Regulatory Restrictions and Capital Adequacy

12 Months Ended

Dec. 31, 2019

Broker-Dealer, Net Capital Requirement, SEC Regulation [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 and First Commonwealth Bank are 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 First Commonwealth Bank 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.

Effective January 1, 2015, the Company became subject to new regulatory risk-based capital rules adopted by the federal banking agencies implementing Basel III. The most significant changes include higher minimum capital requirements, as the minimum Tier I capital ratio increased from 4.0% to 6.0%, and 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, resulting in an effective common equity Tier I risk-weighted asset minimum ratio of 7% on a fully phased-in basis.

The Basel III Rules also permit banking organizations with less than $15.0 billion in assets to retain, through a one-time election, the exclusion of accumulated other comprehensive income from regulatory capital. The Company elected to retain this treatment, which reduces the volatility of regulatory capital levels.

During the second quarter of 2018, First Commonwealth Bank, the Company's banking subsidiary, issued $100 million in subordinated debt, which under regulatory rules qualifies as Tier II capital. This subordinated debt issuance increased the total risk-based capital ratio by 160 basis points.

As of December 31, 2019 and 2018, First Commonwealth and First Commonwealth Bank met all capital adequacy requirements to which they are subject and were considered well-capitalized under the regulatory rules, all on a fully phased-in basis. To be considered well-capitalized, the Company must maintain minimum Total risk-based capital, Tier I risk-based capital, Tier I leverage ratio and Common equity tier I risk-based capital as set forth in the table below:

	Actual				Minimum Capital Required				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
	(dollars in thousands)
As of December 31, 2019
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	954,991	14.26	%	$	703,370	10.50	%	$	669,877	10.00	%
First Commonwealth Bank	913,863		13.67		702,006		10.50		668,577		10.00
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	800,526	11.95	%	$	569,395	8.50	%	$	535,901	8.00	%
First Commonwealth Bank	759,398		11.36		568,291		8.50		534,862		8.00
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	800,526	10.17	%	$	314,963	4.00	%	$	393,704	5.00	%
First Commonwealth Bank	759,398		9.66		314,338		4.00		392,922		5.00
Common Equity Tier I to Risk Weighted Assets
First Commonwealth Financial Corporation	$	730,526	10.91	%	$	468,914	7.00	%	$	435,420	6.50	%
First Commonwealth Bank	759,398		11.36		468,004		7.00		434,575		6.50

	Actual				Minimum Capital Required - Basel III Phase-In Schedule				Minimum Capital Required - Basel III Fully Phased-In				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
	(dollars in thousands)
As of December 31, 2018
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	918,786	14.65	%	$	619,173	9.88	%	$	658,361	10.50	%	$	627,011	10.00	%
First Commonwealth Bank	885,151		14.14		618,213		9.88		657,341		10.50		626,039		10.00
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	767,881	12.25	%	$	493,771	7.88	%	$	532,959	8.50	%	$	501,608	8.00	%
First Commonwealth Bank	734,246		11.73		493,005		7.88		532,133		8.50		500,831		8.00
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	767,881	10.28	%	$	298,856	4.00	%	$	298,856	4.00	%	$	373,570	5.00	%
First Commonwealth Bank	734,246		9.84		298,340		4.00		298,340		4.00		372,926		5.00
Common Equity Tier I to Risk Weighted Assets
First Commonwealth Financial Corporation	$	697,881	11.13	%	$	399,719	6.38	%	$	438,907	7.00	%	$	407,557	6.50	%
First Commonwealth Bank	734,246		11.73		399,100		6.38		438,227		7.00		406,925		6.50