~~0000712537us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-09-30~~10-Qfalse2021-09-302021Q3FIRST COMMONWEALTH FINANCIAL CORP /PA/00007125371570112/3194,932,087FalseFalseFalseYesFalseTrue10.002.002.0050.0050.0010.001.461.4836.0036.00657—nononono0.10.10.1P3YP30Y

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


ý			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Pennsylvania		25-1428528
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

601 Philadelphia Street
Indiana	PA	15701
(Address of principal executive offices)		(Zip Code)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Smaller reporting company ☐ Emerging growth company ☐

Non-accelerated filer ¨ (Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

The number of shares outstanding of issuer’s common stock, $1.00 par value, as of November 5, ~~2020,~~2021, was ~~96,132,751.~~94,932,087.

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)~~

September 30, 2020 December 31, 2019
(dollars in thousands, except share data)
Assets
Cash and due from banks $ 97,060 $ 102,346
Interest-bearing bank deposits 283,037 19,510
Securities available for sale, at fair value 908,236 902,292
Securities held to maturity, at amortized cost (Fair value of $276,988 and $338,718 at September 30, 2020 and December 31,2019, respectively) 268,638 337,123
Other investments 12,966 16,761
Loans held for sale 37,998 15,989
Loans:
Portfolio loans 6,949,716 6,189,148
Allowance for credit losses (88,307) (51,637)
Net loans 6,861,409 6,137,511
Premises and equipment, net(1)
128,041 137,268
Other real estate owned 1,079 2,228
Goodwill 303,328 303,328
Amortizing intangibles, net 14,095 16,366
Bank owned life insurance 224,660 220,723
Other assets 148,819 97,328
Total assets $ 9,289,366 $ 8,308,773
Liabilities
Deposits (all domestic):
Noninterest-bearing $ 2,301,821 $ 1,690,247
Interest-bearing 5,402,086 4,987,368
Total deposits 7,703,907 6,677,615
Short-term borrowings 122,356 201,853
Subordinated debentures 170,572 170,450
Other long-term debt 56,424 56,917
Capital lease obligation 6,494 6,815
Total long-term debt 233,490 234,182
Other liabilities 156,782 139,458
Total liabilities 8,216,535 7,253,108
Shareholders’ Equity
Preferred stock, $1 par value per share, 3,000,000 shares authorized, none issued 0 0
Common stock, $1 par value per share, 200,000,000 shares authorized; 113,914,902 shares issued at September 30, 2020 and December 31, 2019, and 96,924,781 and 98,311,840 shares outstanding at September 30, 2020 and December 31, 2019, respectively 113,915 113,915
Additional paid-in capital 494,682 493,737
Retained earnings 592,704 577,348
Accumulated other comprehensive income, net 19,111 5,579
Treasury stock (16,990,121 and 15,603,062 shares at September 30, 2020 and December 31, 2019, respectively) (147,581) (134,914)
Total shareholders’ equity 1,072,831 1,055,665
Total liabilities and shareholders’ equity $ 9,289,366 $ 8,308,773

~~(1)September 30, 2020 balance includes $2.6 million in available for sale assets as a result of the branch consolidation initiative.~~

~~The accompanying notes are an integral part of these unaudited consolidated financial statements.~~

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data (Continued)~~

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME (Unaudited)~~FINANCIAL CONDITION (unaudited)

Per Share Data: Basic Earnings per Share

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The accompanying notes are an integral part of these unaudited consolidated financial statements.

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(dollars in thousands)
Net Income $ 19,186 $ 26,644 $ 47,764 $ 78,513
Other comprehensive (loss) income, before tax benefit (expense):
Unrealized holding (losses) gains on securities arising during the period (3,256) 3,152 22,069 22,055
Less: reclassification adjustment for gains on securities included in net income (20) (9) (47) (15)
Unrealized holding gains (losses) on derivatives arising during the period 225 (124) (4,892) 9
Total other comprehensive (loss) income, before tax benefit (expense) (3,051) 3,019 17,130 22,049
Income tax benefit (expense) related to items of other comprehensive (loss) income 640 (635) (3,598) (4,631)
Total other comprehensive (loss) income (2,411) 2,384 13,532 17,418
Comprehensive Income $ 16,775 $ 29,028 $ 61,296 $ 95,931
4

Per Share Data: Basic Earnings per Share

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~CHANGES IN SHAREHOLDERS’ EQUITY~~COMPREHENSIVE INCOME (Unaudited)

Shares
Outstanding Common
Stock Additional
Paid-in-
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss),
net Treasury
Stock Total
Shareholders’
Equity
(dollars in thousands, except share and per share data)
Balance at December 31, 2019 98,311,840 $ 113,915 $ 493,737 $ 577,348 $ 5,579 $ (134,914) $ 1,055,665
Net income 47,764 47,764
Other comprehensive income 13,532 13,532
Cash dividends declared ($0.33 per share) (32,408) (32,408)
Treasury stock acquired (1,638,812) (14,373) (14,373)
Treasury stock reissued 158,453 458 0 1,358 1,816
Restricted stock 93,300 0 487 0 348 835
Balance at September 30, 2020 96,924,781 $ 113,915 $ 494,682 $ 592,704 $ 19,111 $ (147,581) $ 1,072,831

Shares
Outstanding Common
Stock Additional
Paid-in-
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss),
net Treasury
Stock Total
Shareholders’
Equity
(dollars in thousands, except share and per share data)
Balance at December 31, 2018 98,518,668 $ 113,915 $ 492,273 $ 511,409 $ (11,341) $ (130,867) $ 975,389
Net income 78,513 78,513
Other comprehensive income 17,418 17,418
Cash dividends declared ($0.30 per share) (29,562) (29,562)
Treasury stock acquired (482,608) (6,200) (6,200)
Treasury stock reissued 205,021 1,014 0 1,729 2,743
Restricted stock 78,000 0 450 0 279 729
Balance at September 30, 2019 98,319,081 $ 113,915 $ 493,737 $ 560,360 $ 6,077 $ (135,059) $ 1,039,030


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(dollars in thousands)
Net Income	$	34,092	$	19,186	$	103,481	$	47,764
Other comprehensive (loss) income, before tax benefit (expense):
Unrealized holding (losses) gains on securities arising during the period	(4,025)		(3,256)		(18,122)		22,069

Less: reclassification adjustment for gains on securities included in net income	—		(20)		(16)		(47)
Unrealized holding (losses) gains on derivatives arising during the period	(529)		225		776		(4,892)

Total other comprehensive (loss) income, before tax benefit (expense)	(4,554)		(3,051)		(17,362)		17,130
Income tax benefit (expense) related to items of other comprehensive (loss) income	955		640		3,645		(3,598)
Total other comprehensive (loss) income	(3,599)		(2,411)		(13,717)		13,532
Comprehensive Income	$	30,493	$	16,775	$	89,764	$	61,296

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)



	Shares Outstanding	Common Stock		Additional Paid-in- Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), net		Treasury Stock		Total Shareholders’ Equity
	(dollars in thousands, except share and per share data)
Balance at June 30, 2021	96,201,628	$	113,915	$	495,899	$	644,362	$	7,115	$	(154,872)	$	1,106,419


Net income						34,092						34,092
Other comprehensive loss								(3,599)				(3,599)
Cash dividends declared ($0.115 per share)						(11,032)						(11,032)




Treasury stock acquired	(997,943)									(13,327)		(13,327)
Treasury stock reissued	—			—		—				—		—
Restricted stock	6,000	—		30		—				272		302

Balance at September 30, 2021	95,209,685	$	113,915	$	495,929	$	667,422	$	3,516	$	(167,927)	$	1,112,855

