
	March 31, 2020										December 31, 2019
	Originated		Acquired		Total		Originated		Acquired		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,242,909	$	29,331	$	1,272,240	$	1,212,026	$	29,827	$	1,241,853
Real estate construction	408,234		5,224		413,458		442,777		6,262		449,039
Residential real estate	1,439,306		251,834		1,691,140		1,415,808		265,554		1,681,362
Commercial real estate	2,041,339		148,759		2,190,098		1,958,346		159,173		2,117,519
Loans to individuals	734,608		12,400		747,008		685,416		13,959		699,375
Total loans	$	5,866,396	$	447,548	$	6,313,944	$	5,714,373	$	474,775	$	6,189,148


Other Assets Especially Mentioned (OAEM)						Potential weaknesses that deserve management’s close attention. The potential weaknesses may result in deterioration of the repayment prospects or weaken the Company’s credit position at some future date. The credit risk may be relatively minor, yet constitute an undesirable risk in light of the circumstances surrounding the specific credit. No loss of principal or interest is expected.


Substandard						Well-defined weakness or a weakness that jeopardizes the repayment of the debt. A loan may be classified as substandard as a result of deterioration of the borrower’s financial condition and repayment capacity. Loans for which repayment plans have not been met or collateral equity margins do not protect the Company may also be classified as substandard.

The use of creditworthiness categories to grade loans permits management’s use of migration analysis to estimate a portion of credit risk. The Company’s internal creditworthiness grading system provides a measurement of credit risk based primarily on an evaluation of the borrower’s cash flow and collateral. Movement between these rating categories provides a predictive measure of credit losses and therefore assists in determining the appropriate level for the loan loss reserves. Category ratings are reviewed each quarter, at which time management analyzes the results, as well as other external statistics and factors related to loan performance. Loans that migrate towards higher risk rating levels generally have an increased risk of default, whereas loans that migrate toward lower risk ratings generally will result in a lower risk factor being applied to those related loan balances.


	March 31, 2020
	Commercial, financial, agricultural and other		Real estate construction		Residential real estate		Commercial real estate		Loans to individuals		Total
	(dollars in thousands)
Originated loans
Pass	$	1,183,879	$	408,210	$	1,431,760	$	2,001,296	$	734,333	$	5,759,478
Non-Pass
OAEM	21,674		24		466		3,847		7		26,018
Substandard	37,356		—		7,080		36,196		268		80,900
Doubtful	—		—		—		—		—		—
Total Non-Pass	59,030		24		7,546		40,043		275		106,918
Total	$	1,242,909	$	408,234	$	1,439,306	$	2,041,339	$	734,608	$	5,866,396

Acquired loans
Pass	$	27,330	$	4,679	$	249,022	$	143,512	$	12,388	$	436,931
Non-Pass
OAEM	211		545		528		—		—		1,284
Substandard	1,790		—		2,284		5,247		12		9,333
Doubtful	—		—		—		—		—		—
Total Non-Pass	2,001		545		2,812		5,247		12		10,617
Total	$	29,331	$	5,224	$	251,834	$	148,759	$	12,400	$	447,548


	December 31, 2019
	Commercial, financial, agricultural and other		Real estate construction		Residential real estate		Commercial real estate		Loans to individuals		Total
	(dollars in thousands)
Originated loans
Pass	$	1,171,363	$	442,751	$	1,406,845	$	1,918,690	$	685,108	$	5,624,757
Non-Pass
OAEM	29,359		26		475		13,533		—		43,393
Substandard	11,304		—		8,488		26,123		308		46,223
Doubtful	—		—		—		—		—		—
Total Non-Pass	40,663		26		8,963		39,656		308		89,616
Total	$	1,212,026	$	442,777	$	1,415,808	$	1,958,346	$	685,416	$	5,714,373

Acquired loans
Pass	$	27,696	$	5,697	$	262,630	$	153,814	$	13,947	$	463,784
Non-Pass
OAEM	2,009		565		537		2,072		—		5,183
Substandard	122		—		2,387		3,287		12		5,808
Doubtful	—		—		—		—		—		—
Total Non-Pass	2,131		565		2,924		5,359		12		10,991
Total	$	29,827	$	6,262	$	265,554	$	159,173	$	13,959	$	474,775

The credit quality of our loan portfolio can potentially represent significant risk to our earnings, capital and liquidity. First Commonwealth devotes substantial resources to managing this risk primarily through our credit administration department that develops and administers policies and procedures for underwriting, maintaining, monitoring and collecting loans. Credit administration is independent of lending departments and oversight is provided by the Credit Committee of the First Commonwealth Board of Directors.

