Regulatory Restrictions and Capital Adequacy

12 Months Ended

Dec. 31, 2021

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, First Commonwealth became subject to regulatory risk-based capital rules adopted by the federal banking agencies implementing Basel III. The capital rules require First Commonwealth to maintain the following minimum capital levels:

•a minimum Tier I capital to risk-weighted assets of at least 6.0%, plus a capital conservation buffer of 2.5%, resulting in a required minimum ratio of 8.5%

•a minimum Common Equity Tier 1 to risk weighted assets of at least 4.5%, plus the capital conservation buffer of 2.5%, resulting in a required minimum ratio of 7%.

•a minimum Total Capital to risk weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum of 10.5%

•a minimum Leverage ratio, which is Tier 1 capital to adjusted average assets, of 4.0%

The capital conservation buffer may only include capital that qualifies as Common Equity Tier 1.

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, 2021, the Company had $71.3 million in PPP loans outstanding under the CARES Act. Because these loans are 100% guaranteed by the SBA, banking regulators confirmed that they have a zero percent risk weight under applicable risk-based capital rules. Additionally, a bank may exclude all PPP loans pledged as collateral to the Federal Reserve's PPP Facility from average total assets when calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPP Facility will be included. The PPP loans originated by the Company are included in our leverage ratio as of December 31, 2021, as we did not utilize the PPP Facility.

As of December 31, 2021 and 2020, 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 as set forth in the tables 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, 2021
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	1,071,965	14.64	%	$	768,723	10.50	%	$	732,118	10.00	%
First Commonwealth Bank	1,041,854		14.26		767,321		10.50		730,782		10.00
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	894,670	12.22	%	$	622,300	8.50	%	$	585,694	8.00	%
First Commonwealth Bank	864,559		11.83		621,165		8.50		584,626		8.00
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	894,670	9.73	%	$	367,656	4.00	%	$	459,570	5.00	%
First Commonwealth Bank	864,559		9.43		366,839		4.00		458,549		5.00
Common Equity Tier I to Risk Weighted Assets
First Commonwealth Financial Corporation	$	824,670	11.26	%	$	512,482	7.00	%	$	475,876	6.50	%
First Commonwealth Bank	864,559		11.83		511,547		7.00		475,008		6.50

	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, 2020
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	1,010,608	14.88	%	$	713,289	10.50	%	$	679,323	10.00	%
First Commonwealth Bank	974,911		14.36		712,995		10.50		679,043		10.00
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	827,231	12.18	%	$	577,424	8.50	%	$	543,458	8.00	%
First Commonwealth Bank	791,568		11.66		577,186		8.50		543,234		8.00
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	827,231	9.40	%	$	352,023	4.00	%	$	440,029	5.00	%
First Commonwealth Bank	791,568		9.01		351,244		4.00		439,055		5.00
Common Equity Tier I to Risk Weighted Assets
First Commonwealth Financial Corporation	$	757,231	11.15	%	$	475,526	7.00	%	$	441,560	6.50	%
First Commonwealth Bank	791,568		11.66		475,330		7.00		441,378		6.50