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

For the Nine Months Ended
September 30,
2020 2019
Operating Activities (dollars in thousands)
Net income $ 47,764 $ 78,513
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for credit losses 49,038 9,638
Deferred tax (benefit) expense (5,059) 2,613
Depreciation and amortization 8,676 7,777
Net gains on securities and other assets (12,608) (8,545)
Net amortization of premiums and discounts on securities 4,662 2,871
Income from increase in cash surrender value of bank owned life insurance (4,699) (4,405)
Increase in interest receivable (13,105) (110)
Mortgage loans originated for sale (287,196) (178,911)
Proceeds from sale of mortgage loans 281,424 173,961
Increase in interest payable 575 1,180
Decrease in income taxes payable (536) (556)
Other-net 1,888 (7,193)
Net cash provided by operating activities 70,824 76,833
Investing Activities
Transactions with securities held to maturity:
Proceeds from maturities and redemptions 76,841 35,163
Purchases (9,621) (200)
Transactions with securities available for sale:
Proceeds from maturities and redemptions 272,544 134,453
Purchases (282,461) (17,401)
Purchases of FHLB stock (21,903) (29,538)
Proceeds from the redemption of FHLB stock 25,698 50,103
Proceeds from bank owned life insurance 1,147 0
Proceeds from sale of loans 25,534 28,098
Proceeds from sale of other assets 4,875 5,390
Acquisition, net of cash acquired 0 332,465
Net increase in loans (798,377) (256,168)
Purchases of premises and equipment and other assets (6,570) (14,060)
Net cash (used in) provided by investing activities (712,293) 268,305
Financing Activities
Net decrease in federal funds purchased 0 (4,000)
Net decrease in other short-term borrowings (79,497) (634,088)
Net increase in deposits 1,026,580 308,976
Repayments of other long-term debt (493) (473)
Repayments of capital lease obligation (321) (300)
Proceeds from issuance of other long-term debt 0 50,000
Dividends paid (32,408) (29,562)
Proceeds from reissuance of treasury stock 222 211
Purchase of treasury stock (14,373) (6,200)
Net cash provided by (used in) financing activities 899,710 (315,436)
Net increase in cash and cash equivalents 258,241 29,702
Cash and cash equivalents at January 1 121,856 98,947
Cash and cash equivalents at September 30 $ 380,097 $ 128,649


	For the Nine Months Ended
	September 30,
	2021		2020
Operating Activities	(dollars in thousands)
Net income	$	103,481	$	47,764
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for credit losses	1,353		49,038
Deferred tax expense (benefit)	1,057		(5,059)
Depreciation and amortization	8,784		8,676
Net gains on securities and other assets	(17,093)		(12,608)
Net amortization of premiums and discounts on securities	3,693		4,662

Income from increase in cash surrender value of bank owned life insurance	(4,617)		(4,699)
Decrease (increase) in interest receivable	4,590		(13,105)
Mortgage loans originated for sale	(308,744)		(287,196)
Proceeds from sale of mortgage loans	338,115		281,424
Increase in interest payable	929		575
Increase (decrease) in income taxes payable	2,142		(536)

Other-net	(14,267)		1,888
Net cash provided by operating activities	119,423		70,824
Investing Activities
Transactions with securities held to maturity:
Proceeds from maturities and redemptions	89,698		76,841
Purchases	(337,054)		(9,621)
Transactions with securities available for sale:

Proceeds from maturities and redemptions	353,788		272,544
Purchases	(667,861)		(282,461)
Purchases of FHLB stock	(3,552)		(21,903)
Proceeds from the redemption of FHLB stock	3,060		25,698
Proceeds from bank owned life insurance	5,208		1,147
Proceeds from sale of loans	52,919		25,534
Proceeds from sale of other assets	6,620		4,875


Net increase in loans	(37,782)		(798,377)

Purchases of premises and equipment and other assets	(6,056)		(6,570)
Net cash used in investing activities	(541,012)		(712,293)
Financing Activities

Net increase (decrease) in other short-term borrowings	381		(79,497)
Net increase in deposits	497,915		1,026,580
Repayments of other long-term debt	(50,512)		(493)
Repayments of capital lease obligation	(346)		(321)



Dividends paid	(32,673)		(32,408)
Proceeds from reissuance of treasury stock	222		222
Purchase of treasury stock	(15,305)		(14,373)

Net cash provided by financing activities	399,682		899,710
Net (decrease) increase in cash and cash equivalents	(21,907)		258,241
Cash and cash equivalents at January 1	356,581		121,856
Cash and cash equivalents at September 30	$	334,674	$	380,097

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Basis of Presentation

The accounting and reporting policies of First Commonwealth Financial Corporation and its subsidiaries (“First Commonwealth” or the “Company”) conform with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual realized amounts could differ from those estimates. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of First Commonwealth’s financial position, results of operations, comprehensive income, cash flows and changes in shareholders’ equity as of and for the periods presented. Certain information and Note disclosures normally included in Consolidated Financial Statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold and interest-bearing bank deposits. Generally, federal funds are sold for one-day periods.

The results of operations for the nine months ended September 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the full year of ~~2020.~~2021. These interim financial statements should be read in conjunction with First Commonwealth’s ~~2019~~2020 Annual Report on Form 10-K.

Note 2 ~~Acquisition~~

~~Santander Branch Acquisition~~

On September 6, 2019, the Company's banking subsidiary, First Commonwealth Bank, completed its acquisition of 14 full service branches from Santander Bank N.A. ("Santander") receiving $329.5 million in cash. This acquisition further expands the Company's market into State College, Lock Haven, Williamsport and Lewisburg, Pennsylvania and included the purchase of $101.2 million in loans and $471.4 million in deposits.

The table below summarizes the final purchase price allocation and the net assets acquired (at fair value) and consideration transferred in connection with the Santander acquisition (dollars in thousands):


~~Consideration received~~
~~Cash received~~	$	~~329,533~~

~~Total consideration received~~			$	~~329,533~~

~~Fair Value of Assets Acquired~~
~~Cash and cash equivalents~~	~~2,935~~


~~Loans~~	~~99,956~~
~~Premises and other equipment~~	~~3,637~~
~~Core deposit intangible~~	~~5,615~~


~~Other assets~~	~~770~~
~~Total assets acquired~~	~~112,913~~

~~Fair Value of Liabilities Assumed~~

~~Deposits~~	~~471,386~~

~~Other Liabilities~~	~~186~~
~~Total liabilities assumed~~	~~471,572~~

~~Total Fair Value of Identifiable Net Assets~~			~~(358,659)~~
~~Goodwill~~			$	~~29,126~~

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The Company determined that this acquisition constitutes a business combination as defined in FASB ASC Topic 805, “Business Combinations.” Accordingly, as of the date of the acquisition, the Company recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. At the date of acquisition, none of the loans were accounted for under the guidance of ASC Topic 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality.” The fair value of acquired loans and certificate of deposits is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. The $100.0 million fair value of acquired loans is the result of $101.2 million in loans acquired from Santander and the recognition of a net combined yield and credit mark adjustment of $1.2 million. The $471.4 million fair value of acquired deposits is the result of $471.0 million in deposits acquired and the recognition of a yield mark adjustment of $0.4 million on the certificate of deposits. A $5.6 million core deposit intangible was recognized for core deposits acquired.

The goodwill of $29.1 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with the branches acquired from Santander. The goodwill for this transaction is expected to be deducted over a 15-year period for income tax purposes.

~~Costs related to the acquisition totaled $3.7 million. These amounts were expensed as incurred and are recorded as a merger and acquisition related expense in the Consolidated Statements of Income.~~

~~Note 3~~ Supplemental Comprehensive Income Disclosures

The following table identifies the related tax effects allocated to each component of other comprehensive income (“OCI”) in the unaudited Consolidated Statements of Comprehensive Income. Reclassification adjustments related to securities available for sale are included in the "Net securities gains" line and reclassification adjustments related to losses on derivatives are included in the "Other operating" line in the unaudited Consolidated Statements of Income.