Criticized loans have been evaluated when determining the appropriateness of the allowance for credit losses, which we believe is adequate to absorb losses inherent to the portfolio as of March 31, 2020. However, changes in economic conditions, interest rates, borrower financial condition, delinquency trends or previously established fair values of collateral factors could significantly change those judgmental estimates.

The following tables delineate the aging analysis of the recorded investments in past due loans as of March 31, 2020 and December 31, 2019. Also included in these tables are loans that are 90 days or more past due and still accruing because they are well-secured and in the process of collection.


	March 31, 2020
	30 - 59 days past due		60 - 89 days past due		90 days or greater and still accruing		Nonaccrual		Total past due and nonaccrual		Current		Total
	(dollars in thousands)
Originated loans
Commercial, financial, agricultural and other	$	417	$	71	$	28	$	7,154	$	7,670	$	1,235,239	$	1,242,909
Real estate construction	—		—		—		—		—		408,234		408,234
Residential real estate	3,350		1,036		506		6,160		11,052		1,428,254		1,439,306
Commercial real estate	375		66		31		34,021		34,493		2,006,846		2,041,339
Loans to individuals	3,145		885		720		267		5,017		729,591		734,608
Total	$	7,287	$	2,058	$	1,285	$	47,602	$	58,232	$	5,808,164	$	5,866,396

Acquired loans
Commercial, financial, agricultural and other	$	—	$	—	$	—	$	74	$	74	$	29,257	$	29,331
Real estate construction	—		—		—		—		—		5,224		5,224
Residential real estate	513		313		66		1,850		2,742		249,092		251,834
Commercial real estate	434		—		49		2,093		2,576		146,183		148,759
Loans to individuals	73		5		27		12		117		12,283		12,400
Total	$	1,020	$	318	$	142	$	4,029	$	5,509	$	442,039	$	447,548


	December 31, 2019
	30 - 59 days past due		60 - 89 days past due		90 days or greater and still accruing		Nonaccrual		Total past due and nonaccrual		Current		Total
	(dollars in thousands)
Originated loans
Commercial, financial, agricultural and other	$	391	$	57	$	140	$	8,780	$	9,368	$	1,202,658	$	1,212,026
Real estate construction	198		—		9		—		207		442,570		442,777
Residential real estate	3,757		749		736		6,646		11,888		1,403,920		1,415,808
Commercial real estate	227		114		—		6,609		6,950		1,951,396		1,958,346
Loans to individuals	4,070		1,020		931		307		6,328		679,088		685,416
Total	$	8,643	$	1,940	$	1,816	$	22,342	$	34,741	$	5,679,632	$	5,714,373

Acquired loans
Commercial, financial, agricultural and other	$	1	$	—	$	1	$	74	$	76	$	29,751	$	29,827
Real estate construction	—		—		—		—		—		6,262		6,262
Residential real estate	304		207		221		1,949		2,681		262,873		265,554
Commercial real estate	—		107		—		298		405		158,768		159,173
Loans to individuals	87		89		35		12		223		13,736		13,959
Total	$	392	$	403	$	257	$	2,333	$	3,385	$	471,390	$	474,775

The previous tables summarize nonaccrual loans by loan segment. The Company generally places loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain, when part of the principal balance has been charged off and no restructuring has occurred, or the loans reach a certain number of days past due. Generally, loans 90 days or more past due are placed on nonaccrual status, except for consumer loans, which are placed on nonaccrual status at 150 days past due.

