Leases Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

First Commonwealth has elected to apply certain practical expedients provided under ASU 2016-02 "Leases" (Topic 842) including (i) to not apply the requirements in the new standard to short-term leases (ii) to not reassess the lease classification for any expired or existing lease (iii) to account for lease and non-lease components separately (iv) to not reassess initial direct costs for any existing leases. The impact of this standard primarily relates to operating leases of certain real estate properties, including certain branch and ATM locations and office space. First Commonwealth has no material leasing arrangements for which it is the lessor of property or equipment.

The following table represents the unaudited Consolidated Statements of Condition classification of the Company’s right of use ("ROU") assets and lease liabilities, lease costs and other lease information.

					September 30, 2022			December 31, 2021
Balance sheet:
Operating lease asset classified as premises and equipment					$	41,637		$	40,550
Operating lease liability classified as other liabilities					46,023			44,801
	For the Three Months Ended				For the Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022			September 30, 2021
Income statement:
Operating lease cost classified as occupancy and equipment expense	$	1,259	$	1,545	$	3,727		$	4,281
Weighted average lease term, in years					14.10			14.36
Weighted average discount rate					3.28		%	3.34		%
Operating cash flows					$	1,245		$	1,190

The ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. First Commonwealth's lease agreements often include one or more options to renew at the Company's discretion. If we consider the renewal option to be reasonably certain, we include the extended term in the calculation of the ROU asset and lease liability.

First Commonwealth uses incremental borrowing rates when calculating the lease liability because the rate implicit in the lease is not readily determinable. The incremental borrowing rate used by First Commonwealth is an amortizing loan rate obtained from the Federal Home Loan Bank ("FHLB") of Pittsburgh. This rate is consistent with a collateralized borrowing rate and is available for terms similar to the lease payment schedules.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2022 were as follows (dollars in thousands):

For the twelve months ended:
September 30, 2023	$	4,983
September 30, 2024	4,820
September 30, 2025	4,705
September 30, 2026	4,262
September 30, 2027	4,040
Thereafter	36,183
Total future minimum lease payments	58,993
Less remaining imputed interest	12,970
Operating lease liability	$	46,023