For the Nine Months Ended September 30,
2020 2019
Pretax Amount Tax (Expense) Benefit Net of Tax Amount Pretax Amount Tax (Expense) Benefit Net of Tax Amount
(dollars in thousands)
Unrealized gains on securities:
Unrealized holding gains on securities arising during the period $ 22,069 $ (4,635) $ 17,434 $ 22,055 $ (4,632) $ 17,423
Reclassification adjustment for gains on securities included in net income (47) 10 (37) (15) 3 (12)
Total unrealized gains on securities 22,022 (4,625) 17,397 22,040 (4,629) 17,411
Unrealized (losses) gains on derivatives:
Unrealized holding (losses) gains on derivatives arising during the period (4,892) 1,027 (3,865) 9 (2) 7
Reclassification adjustment for losses on derivatives included in net income 0 0 0 0 0 0
Total unrealized (losses) gains on derivatives (4,892) 1,027 (3,865) 9 (2) 7
Total other comprehensive income $ 17,130 $ (3,598) $ 13,532 $ 22,049 $ (4,631) $ 17,418


	For the Nine Months Ended September 30,
	2021						2020
	Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount		Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount
	(dollars in thousands)
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains on securities arising during the period	$	(18,122)	$	3,805	$	(14,317)	$	22,069	$	(4,635)	$	17,434

Reclassification adjustment for gains on securities included in net income	(16)		3		(13)		(47)		10		(37)
Total unrealized (losses) gains on securities	(18,138)		3,808		(14,330)		22,022		(4,625)		17,397
Unrealized gains (losses) on derivatives:
Unrealized holding gains (losses) on derivatives arising during the period	776		(163)		613		(4,892)		1,027		(3,865)
Reclassification adjustment for losses on derivatives included in net income	—		—		—		—		—		—
Total unrealized gains (losses) on derivatives	776		(163)		613		(4,892)		1,027		(3,865)




Total other comprehensive (loss) income	$	(17,362)	$	3,645	$	(13,717)	$	17,130	$	(3,598)	$	13,532

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30,
2020 2019
Pretax Amount Tax (Expense) Benefit Net of Tax Amount Pretax Amount Tax (Expense) Benefit Net of Tax Amount
(dollars in thousands)
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains on securities arising during the period $ (3,256) $ 684 $ (2,572) $ 3,152 $ (663) $ 2,489
Reclassification adjustment for gains on securities included in net income (20) 4 (16) (9) 2 (7)
Total unrealized (losses) gains on securities (3,276) 688 (2,588) 3,143 (661) 2,482
Unrealized gains (losses) on derivatives:
Unrealized holding gains (losses) on derivatives arising during the period 225 (48) 177 (124) 26 (98)
Reclassification adjustment for losses on derivatives included in net income 0 0 0 0 0 0
Total unrealized gains (losses) on derivatives 225 (48) 177 (124) 26 (98)
Total other comprehensive (loss) income $ (3,051) $ 640 $ (2,411) $ 3,019 $ (635) $ 2,384



	For the Three Months Ended September 30,
	2021						2020
	Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount		Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount
	(dollars in thousands)
Unrealized losses on securities:
Unrealized holding losses on securities arising during the period	$	(4,025)	$	844	$	(3,181)	$	(3,256)	$	684	$	(2,572)

Reclassification adjustment for gains on securities included in net income	—		—		—		(20)		4		(16)
Total unrealized losses on securities	(4,025)		844		(3,181)		(3,276)		688		(2,588)
Unrealized (losses) gains on derivatives:
Unrealized holding (losses) gains on derivatives arising during the period	(529)		111		(418)		225		(48)		177
Reclassification adjustment for losses on derivatives included in net income	—		—		—		—		—		—
Total unrealized (losses) gains on derivatives	(529)		111		(418)		225		(48)		177




Total other comprehensive loss	$	(4,554)	$	955	$	(3,599)	$	(3,051)	$	640	$	(2,411)

The following table details the change in components of OCI for the nine months ended September 30:

2020 2019
Securities Available for Sale Post-Retirement Obligation Derivatives Accumulated Other Comprehensive Income (Loss) Securities Available for Sale Post-Retirement Obligation Derivatives Accumulated Other Comprehensive Income (Loss)
(dollars in thousands)
Balance at December 31 $ 4,580 $ 365 $ 634 $ 5,579 $ (11,697) $ 461 $ (105) $ (11,341)
Other comprehensive income before reclassification adjustment 17,434 0 (3,865) 13,569 17,423 0 7 17,430
Amounts reclassified from accumulated other comprehensive (loss) income (37) 0 0 (37) (12) 0 0 (12)
Net other comprehensive income during the period 17,397 0 (3,865) 13,532 17,411 0 7 17,418
Balance at September 30 $ 21,977 $ 365 $ (3,231) $ 19,111 $ 5,714 $ 461 $ (98) $ 6,077

The following table details the change in components of OCI for the three months ended September 30:




	2021								2020
	Securities Available for Sale		Post-Retirement Obligation		Derivatives		Accumulated Other Comprehensive Income (Loss)		Securities Available for Sale		Post-Retirement Obligation		Derivatives		Accumulated Other Comprehensive Income (Loss)
	(dollars in thousands)
Balance at June 30	$	9,161	$	(182)	$	(1,864)	$	7,115	$	24,565	$	365	$	(3,408)	$	21,522


Other comprehensive loss before reclassification adjustment	(3,181)		—		(418)		(3,599)		(2,572)		—		177		(2,395)
Amounts reclassified from accumulated other comprehensive (loss) income	—		—		—		—		(16)		—		—		(16)
Net other comprehensive loss during the period	(3,181)		—		(418)		(3,599)		(2,588)		—		177		(2,411)
Balance at September 30	$	5,980	$	(182)	$	(2,282)	$	3,516	$	21,977	$	365	$	(3,231)	$	19,111

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 43 Supplemental Cash Flow Disclosures

The following table presents information related to cash paid during the period for interest and income taxes, as well as detail on non-cash investing and financing activities for the nine months ended September 30:


	2021		2020
	(dollars in thousands)
Cash paid during the period for:
Interest	$	11,039	$	26,687
Income taxes	22,374		16,207
Non-cash investing and financing activities:

Loans transferred to other real estate owned and repossessed assets	2,533		3,206
Loans transferred from held to maturity to held for sale	55,700		27,391

Loans transferred from available for sale to held to maturity	—		1,908
Gross (decrease) increase in market value adjustment to securities available for sale	(18,138)		22,022
Gross increase (decrease) in market value adjustment to derivatives	776		(4,892)
Investments committed to purchase, not settled	—		22,644
Increase in limited partnership investment unfunded commitment	6,929		—
Noncash treasury stock reissuance	2,042		1,594

Unsettled treasury stock repurchases	680		—
Proceeds from death benefit on bank owned life insurance not received	(384)		(384)

2020 2019
(dollars in thousands)
Cash paid during the period for:
Interest $ 26,687 $ 42,195
Income taxes 16,207 16,994
Non-cash investing and financing activities:
Loans transferred to other real estate owned and repossessed assets 3,206 2,754
Loans transferred from held to maturity to held for sale 27,391 21,620
Loans transferred from available for sale to held to maturity 1,908 0
Gross increase in market value adjustment to securities available for sale 22,022 22,041
Gross (decrease) increase in market value adjustment to derivatives (4,892) 9
Investments committed to purchase, not settled 22,644 0
Noncash treasury stock reissuance 1,594 2,531
Net (liabilities) assets acquired through acquisition 0 (361,895)
Proceeds from death benefit on bank owned life insurance not received (384) 486

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 54 Earnings per Share

The following table summarizes the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computations:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Weighted average common shares issued	113,914,902		113,914,902		113,914,902		113,914,902
Average treasury stock shares	(18,103,611)		(15,821,469)		(17,840,694)		(15,761,114)
Average deferred compensation shares	(55,615)		(45,454)		(55,581)		(41,790)
Average unearned nonvested shares	(139,255)		(130,883)		(134,759)		(121,249)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share	95,616,421		97,917,096		95,883,868		97,990,749
Additional common stock equivalents (nonvested stock) used to calculate diluted earnings per share	220,268		197,545		191,119		188,255
Additional common stock equivalents (deferred compensation) used to calculate diluted earnings per share	55,615		45,502		55,615		45,502

