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Fair Values of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Quantitative Inputs and Assumptions Used in Level 3 Fair Value Measurements

In accordance with ASU 2011-4, the following table provides information related to quantitative inputs and assumptions used in Level 3 fair value measurements.



	Fair Value (dollars in thousands)			Valuation Technique	Unobservable Inputs	Range / (weighted average)
December 31, 2019
Other Investments	$	1,670		Carrying Value	N/A	N/A
Impaired Loans	884		(a)	Gas Reserve study	Discount rate	10.00%
					Gas per MMBTU	$2.61 - $3.49 (b)
					Oil per BBL/d	$47.09 - $53.14 (b)
	2,239		(a)	Discounted Cash Flow	Discount Rate	3.84% - 9.50%
Limited Partnership Investments	5,795			Par Value	N/A	N/A

December 31, 2018
Other Investments	1,670			Carrying Value	N/A	N/A
Impaired Loans	1,104		(a)	Gas Reserve study	Discount rate	10.00%
					Gas per MMBTU	$2.81 - $3.35 (b)
					Oil per BBL/d	$51.59 - $59.55 (b)
	3,249		(a)	Discounted Cash Flow	Discount Rate	1.90% - 9.50%
Limited Partnership Investments	2,696			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—one 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 at December 31:



	2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities—Residential	$	—	$	8,341	$	—	$	8,341
Mortgage-Backed Securities—Commercial	—		189,133		—		189,133
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities—Residential	—		661,947		—		661,947
Other Government-Sponsored Enterprises	—		1,000		—		1,000
Obligations of States and Political Subdivisions	—		17,909		—		17,909
Corporate Securities	—		23,962		—		23,962
Total Securities Available for Sale	—		902,292		—		902,292
Other Investments	—		15,091		1,670		16,761
Loans Held for Sale	—		15,989		—		15,989
Other Assets (a)	—		21,894		5,795		27,689
Total Assets	$	—	$	955,266	$	7,465	$	962,731
Other Liabilities (a)	$	—	$	21,469	$	—	$	21,469
Total Liabilities	$	—	$	21,469	$	—	$	21,469


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



	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)

Schedule of Changes in Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows for the year ended December 31, 2019:



	Other Investments		Other Assets			Total
	(dollars in thousands)
Balance, beginning of year	$	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	—		2,956			2,956
Issuances	—		—			—
Sales	—		—			—
Settlements	—		(55		)	(55		)
Transfers from Level 3	—		—			—
Transfers into Level 3	—		—			—
Balance, end of year	$	1,670	$	5,795		$	7,465

There are no gains or losses included in earnings for the period that are attributable to the change in realized gains (losses) relating to assets held at December 31, 2019.

During the year ended December 31, 2019, there were no transfers between fair value Levels 1, 2 or 3.

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows for the year ended December 31, 2018:



		Pooled Trust Preferred Collateralized Debt Obligations			Other Investments		Other Assets			Total
	(dollars in thousands)
Balance, beginning of year		$	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		—			—		601			601
Issuances		—			—		—			—
Sales		(12,289		)	—		—			(12,289		)
Settlements		(19,341		)	—		(48		)	(19,389		)
Transfers from Level 3		—			—		—			—
Transfers into Level 3		—			—		—			—
Balance, end of year		$	—		$	1,670	$	2,696		$	4,366

Schedule of Assets Measured on Nonrecurring Basis

The tables below present the balances of assets measured at fair value on a nonrecurring basis at December 31 and total gains and losses realized on these assets during the year ended December 31:



	2019
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(dollars in thousands)
Impaired loans	$	—	$	12,267	$	17,518	$	29,785	$	(2,667	)
Other real estate owned	—		2,608		—		2,608		(196		)
Total Assets	$	—	$	14,875	$	17,518	$	32,393	$	(2,863	)



	2018
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(dollars in thousands)
Impaired loans	$	—	$	15,076	$	15,320	$	30,396	$	(1,778	)
Other real estate owned	—		4,035		—		4,035		(593		)
Total Assets	$	—	$	19,111	$	15,320	$	34,431	$	(2,371	)

Carrying Amounts and Fair Values of Financial Instruments

The following table presents carrying amounts and estimated fair values of First Commonwealth’s financial instruments at December 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	$	102,346	$	102,346	$	102,346	$	—	$	—
Interest-bearing deposits	19,510		19,510		19,510		—		—
Securities available for sale	902,292		902,292		—		902,292		—
Securities held to maturity	337,123		338,718		—		338,718		—
Other investments	16,761		16,761		—		15,091		1,670
Loans held for sale	15,989		15,989		—		15,989		—
Loans	6,189,148		6,393,872		—		12,267		6,381,605
Financial liabilities
Deposits	6,677,615		6,677,595		—		6,677,595		—
Short-term borrowings	201,853		201,151		—		201,151		—
Long-term debt	56,917		58,051		—		58,051		—
Subordinated debt	170,450		171,772		—		—		171,772
Capital lease obligation	6,815		6,815		—		6,815		—



	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		—
Long-term debt	7,551		7,720		—		7,720		—
Subordinated debt	170,288		168,067		—		—		168,067
Capital lease obligation	7,217		7,217		—		7,217		—