When a loan is placed on nonaccrual, the accrued unpaid interest receivable is reversed against interest income and all future payments received are applied as a reduction to the loan principal. Generally, the loan is returned to accrual status when (a) all delinquent interest and principal becomes current under the terms of the loan agreement or (b) the loan is both well-secured and in the process of collection and collectability is no longer in doubt.

Management considers loans to be impaired when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Determination of impairment is treated the same across all loan categories. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole source for repayment of the loan is the operation or liquidation of collateral. When the loan is collateral dependent, the appraised value less estimated cost to sell is utilized. If management determines the value of the impaired loan is less than the recorded investment in the loan, impairment is recognized through an allowance estimate or a charge-off to the allowance. Troubled debt restructured loans on accrual status are also considered to be impaired loans.

Troubled debt restructured loans are those loans whose terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of the financial difficulties experienced by the borrower, who could not obtain comparable terms from alternate financing sources.

In March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. These modifications typically provide for the deferral of both principal and interest for 90 days. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), along with a joint agency statement issued by banking regulators,

provides that short-term modifications of up to 180 days made in response to COVID-19 do not need to be accounted for as a TDR. As of April 24, 2020, the Company has granted approximately 6,000 deferrals to its customers with aggregate principal balances of $1.1 billion.

When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received under the cash basis method.

The following tables include the recorded investment and unpaid principal balance for impaired loans with the associated allowance amount, if applicable, as of March 31, 2020 and December 31, 2019. Also presented are the average recorded investment in impaired loans and the related amount of interest recognized while the loan was considered impaired. Average balances are calculated using month-end balances of the loans for the period reported and are included in the table below based on their period-end allowance position.


	March 31, 2020										December 31, 2019
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(dollars in thousands)
Originated loans:
With no related allowance recorded:
Commercial, financial, agricultural and other	$	958	$	1,143			$	1,848	$	6,997
Real estate construction	—		—				—		—
Residential real estate	9,909		12,056				10,372		12,437
Commercial real estate	4,447		4,965				3,015		3,210
Loans to individuals	473		840				406		640
Subtotal	15,787		19,004				15,641		23,284
With an allowance recorded:
Commercial, financial, agricultural and other	7,469		14,780		$	2,727	8,290		10,032		$	1,580
Real estate construction	—		—		—		—		—		—
Residential real estate	255		358		—		474		498		1
Commercial real estate	31,451		31,484		6,868		5,293		5,308		851
Loans to individuals	—		—		—		—		—		—
Subtotal	39,175		46,622		9,595		14,057		15,838		2,432
Total	$	54,962	$	65,626	$	9,595	$	29,698	$	39,122	$	2,432


	March 31, 2020										December 31, 2019
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(dollars in thousands)
Acquired loans
With no related allowance recorded:
Commercial, financial, agricultural and other	$	74	$	74			$	73	$	73
Real estate construction	—		—				—		—
Residential real estate	2,000		2,468				2,136		2,585
Commercial real estate	245		261				298		320
Loans to individuals	12		15				12		15
Subtotal	2,331		2,818				2,519		2,993
With an allowance recorded:
Commercial, financial, agricultural and other	—		—		$	—	—		—		$	—
Real estate construction	—		—		—		—		—		—
Residential real estate	—		—		—		—		—		—
Commercial real estate	1,847		1,862		204		—		—		—
Loans to individuals	—		—		—		—		—		—
Subtotal	1,847		1,862		204		—		—		—
Total	$	4,178	$	4,680	$	204	$	2,519	$	2,993	$	—


	For the Three Months Ended March 31,
	2020														2019
	Originated Loans						Acquired Loans						Originated Loans				Acquired Loans
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
	(dollars in thousands)
With no related allowance recorded:
Commercial, financial, agricultural and other	$	925	$	4	$	74	$	—	$	2,707	$	13	$	439	$	—
Real estate construction	—		—		—		—		—		—		—		—
Residential real estate	10,529		78		2,090		2		10,798		72		1,981		1
Commercial real estate	4,086		22		229		—		3,994		36		982		1
Loans to individuals	445		3		12		—		324		1		14		—
Subtotal	15,985		107		2,405		2		17,823		122		3,416		2
With an allowance recorded:
Commercial, financial, agricultural and other	7,838		18		—		—		3,068		3		—		—
Real estate construction	—		—		—		—		—		—		—		—
Residential real estate	325		—		—		—		604		5		—		—
Commercial real estate	13,114		1		616		—		3,278		1		—		—
Loans to individuals	—		—		—		—		—		—		—		—
Subtotal	21,277		19		616		—		6,950		9		—		—
Total	$	37,262	$	126	$	3,021	$	2	$	24,773	$	131	$	3,416	$	2