Weighted average common shares and common stock equivalents used to calculate diluted earnings per share	95,892,304		98,160,143		96,130,602		98,224,506
Basic Earnings per Share	$	0.36	$	0.20	$	1.08	$	0.49
Diluted Earnings per Share	$	0.36	$	0.20	$	1.08	$	0.49

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
Weighted average common shares issued 113,914,902 113,914,902 113,914,902 113,914,902
Average treasury stock shares (15,821,469) (15,496,941) (15,761,114) (15,396,215)
Average deferred compensation shares (45,454) (37,411) (41,790) (37,411)
Average unearned nonvested shares (130,883) (113,321) (121,249) (117,737)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share 97,917,096 98,267,229 97,990,749 98,363,539
Additional common stock equivalents (nonvested stock) used to calculate diluted earnings per share 197,545 243,258 188,255 214,837
Additional common stock equivalents (deferred compensation) used to calculate diluted earnings per share 45,502 37,411 45,502 37,411
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share 98,160,143 98,547,898 98,224,506 98,615,787
Per Share Data: Basic Earnings per Share $ 0.20 $ 0.27 $ 0.49 $ 0.80
Diluted Earnings per Share $ 0.20 $ 0.27 $ 0.49 $ 0.80

The following table shows the number of shares and the price per share related to common stock equivalents that were not included in the computation of diluted earnings per share for the nine months ended September 30 because to do so would have been antidilutive.

2020 2019
Price Range Price Range
Shares From To Shares From To
Restricted Stock 110,068 $ 13.72 $ 15.44 95,054 $ 12.99 $ 15.44
Restricted Stock Units 102,844 $ 12.43 $ 15.37 24,782 $ 16.62 $ 16.62

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


	2021					2020
		Price Range					Price Range
	Shares	From		To		Shares	From		To

Restricted Stock	111,589	$	12.77	$	14.58	110,068	$	13.72	$	15.44
Restricted Stock Units	29,547	$	16.41	$	16.41	102,844	$	12.43	$	15.37

Note 65 Commitments and Contingent Liabilities

Commitments and Letters of Credit

Standby letters of credit and commercial letters of credit are conditional commitments issued by First Commonwealth to guarantee the performance of a customer to a third party. The contract or notional amount of these instruments reflects the maximum amount of future payments that First Commonwealth could be required to pay under the guarantees if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from collateral held or pledged. In addition, many of these commitments are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements.

The following table identifies the notional amount of those instruments at:

September 30, 2020 December 31, 2019
(dollars in thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit $ 2,080,476 $ 1,981,275
Financial standby letters of credit 13,879 16,630
Performance standby letters of credit 17,914 23,293
Commercial letters of credit 470 783


	September 30, 2021		December 31, 2020
	(dollars in thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	2,270,058	$	2,097,628
Financial standby letters of credit	15,914		15,988
Performance standby letters of credit	11,233		16,864
Commercial letters of credit	975		783

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The notional amounts outstanding as of September 30, ~~2020~~2021 include amounts issued in ~~2020~~2021 of ~~$245 thousand~~$2.5 million in performance standby letters of credit and ~~$641 thousand~~$0.1 million in financial standby letters of credit. There were 0no commercial letters of credit issued in ~~2020.~~2021, however there was a change in terms for one letter of credit which increased its commitment amount. A liability of $0.1 million has been recorded as of both September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, which represents the estimated fair value of letters of credit issued. The fair value of letters of credit is estimated based on the unrecognized portion of fees received at the time the commitment was issued.

Unused commitments and letters of credit provide exposure to future credit loss in the event of nonperformance by the borrower or guaranteed parties. Management’s evaluation of the credit risk related to these commitments resulted in the recording of a liability of ~~$3.4~~$6.4 million and ~~$4.5~~$7.4 million as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. This liability is reflected in "Other liabilities" in the unaudited Consolidated Statements of Financial Condition. The credit risk evaluation ~~incorporated probability~~incorporates the expected loss percentage calculated for comparable loan categories as part of ~~default, loss given default and~~the allowance for credit losses for loans as well as estimated utilization for ~~the next twelve months for~~ each loan ~~category and the letters of credit.~~category.

Legal Proceedings

First Commonwealth and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. As of September 30, ~~2020,~~2021, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against First Commonwealth or its subsidiaries will be material to First Commonwealth’s consolidated financial position. On at least a quarterly basis, First Commonwealth assesses its liabilities and contingencies in connection with such legal proceedings. For those matters where it is probable that First Commonwealth will incur losses and the amounts of the losses can be reasonably estimated, First Commonwealth records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability (if any), is between $0 and $1 million. Although First Commonwealth does not believe that the outcome of pending litigation will be material to First Commonwealth’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations and cash flows for a particular reporting period in the future.

First Commonwealth Bank was named a defendant in an action that commenced on October 14, 2020 in the Court of Common Pleas of Allegheny County, Pennsylvania. The plaintiffs allege that the Bank violated the Pennsylvania Commercial Code by failing to provide accurate and complete notices of repossession and post-sale notices to certain Pennsylvania customers whose motor vehicles were repossessed and later sold at public sales. Plaintiffs seek to pursue the action as a statewide class action on behalf of themselves and other allegedly similarly situated defaulting borrowers who had their motor vehicles repossessed and seeks to recover statutory damages. The Bank intends to vigorously defend the plaintiffs’ claims and any request for class

1314

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

certification. The plaintiffs have not made any formal or specific financial demand and due to the preliminary status of this case any possible loss cannot be reasonably estimated at this time and is not included in the range set forth in the preceding paragraph.

Note 76 Investment Securities

Securities Available for Sale

Below is an analysis of the amortized cost and estimated fair values of securities available for sale at:

September 30, 2020 December 31, 2019
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair Value Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair Value
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential $ 6,778 $ 763 $ 0 $ 7,541 $ 7,745 $ 596 $ 0 $ 8,341
Mortgage-Backed Securities – Commercial 209,175 9,377 0 218,552 186,316 2,983 (166) 189,133
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 527,570 15,977 (4) 543,543 660,777 4,113 (2,943) 661,947
Other Government-Sponsored Enterprises 100,993 2 (2) 100,993 1,000 0 0 1,000
Obligations of States and Political Subdivisions 12,965 208 (6) 13,167 17,738 171 0 17,909
Corporate Securities 22,935 1,505 0 24,440 22,919 1,043 0 23,962
Total Securities Available for Sale $ 880,416 $ 27,832 $ (12) $ 908,236 $ 896,495 $ 8,906 $ (3,109) $ 902,292


	September 30, 2021								December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential	$	5,448	$	534	$	—	$	5,982	$	6,492	$	738	$	—	$	7,230
Mortgage-Backed Securities – Commercial	390,566		4,588		(1,447)		393,707		182,823		8,357		—		191,180
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	682,677		9,296		(6,547)		685,426		481,109		14,924		—		496,033

Other Government-Sponsored Enterprises	1,000		—		(9)		991		100,996		2		—		100,998
Obligations of States and Political Subdivisions	9,586		105		(81)		9,610		11,154		243		—		11,397
Corporate Securities	28,107		1,173		(40)		29,240		22,941		1,444		—		24,385



Total Securities Available for Sale	$	1,117,384	$	15,696	$	(8,124)	$	1,124,956	$	805,515	$	25,708	$	—	$	831,223

Mortgage-backed securities include mortgage-backed obligations of U.S. Government agencies and obligations of U.S. Government-sponsored enterprises. These obligations have contractual maturities ranging from less than one year to approximately 30 years,, with lower anticipated lives to maturity due to prepayments. All mortgage-backed securities contain a certain amount of risk related to the uncertainty of prepayments of the underlying mortgages. Interest rate changes have a direct impact upon prepayment speeds; therefore, First Commonwealth uses computer simulation models to test the average life and yield volatility of all mortgage-backed securities under various interest rate scenarios to monitor the potential impact on earnings and interest rate risk positions.

Expected maturities will differ from contractual maturities because issuers may have the right to call or repay obligations with or without call or prepayment penalties. Other fixed income securities within the portfolio also contain prepayment risk.

