Fair Values of Assets and Liabilities (Tables)

9 Months Ended

Sep. 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 September 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	932		(a)	Reserve study	Discount rate	10.00%
					Gas per MMBTU	$2.61 - $3.49 (b)
					Oil per BBL/d	$47.09 - $53.14 (b)
	2,539		(a)	Discounted Cash Flow	Discount Rate	3.84% - 9.50%
Limited Partnership Investments	4,131			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:

	September 30, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential	$	—	$	8,767	$	—	$	8,767
Mortgage-Backed Securities - Commercial	—		171,591		—		171,591
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential	—		584,824		—		584,824
Other Government-Sponsored Enterprises	—		998		—		998
Obligations of States and Political Subdivisions	—		22,168		—		22,168
Corporate Securities	—		24,035		—		24,035
Total Securities Available for Sale	—		812,383		—		812,383
Other Investments	—		9,891		1,670		11,561
Loans Held for Sale	—		20,288		—		20,288
Other Assets(a)	—		27,571		4,131		31,702
Total Assets	$	—	$	870,133	$	5,801	$	875,934
Other Liabilities(a)	$	—	$	27,784	$	—	$	27,784
Total Liabilities	$	—	$	27,784	$	—	$	27,784

(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 nine months ended September 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	—		198		198
Included in other comprehensive income	—		—		—
Purchases, issuances, sales and settlements
Purchases	—		1,237		1,237
Issuances	—		—		—
Sales	—		—		—
Settlements	—		—		—
Transfers from Level 3	—		—		—
Transfers into Level 3	—		—		—
Balance, end of period	$	1,670	$	4,131	$	5,801

	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	—			—		426			426
Issuances	—			—		—			—
Sales	(12,289		)	—		—			(12,289		)
Settlements	(19,341		)	—		(48		)	(19,389		)
Transfers from Level 3	—			—		—			—
Transfers into Level 3	—			—		—			—
Balance, end of period	$	—		$	1,670	$	2,521		$	4,191

During the nine months ended September 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 September 30, 2019 and 2018.

For the three months ended September 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	$	3,312	$	4,982
Total gains or losses
Included in earnings	—		245		245
Included in other comprehensive income	—		—		—
Purchases, issuances, sales and settlements
Purchases	—		574		574
Issuances	—		—		—
Sales	—		—		—
Settlements	—		—		—
Transfers from Level 3	—		—		—
Transfers into Level 3	—		—		—
Balance, end of period	$	1,670	$	4,131	$	5,801

	2018
	Other Investments		Other Assets			Total
	(dollars in thousands)
Balance, beginning of period	$	1,670	$	2,297		$	3,967
Total gains or losses
Included in earnings	—		—			—
Included in other comprehensive income	—		—			—
Purchases, issuances, sales and settlements
Purchases	—		272			272
Issuances	—		—			—
Sales	—		—			—
Settlements	—		(48		)	(48		)
Transfers from Level 3	—		—			—
Transfers into Level 3	—		—			—
Balance, end of period	$	1,670	$	2,521		$	4,191

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:

	September 30, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Impaired loans	$	—	$	20,407	$	13,372	$	33,779
Other real estate owned	—		1,981		—		1,981
Total Assets	$	—	$	22,388	$	13,372	$	35,760

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

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
	(dollars in thousands)
Impaired loans	$	(954	)	$	(239	)	$	(2,606	)	$	(6,659	)
Other real estate owned	(42		)	(128		)	(51		)	(544		)
Total losses	$	(996	)	$	(367	)	$	(2,657	)	$	(7,203	)

Carrying Amounts and Fair Values of Financial Instruments

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

	September 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	$	112,241	$	112,241	$	112,241	$	—	$	—
Interest-bearing deposits	16,408		16,408		16,408		—		—
Securities available for sale	812,383		812,383		—		812,383		—
Securities held to maturity	357,890		360,224		—		360,224		—
Other investments	11,561		11,561		—		9,891		1,670
Loans held for sale	20,288		20,288		—		20,288		—
Loans	6,099,561		6,213,529		—		20,407		6,193,122
Financial liabilities
Deposits	6,677,996		6,685,082		—		6,685,082		—
Short-term borrowings	83,735		83,698		—		83,698		—
Subordinated debt	170,409		169,601		—		—		169,601
Long-term debt	57,078		57,389		—		57,389		—
Capital lease obligation	6,917		6,917		—		6,917		—

	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		—