$	—	$	19,841
Total Liabilities	$	—	$	19,841	$	—	$	19,841

(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 six months ended June 30, 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	—		(47		)	(47		)
Included in other comprehensive income	—		—			—
Purchases, issuances, sales and settlements
Purchases	—		663			663
Issuances	—		—			—
Sales	—		—			—
Settlements	—		—			—
Transfers from Level 3	—		—			—
Transfers into Level 3	—		—			—
Balance, end of period	$	1,670	$	3,312		$	4,982

	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	8,102			—		—		8,102
Included in other comprehensive income	(118		)	—		—		(118		)
Purchases, issuances, sales and settlements
Purchases	—			—		154		154
Issuances	—			—		—		—
Sales	(12,289		)	—		—		(12,289		)
Settlements	(19,341		)	—		—		(19,341		)
Transfers from Level 3	—			—		—		—
Transfers into Level 3	—			—		—		—
Balance, end of period	$	—		$	1,670	$	2,297	$	3,967

During the six months ended June 30, 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 June 30, 2019 and 2018.

For the three months ended June 30, 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	$	3,200	$	4,870
Total gains or losses
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases, issuances, sales and settlements
Purchases	—		112		112
Issuances	—		—		—
Sales	—		—		—
Settlements	—		—		—
Transfers from Level 3	—		—		—
Transfers into Level 3	—		—		—
Balance, end of period	$	1,670	$	3,312	$	4,982

	2018
	Pooled Trust Preferred Collateralized Debt Obligations			Other Investments		Other Assets		Total
	(dollars in thousands)
Balance, beginning of period	$	14,132		$	1,670	$	2,292	$	18,094
Total gains or losses
Included in earnings	5,262			—		—		5,262
Included in other comprehensive income	(4,647		)	—		—		(4,647		)
Purchases, issuances, sales and settlements
Purchases	—			—		5		5
Issuances	—			—		—		—
Sales	(12,289		)	—		—		(12,289		)
Settlements	(2,458		)	—		—		(2,458		)
Transfers from Level 3	—			—		—		—
Transfers into Level 3	—			—		—		—
Balance, end of period	$	—		$	1,670	$	2,297	$	3,967

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:

	June 30, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Impaired loans	$	—	$	19,451	$	13,573	$	33,024
Other real estate owned	—		2,128		—		2,128
Total Assets	$	—	$	21,579	$	13,573	$	35,152

	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 June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
	(dollars in thousands)
Impaired loans	$	(497	)	$	992		$	(1,460	)	$	(6,544	)
Other real estate owned	(532		)	(437		)	(541		)	(437		)
Total losses	$	(1,029	)	$	555		$	(2,001	)	$	(6,981	)

Carrying Amounts and Fair Values of Financial Instruments

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

	June 30, 2019
			Fair Value Measurements Using:
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(dollars in thousands)
Financial assets
Cash and due from banks	$	95,047	$	95,047	$	95,047	$	—	$	—
Interest-bearing deposits	1,233		1,233		1,233		—		—
Securities available for sale	865,903		865,903		—		865,903		—
Securities held to maturity	373,453		373,335		—		373,335		—
Other investments	29,568		29,568		—		27,898		1,670
Loans held for sale	16,036		16,036		—		16,036		—
Loans	6,003,059		6,109,530		—		19,451		6,090,079
Financial liabilities
Deposits	6,155,965		6,158,427		—		6,158,427		—
Short-term borrowings	555,080		555,081		—		555,081		—
Subordinated debt	170,369		169,549		—		—		169,549
Long-term debt	57,236		57,863		—		57,863		—
Capital lease obligation	7,018		7,018		—		7,018		—

	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		—