1415

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The amortized cost and estimated fair value of debt securities available for sale at September 30, ~~2020,~~2021, by contractual maturity, are shown below.

Amortized
Cost Estimated
Fair Value
(dollars in thousands)
Due within 1 year $ 104,991 $ 105,041
Due after 1 but within 5 years 20,225 21,260
Due after 5 but within 10 years 7,127 7,749
Due after 10 years 4,550 4,550
136,893 138,600
Mortgage-Backed Securities (a) 743,523 769,636
Total Debt Securities $ 880,416 $ 908,236


	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	5,000	$	5,027
Due after 1 but within 5 years	13,872		14,498
Due after 5 but within 10 years	19,821		20,316
Due after 10 years	—		—
	38,693		39,841
Mortgage-Backed Securities (a)	1,078,691		1,085,115
Total Debt Securities	$	1,117,384	$	1,124,956

(a)Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds. Mortgage-Backed Securities include an amortized cost of ~~$216.0~~$396.0 million and a fair value of ~~$226.1~~$399.7 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of ~~$527.6~~$682.7 million and a fair value of ~~$543.5~~$685.4 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

Proceeds from sales, gross gains (losses) realized on sales ~~maturities~~ and ~~other-than-temporary impairment charges~~maturities related to securities held to maturity and securities available for sale were as follows for the nine months ended September 30:

2020 2019
(dollars in thousands)
Proceeds from sales $ 0 $ 0
Gross gains (losses) realized:
Sales transactions:
Gross gains $ 0 $ 0
Gross losses 0 0
0 0
Maturities
Gross gains 47 15
Gross losses 0 0
47 15
Net gains and impairment $ 47 $ 15


	2021		2020
	(dollars in thousands)
Proceeds from sales	$	—	$	—
Gross gains (losses) realized:
Sales transactions:
Gross gains	$	—	$	—
Gross losses	—		—
	—		—
Maturities
Gross gains	16		47
Gross losses	—		—

	16		47
Net gains	$	16	$	47

Securities available for sale with an estimated fair value of ~~$865.1~~$802.2 million and ~~$584.8~~$792.1 million were pledged as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, to secure public deposits and for other purposes required or permitted by law.

1516

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Securities Held to Maturity

Below is an analysis of the amortized cost and fair values of debt securities held to maturity at:


	September 30, 2021								December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential	$	2,432	$	125	$	—	$	2,557	$	2,766	$	138	$	—	$	2,904
Mortgage-Backed Securities- Commercial	96,228		590		(834)		95,984		36,799		1,441		—		38,240
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	387,399		3,832		(4,303)		386,928		277,351		5,389		(10)		282,730
Mortgage-Backed Securities – Commercial	7,927		235		—		8,162		9,737		344		—		10,081
Other Government-Sponsored Enterprises	21,825		—		(726)		21,099		—		—		—		—
Obligations of States and Political Subdivisions	31,246		461		(94)		31,613		34,391		705		—		35,096
Debt Securities Issued by Foreign Governments	1,000		—		—		1,000		800		—		—		800




Total Securities Held to Maturity	$	548,057	$	5,243	$	(5,957)	$	547,343	$	361,844	$	8,017	$	(10)	$	369,851

September 30, 2020 December 31, 2019
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair Value Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair Value
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential $ 2,937 $ 151 $ 0 $ 3,088 $ 3,392 $ 57 $ 0 $ 3,449
Mortgage-Backed Securities- Commercial 41,334 1,537 0 42,871 51,291 18 (184) 51,125
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 171,100 5,646 (19) 176,727 229,667 1,377 (294) 230,750
Mortgage-Backed Securities – Commercial 10,334 375 0 10,709 12,081 67 0 12,148
Obligations of States and Political Subdivisions 42,133 661 (1) 42,793 40,092 554 0 40,646
Debt Securities Issued by Foreign Governments 800 0 0 800 600 0 0 600
Total Securities Held to Maturity $ 268,638 $ 8,370 $ (20) $ 276,988 $ 337,123 $ 2,073 $ (478) $ 338,718

The amortized cost and estimated fair value of debt securities held to maturity at September 30, ~~2020,~~2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

Amortized
Cost Estimated
Fair Value
(dollars in thousands)
Due within 1 year $ 4,949 $ 4,974
Due after 1 but within 5 years 11,195 11,310
Due after 5 but within 10 years 19,760 20,232
Due after 10 years 7,029 7,077
42,933 43,593
Mortgage-Backed Securities (a) 225,705 233,395
Total Debt Securities $ 268,638 $ 276,988


	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	1,800	$	1,807
Due after 1 but within 5 years	5,568		5,616
Due after 5 but within 10 years	43,207		42,769
Due after 10 years	3,496		3,520
	54,071		53,712
Mortgage-Backed Securities (a)	493,986		493,631
Total Debt Securities	$	548,057	$	547,343

(a)Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds. Mortgage-Backed Securities include an amortized cost of ~~$44.3~~$98.7 million and a fair value of ~~$46.0~~$98.5 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of ~~$181.4~~$395.3 million and a fair value of ~~$187.4~~$395.1 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

Securities held to maturity with an amortized cost of ~~$257.6~~$334.5 million and ~~$306.8~~$228.1 million were pledged as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, to secure public deposits and for other purposes required or permitted by law.

Other Investments

As a member of the Federal Home Loan Bank ("FHLB"), First Commonwealth is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. The level of stock required to be held is dependent on the amount of First Commonwealth's mortgage-related assets and outstanding borrowings with the FHLB. This stock is restricted in that it can ~~only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these~~

1617

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our FHLB stock totaled ~~$11.3~~$11.0 million and ~~$15.1~~$10.6 million, respectively, and is included in “Other investments” on the unaudited Consolidated Statements of Financial Condition.

FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. First Commonwealth evaluates impairment quarterly and has concluded that the par value of its investment in FHLB stock will be recovered. Accordingly, no impairment charge was recorded on these securities during the three and nine months ended September 30, ~~2020.~~2021.

As of both September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, "Other investments" also includes $1.7 million in equity securities. These securities do not have a readily determinable fair value and are carried at cost. During the nine-months ended September 30, ~~2020~~2021 and ~~2019,~~2020, there were 0no gains or losses recognized through earnings on equity securities. On a quarterly basis, management evaluates equity securities by reviewing the severity and duration of decline in estimated fair value, research reports, analysts’ recommendations, credit rating changes, news stories, annual reports, regulatory filings, impact of interest rate changes and other relevant information.

Impairment of Investment Securities

~~As required by FASB ASC Topic 320, “Investments – Debt~~We review our investment portfolio on a quarterly basis for indications of impairment. For available for sale securities, the

review includes analyzing the financial condition and ~~Equity Securities,” credit-related other-than-temporary~~near-term prospects of the issuer, including any specific events which

may influence the operations of the issuer and whether we are more likely than not to sell the security. We evaluate whether we

are more likely than not to sell debt securities based upon our investment strategy for the particular type of security and our

cash flow needs, liquidity position, capital adequacy, tax position and interest rate risk position. Held-to-maturity securities are

evaluated for impairment on ~~debt securities~~a quarterly basis using historical probability of default and loss given default information specific

to the investment category. If this evaluation determines that credit losses exist an allowance for credit loss is ~~recognized~~recorded and

included in earnings while non-credit related other-than-temporary impairment on debt securities not expected to be sold is recognized in OCI. During the nine months ended September 30, 2020 and 2019, 0 other-than-temporary impairment charges were recognized.as a component of credit loss expense.

First Commonwealth utilizes the specific identification method to determine the net gain or loss on debt securities and the average cost method to determine the net gain or loss on equity securities.

We review our investment portfolio on a quarterly basis for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and whether we are more likely than not to sell, or be required to sell, the security. We evaluate whether we are more likely than not to sell debt securities based upon our investment strategy for the particular type of security, our cash flow needs, liquidity position, capital adequacy, tax position and interest rate risk position. In addition, the risk of future other-than-temporary impairment may be influenced by weakness in the U.S. economy or changes in real estate values.