	March 31, 2020		December 31, 2019
	(dollars in thousands)
Troubled debt restructured loans
Accrual status	$	7,509	$	7,542
Nonaccrual status	5,522		6,037
Total	$	13,031	$	13,579
Commitments
Letters of credit	$	60	$	60
Unused lines of credit	213		163
Total	$	273	$	223


	For the Three Months Ended March 31, 2020
		Type of Modification
	Number of Contracts	Extend Maturity		Modify Rate		Modify Payments		Total Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Specific Reserve
	(dollars in thousands)
Commercial, financial, agricultural and other	—	$	—	$	—	$	—	$	—	$	—	$	—

Residential real estate	2	—		—		118		118		117		—
Commercial real estate	2	—		—		12		12		12		—
Loans to individuals	8	—		18		129		147		144		—
Total	12	$	—	$	18	$	259	$	277	$	273	$	—


	For the Three Months Ended March 31, 2019
		Type of Modification
	Number of Contracts	Extend Maturity		Modify Rate		Modify Payments		Total Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Specific Reserve
	(dollars in thousands)
Commercial, financial, agricultural and other	1	$	—	$	—	$	61	$	61	$	62	$	—

Residential real estate	6	17		49		514		580		570		40
Commercial real estate	2	—		556		242		798		767		—
Loans to individuals	3	—		—		48		48		46		—
Total	12	$	17	$	605	$	865	$	1,487	$	1,445	$	40

The troubled debt restructurings included in the above tables are also included in the impaired loan tables provided earlier in this note. Loans defined as modified due to a change in rate may include loans that were modified for a change in rate as well as a re-amortization of the principal and an extension of the maturity. For the three months ended March 31, 2020 and 2019, $18 thousand and $0.6 million, respectively, of total rate modifications represent loans with modifications to the rate as well as

A troubled debt restructuring is considered to be in default when a restructured loan is 90 days or more past due. The following table provides information related to loans that were restructured within the past twelve months and that were considered to be in default during the three months ended March 31:


	For the Three Months Ended March 31, 2020
	Commercial, financial, agricultural and other		Real estate construction		Residential real estate		Commercial real estate		Loans to individuals		Total
	(dollars in thousands)
Allowance for credit losses:
Originated loans:
Beginning balance	$	20,221	$	2,558	$	4,091	$	19,731	$	4,984	$	51,585
Charge-offs	(486)		—		(552)		(265)		(2,483)		(3,786)
Recoveries	68		—		62		44		212		386
Provision (credit)	7,575		294		4,123		11,755		5,555		29,302
Ending balance	27,378		2,852		7,724		31,265		8,268		77,487
Acquired loans:
Beginning balance	13		—		2		37		—		52
Charge-offs	—		—		(25)		(1)		(136)		(162)
Recoveries	13		—		13		—		7		33
Provision (credit)	324		—		10		1,202		129		1,665
Ending balance	350		—		—		1,238		—		1,588
Total ending balance	$	27,728	$	2,852	$	7,724	$	32,503	$	8,268	$	79,075
Ending balance: individually evaluated for impairment	$	2,727	$	—	$	—	$	7,072	$	—	$	9,799
Ending balance: collectively evaluated for impairment	25,001		2,852		7,724		25,431		8,268		69,276
Loans:
Ending balance	1,272,240		413,458		1,691,140		2,190,098		747,008		6,313,944
Ending balance: individually evaluated for impairment	7,544		—		1,506		36,513		—		45,563
Ending balance: collectively evaluated for impairment	1,264,696		413,458		1,689,634		2,153,585		747,008		6,268,381