The following table presents the gross unrealized losses and estimated fair values at September 30, ~~2020~~2021 for both available for sale and held to maturity securities by investment category and time frame for which securities have been in a continuous unrealized loss position:

Less Than 12 Months 12 Months or More Total
Estimated
Fair Value Gross
Unrealized
Losses Estimated
Fair Value Gross
Unrealized
Losses Estimated
Fair Value Gross
Unrealized
Losses
(dollars in thousands)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential $ 10,777 $ (23) $ 0 $ 0 $ 10,777 $ (23)
Other Government-Sponsored Enterprises 998 (2) 0 0 998 (2)
Obligations of States and Political Subdivisions 2,207 (7) — — 2,207 (7)
Total Securities $ 13,982 $ (32) $ 0 $ 0 $ 13,982 $ (32)


	Less Than 12 Months				12 Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(dollars in thousands)
Obligations of U.S. Government Agencies:

Mortgage-Backed Securities – Commercial	$	213,203	$	(2,281)	$	—	$	—	$	213,203	$	(2,281)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	640,235		(10,850)		—		—		640,235		(10,850)

Other Government-Sponsored Enterprises	22,090		(735)		—		—		22,090		(735)
Obligations of States and Political Subdivisions	13,798		(175)		—		—		13,798		(175)

Corporate Securities	5,111		(40)		—		—		5,111		(40)



Total Securities	$	894,437	$	(14,081)	$	—	$	—	$	894,437	$	(14,081)

At September 30, ~~2020,~~2021, fixed income securities issued by the U.S. Government and U.S. Government-sponsored enterprises comprised ~~78%~~98% of total unrealized losses due to changes in market interest rates. At September 30, ~~2020,~~2021, there are 1052 debt securities in an unrealized loss position.

1718

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the gross unrealized losses and estimated fair values at December 31, ~~2019~~2020 by investment category and time frame for which securities have been in a continuous unrealized loss position:

Less Than 12 Months 12 Months or More Total
Estimated
Fair Value Gross
Unrealized
Losses Estimated
Fair Value Gross
Unrealized
Losses Estimated
Fair Value Gross
Unrealized
Losses
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Commercial $ 54,501 $ (201) $ 16,365 $ (149) $ 70,866 $ (350)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 111,969 (436) 219,015 (2,801) 330,984 (3,237)
Total Securities $ 166,470 $ (637) $ 235,380 $ (2,950) $ 401,850 $ (3,587)


	Less Than 12 Months				12 Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(dollars in thousands)



Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	$	3,755	$	(10)	$	—	$	—	$	3,755	$	(10)





Total Securities	$	3,755	$	(10)	$	—	$	—	$	3,755	$	(10)

As of September 30, ~~2020,~~2021, our corporate securities had an amortized cost and an estimated fair value of ~~$22.9~~$28.1 million and ~~$24.4~~$29.2 million, respectively. As of December 31, ~~2019,~~2020, our corporate securities had an amortized cost and estimated fair value of $22.9 million and ~~$24.0~~$24.4 million, respectively. Corporate securities are comprised of debt issued by large regional banks. There ~~were 0~~was 1 corporate ~~securities~~security in an unrealized loss position as of ~~both~~ September 30, ~~2020~~2021 and none as of December 31, ~~2019.~~2020. When unrealized losses exist, ~~on these investments,~~ management reviews each of the issuer’s asset quality, earnings trends and capital position to determine whether ~~issues in an~~the unrealized loss position ~~were other-than-temporarily impaired.~~is a result of credit losses. All interest payments on the corporate securities are being made as contractually required.

There was no expected credit related impairment recognized on investment securities during the nine months ended September 30, 2021 and 2020.

Note 87 Loans and Allowance for Credit Losses

1Loans are presented in the Consolidated Statements of Financial Condition net of deferred fees and costs, and discounts related to purchased loans. Net deferred fees were $2.6 million and $6.0 million as of September 30, 2021 and December 31, 2020, respectively, and discounts on purchased loans were $6.3 million and $7.0 million at September 30, 2021 and December 31, 2020, respectively. The following table provides outstanding balances related to each of our loan types:

September 30, 2020 December 31, 2019
Originated Acquired Total Originated Acquired Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,711,614 $ 25,122 $ 1,736,736 $ 1,212,026 $ 29,827 $ 1,241,853
Real estate construction 450,589 2,400 452,989 442,777 6,262 449,039
Residential real estate 1,534,949 209,071 1,744,020 1,415,808 265,554 1,681,362
Commercial real estate 2,088,217 127,094 2,215,311 1,958,346 159,173 2,117,519
Loans to individuals 790,471 10,189 800,660 685,416 13,959 699,375
Total loans $ 6,575,840 $ 373,876 $ 6,949,716 $ 5,714,373 $ 474,775 $ 6,189,148


	September 30, 2021		December 31, 2020

	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,224,591	$	1,555,986
Time and demand	1,210,694		1,541,382
Commercial credit cards	13,897		14,604
Real estate construction	424,016		427,221
Residential real estate	1,875,375		1,750,592
Residential first lien	1,254,142		1,144,323
Residential junior lien/home equity	621,233		606,269
Commercial real estate	2,231,890		2,211,569
Multifamily	405,720		371,239
Nonowner occupied	1,442,845		1,421,151
Owner occupied	383,325		419,179
Loans to individuals	976,708		815,815
Automobile	886,367		712,800
Consumer credit cards	10,617		12,360
Consumer other	79,724		90,655
Total loans	$	6,732,580	$	6,761,183

In the table above, ~~originated~~ Commercial, financial, agricultural and other loans at September 30, 2021 and December 31, 2020 includes ~~$573.5~~$152.1 million and $478.9 million, respectively, in Paycheck Protection Program ("PPP") loans for small businesses who meet the necessary eligibility requirements. PPP loans are 100% guaranteed by the Small Business Administration ("SBA") under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the PPP requirements. Because PPP loans are fully

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

guaranteed by the SBA, there is no allowance for credit losses recognized for these loans. Although the Company believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program, there could be risks and liability to the Company associated with participation in the program.

On March 27, 2020, the CARES Act was signed into law, providing banking organizations with optional, temporary relief from complying with CECL. The Company elected to defer its adoption of CECL until the fourth quarter 2020. At the end of the deferral period, CECL was adopted effective January 1, 2020. The allowance for credit losses for the interim period ending September 30, 2020, was calculated in accordance with previously applicable GAAP.

First Commonwealth’s loan portfolio includes five primary loan categories. When calculating the allowance for credit losses these categories are classified into eleven portfolio segments. The composition of loans by portfolio segment includes:

Commercial, financial, agricultural and other

Time & Demand - Consists primarily of commercial and industrial loans. This category consists of loans that are typically cash flow dependent and therefore have different risk and loss characteristics than other commercial loans. Loans in this category include revolving and term structures with fixed and variable interest rates. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Commercial Credit Cards - Consists of unsecured credit cards for commercial customers. These commercial credit cards have separate characteristics outside of normal commercial non-real estate loans, as they tend to have shorter overall duration. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Real estate construction

Includes both 1-4 family and commercial construction loans. The risk and loss characteristics of the construction category are different than other real estate secured categories due to the collateral being at various stages of completion. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and measures of completed construction projects.

Residential real estate

Residential first lien - Consists of loans with collateral of 1-4 family residencies with a senior lien position. The risk and loss characteristics are unique for this group because the collateral for these loans are the borrower’s primary residence. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Residential Junior Lien/Home Equity - Consists of loans with collateral of 1-4 family residencies with an open end line of credit or junior lien position. The junior lien position for the majority of these loans provides a higher risk of loss than other residential real estate loans. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Commercial real estate

Multifamily - Consists of loans secured by commercial multifamily properties. Real estate related to rentals to consumers could provide unique risk and loss characteristics. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of commercial real estate values and rental vacancy.

Nonowner Occupied - Consists of loans secured by commercial real estate non-owner occupied and provides different loss characteristics than other real estate categories. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Owner Occupied - Consists of loans secured by commercial real estate owner occupied properties. The risk and loss characteristics of this category were considered different than other real estate categories because it is owner occupied and would impact the ability to conduct business. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loans to individuals

Automobile - Consists of both direct and indirect loans with automobiles and recreational vehicles held as collateral. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and automobile retention value.

Consumer Credit Cards – Consists of unsecured consumer credit cards. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and economic conditions measured by GDP.

Other Consumer - Consists of lines of credit, student loans and other consumer loans, not secured by real estate or autos. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and the level of household debt.

The allowance for credit losses is calculated by pooling loans of similar credit risk characteristics and applying a discounted cash flow methodology after incorporating probability of default and loss given default estimates. Probability of default represents an estimate of the likelihood of default and loss given default measures the expected loss upon default. Inputs impacting the expected losses include a forecast of macroeconomic factors, using a weighted forecast from a nationally recognized firm. Our model incorporates a one-year forecast of macroeconomic factors, after which the factors revert back to the historical mean over a one-year period. The most significant macroeconomic factor used in estimating credit losses is the national unemployment rate. The forecasted value for national unemployment at September 30, 2021 was 5.13% and during the one-year forecast period it was projected to average 5.00%, with a peak of 5.13%.

Credit Quality Information

As part of the on-going monitoring of credit quality within the loan portfolio, the following credit worthiness categories are used in grading our loans:


Pass						Acceptable levels of risk exist in the relationship. Includes all loans not classified as OAEM, substandard or doubtful.

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

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.

Doubtful

Loans with the characteristics of substandard loans with the added characteristic that collection or liquidation in full, on the basis of presently existing facts and conditions, is highly improbable.

~~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.

~~The following tables represent our credit risk profile by creditworthiness:~~

September 30, 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 $ 1,649,458 $ 450,513 $ 1,527,225 $ 1,977,234 $ 790,222 $ 6,394,652
Non-Pass
OAEM 37,033 22 915 69,450 0 107,420
Substandard 25,123 54 6,809 41,533 249 73,768
Doubtful 0 0 0 0 0 0
Total Non-Pass 62,156 76 7,724 110,983 249 181,188
Total $ 1,711,614 $ 450,589 $ 1,534,949 $ 2,088,217 $ 790,471 $ 6,575,840
Acquired loans
Pass $ 23,405 $ 1,588 $ 207,233 $ 123,703 $ 10,178 $ 366,107
Non-Pass
OAEM 196 504 511 136 0 1,347
Substandard 1,521 308 1,327 3,255 11 6,422
Doubtful 0 0 0 0 0 0
Total Non-Pass 1,717 812 1,838 3,391 11 7,769
Total $ 25,122 $ 2,400 $ 209,071 $ 127,094 $ 10,189 $ 373,876

1921

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 0 43,393
Substandard 11,304 0 8,488 26,123 308 46,223
Doubtful 0 0 0 0 0 0
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 0 5,183
Substandard 122 0 2,387 3,287 12 5,808
Doubtful 0 0 0 0 0 0
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 following tables represent our credit risk profile by creditworthiness:


	September 30, 2021
			Non-Pass
	Pass		OAEM		Substandard		Doubtful		Loss		Total Non-Pass		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,185,987	$	12,318	$	26,286	$	—	$	—	$	38,604	$	1,224,591
Time and demand	1,172,090		12,318		26,286		—		—		38,604		1,210,694
Commercial credit cards	13,897		—		—		—		—		—		13,897
Real estate construction	422,668		1,294		54		—		—		1,348		424,016
Residential real estate	1,867,190		1,516		6,669		—		—		8,185		1,875,375
Residential first lien	1,249,248		1,444		3,450		—		—		4,894		1,254,142
Residential junior lien/home equity	617,942		72		3,219		—		—		3,291		621,233
Commercial real estate	2,084,476		121,883		25,531		—		—		147,414		2,231,890
Multifamily	390,579		14,635		506		—		—		15,141		405,720
Nonowner occupied	1,323,095		99,917		19,833		—		—		119,750		1,442,845
Owner occupied	370,802		7,331		5,192		—		—		12,523		383,325
Loans to individuals	976,468		—		240		—		—		240		976,708
Automobile	886,183		—		184		—		—		184		886,367
Consumer credit cards	10,617		—		—		—		—		—		10,617
Consumer other	79,668		—		56		—		—		56		79,724
Total loans	$	6,536,789	$	137,011	$	58,780	$	—	$	—	$	195,791	$	6,732,580


	December 31, 2020
			Non-Pass
	Pass		OAEM		Substandard		Doubtful		Loss		Total Non-Pass		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,491,916	$	48,233	$	15,837	$	—	$	—	$	64,070	$	1,555,986
Time and demand	1,477,312		48,233		15,837		—		—		64,070		1,541,382
Commercial credit cards	14,604		—		—		—		—		—		14,604
Real estate construction	426,663		504		54		—		—		558		427,221
Residential real estate	1,740,992		1,902		7,698		—		—		9,600		1,750,592
Residential first lien	1,138,409		1,780		4,134		—		—		5,914		1,144,323
Residential junior lien/home equity	602,583		122		3,564		—		—		3,686		606,269
Commercial real estate	1,983,258		175,995		52,316		—		—		228,311		2,211,569
Multifamily	369,883		131		1,225		—		—		1,356		371,239
Nonowner occupied	1,216,252		161,336		43,563		—		—		204,899		1,421,151
Owner occupied	397,123		14,528		7,528		—		—		22,056		419,179
Loans to individuals	815,541		—		274		—		—		274		815,815
Automobile	712,539		—		261		—		—		261		712,800
Consumer credit cards	12,360		—		—		—		—		—		12,360
Consumer other	90,642		—		13		—		—		13		90,655
Total loans	$	6,458,370	$	226,634	$	76,179	$	—	$	—	$	302,813	$	6,761,183

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the loan risk rating category by loan type including term loans on an amortized cost basis by origination year:


	September 30, 2021
	Term Loans												Revolving Loans
	2021		2020		2019		2018		2017		Prior				Total
	(dollars in thousands)
Time and demand	$	305,101	$	127,699	$	145,265	$	100,018	$	54,657	$	118,361	$	359,593	$	1,210,694
Pass	305,081		127,623		126,211		99,050		51,866		109,244		353,015		1,172,090
OAEM	—		75		1,173		816		67		7,323		2,864		12,318
Substandard	20		1		17,881		152		2,724		1,794		3,714		26,286
Commercial credit cards	—		—		—		—		—		—		13,897		13,897
Pass	—		—		—		—		—		—		13,897		13,897


Real estate construction	109,671		145,193		118,290		48,963		455		936		508		424,016
Pass	109,647		143,923		118,290		48,963		455		882		508		422,668
OAEM	24		1,270		—		—		—		—		—		1,294
Substandard	—		—		—		—		—		54		—		54
Residential first lien	280,135		372,184		138,407		95,498		81,299		284,645		1,974		1,254,142
Pass	280,124		372,164		138,236		95,081		81,160		280,586		1,897		1,249,248
OAEM	—		—		—		71		—		1,296		77		1,444
Substandard	11		20		171		346		139		2,763		—		3,450
Residential junior lien/home equity	42,602		2,207		3,682		3,038		1,161		6,297		562,246		621,233
Pass	42,602		2,207		3,604		3,038		1,161		6,141		559,189		617,942
OAEM	—		—		—		—		—		62		10		72
Substandard	—		—		78		—		—		94		3,047		3,219
Multifamily	81,608		80,628		16,466		54,180		65,075		106,420		1,343		405,720
Pass	81,608		80,628		16,466		54,180		50,974		105,380		1,343		390,579
OAEM	—		—		—		—		14,101		534		—		14,635
Substandard	—		—		—		—		—		506		—		506
Nonowner occupied	113,742		111,404		198,003		163,617		195,894		655,679		4,506		1,442,845
Pass	113,742		111,404		198,003		145,792		163,703		587,138		3,313		1,323,095
OAEM	—		—		—		17,825		25,274		55,781		1,037		99,917
Substandard	—		—		—		—		6,917		12,760		156		19,833
Owner occupied	49,257		59,485		56,875		34,738		33,796		143,789		5,385		383,325
Pass	49,257		57,858		54,392		34,212		32,449		137,363		5,271		370,802
OAEM	—		1,414		1,239		526		1,323		2,796		33		7,331
Substandard	—		213		1,244		—		24		3,630		81		5,192
Automobile	384,494		276,368		139,680		57,986		22,494		5,345		—		886,367
Pass	384,494		276,368		139,599		57,956		22,487		5,279		—		886,183

Substandard	—		—		81		30		7		66		—		184
Consumer credit cards	—		—		—		—		—		—		10,617		10,617
Pass	—		—		—		—		—		—		10,617		10,617


Consumer other	10,223		5,288		9,439		6,166		854		5,793		41,961		79,724
Pass	10,223		5,288		9,439		6,166		854		5,749		41,949		79,668

Substandard	—		—		—		—		—		44		12		56
Total	$	1,376,833	$	1,180,456	$	826,107	$	564,204	$	455,685	$	1,327,265	$	1,002,030	$	6,732,580

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	December 31, 2020
	Term Loans												Revolving Loans
	2020		2019		2018		2017		2016		Prior				Total
	(dollars in thousands)
Time and demand	$	598,053	$	193,601	$	142,224	$	72,277	$	74,228	$	83,313	$	377,686	$	1,541,382
Pass	597,405		189,834		140,473		63,137		68,007		65,418		353,038		1,477,312
OAEM	93		3,373		972		8,820		6,182		8,043		20,750		48,233
Substandard	555		394		779		320		39		9,852		3,898		15,837
Commercial credit cards	—		—		—		—		—		—		14,604		14,604
Pass	—		—		—		—		—		—		14,604		14,604


Real estate construction	150,493		133,195		104,167		34,803		389		1,009		3,165		427,221
Pass	150,493		133,195		104,167		34,803		389		709		2,907		426,663
OAEM	—		—		—		—		—		246		258		504
Substandard	—		—		—		—		—		54		—		54
Residential first lien	316,052		184,550		142,823		110,365		91,495		297,057		1,981		1,144,323
Pass	316,028		184,533		142,467		110,260		91,059		292,158		1,904		1,138,409
OAEM	—		—		83		—		100		1,520		77		1,780
Substandard	24		17		273		105		336		3,379		—		4,134
Residential junior lien/home equity	3,055		5,783		4,545		2,005		1,303		7,127		582,451		606,269
Pass	3,055		5,698		4,545		2,005		1,303		6,909		579,068		602,583
OAEM	—		—		—		—		—		112		10		122
Substandard	—		85		—		—		—		106		3,373		3,564
Multifamily	76,249		16,287		69,439		66,963		34,383		106,328		1,590		371,239
Pass	76,249		16,287		69,439		66,963		34,383		104,972		1,590		369,883
OAEM	—		—		—		—		—		131		—		131
Substandard	—		—		—		—		—		1,225		—		1,225
Nonowner occupied	105,861		199,280		161,018		214,915		217,883		518,052		4,142		1,421,151
Pass	105,861		190,301		139,643		181,659		175,148		419,900		3,740		1,216,252
OAEM	—		8,979		21,375		26,339		37,762		66,752		129		161,336
Substandard	—		—		—		6,917		4,973		31,400		273		43,563
Owner occupied	59,519		72,313		61,079		40,796		27,415		152,555		5,502		419,179
Pass	58,551		70,726		55,478		39,351		26,359		141,376		5,282		397,123
OAEM	968		684		4,736		1,421		114		6,572		33		14,528
Substandard	—		903		865		24		942		4,607		187		7,528
Automobile	350,293		202,923		96,355		45,218		14,285		3,726		—		712,800
Pass	350,293		202,827		96,336		45,187		14,255		3,641		—		712,539

Substandard	—		96		19		31		30		85		—		261
Consumer credit cards	—		—		—		—		—		—		12,360		12,360
Pass	—		—		—		—		—		—		12,360		12,360


Consumer other	7,814		14,464		10,752		1,965		711		6,383		48,566		90,655
Pass	7,814		14,464		10,752		1,965		711		6,373		48,563		90,642

Substandard	—		—		—		—		—		10		3		13
Total	$	1,667,389	$	1,022,396	$	792,402	$	589,307	$	462,092	$	1,175,550	$	1,052,047	$	6,761,183

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Portfolio Risks

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~~Total net charge-offs for the ~~appropriateness of the allowance for credit losses, which we believe is adequate to absorb losses inherent to the portfolio as of~~nine months ended September 30, 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.

~~ITEM 1.~~ ~~Financial Statements~~2021 and ~~Supplementary Data~~2020 were $9.5 million and $12.4 million, respectively.

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Age Analysis of Past Due Loans by Segment

The following tables delineate the aging analysis of the recorded investments in past due loans as of September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. 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.


		September 30, 2020															September 30, 2021
		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			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)															(dollars in thousands)
Originated loans
Commercial, financial, agricultural and other	Commercial, financial, agricultural and other	$	1,978	$	67	$	17	$	4,389	$	6,451	$	1,705,163	$	1,711,614	Commercial, financial, agricultural and other	$	158	$	478	$	33	$	4,554	$	5,223	$	1,219,368	$	1,224,591
Time and demand																Time and demand	23		459		—		4,554		5,036		1,205,658		1,210,694
Commercial credit cards																Commercial credit cards	135		19		33		—		187		13,710		13,897
Real estate construction	Real estate construction	0		0		0		54		54		450,535		450,589		Real estate construction	—		—		—		54		54		423,962		424,016
Residential real estate	Residential real estate	2,022		1,554		458		5,960		9,994		1,524,955		1,534,949		Residential real estate	3,354		824		411		6,046		10,635		1,864,740		1,875,375
Residential first lien																Residential first lien	2,217		272		172		3,036		5,697		1,248,445		1,254,142
Residential junior lien/home equity																Residential junior lien/home equity	1,137		552		239		3,010		4,938		616,295		621,233
Commercial real estate	Commercial real estate	517		122		0		30,112		30,751		2,057,466		2,088,217		Commercial real estate	177		45		—		19,782		20,004		2,211,886		2,231,890
Multifamily																Multifamily	—		—		—		435		435		405,285		405,720
Nonowner occupied																Nonowner occupied	175		—		—		17,783		17,958		1,424,887		1,442,845
Owner occupied																Owner occupied	2		45		—		1,564		1,611		381,714		383,325
Loans to individuals	Loans to individuals	1,986		902		725		247		3,860		786,611		790,471		Loans to individuals	1,751		351		691		240		3,033		973,675		976,708
Total		$	6,503	$	2,645	$	1,200	$	40,762	$	51,110	$	6,524,730	$	6,575,840

Acquired loans
Commercial, financial, agricultural and other		$	38	$	0	$	0	$	74	$	112	$	25,010	$	25,122
Real estate construction		0		0		0		308		308		2,092		2,400
Residential real estate		397		459		0		1,262		2,118		206,953		209,071
Commercial real estate		0		136		0		233		369		126,725		127,094
Loans to individuals		34		47		49		11		141		10,048		10,189
Total		$	469	$	642	$	49	$	1,888	$	3,048	$	370,828	$	373,876
Automobile																Automobile	1,363		83		158		184		1,788		884,579		886,367
Consumer credit cards																Consumer credit cards	50		22		25		—		97		10,520		10,617
Consumer other																Consumer other	338		246		508		56		1,148		78,576		79,724
Total loans																Total loans	$	5,440	$	1,698	$	1,135	$	30,676	$	38,949	$	6,693,631	$	6,732,580

2125

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 0 9 0 207 442,570 442,777
Residential real estate 3,757 749 736 6,646 11,888 1,403,920 1,415,808
Commercial real estate 227 114 0 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 $ 0 $ 1 $ 74 $ 76 $ 29,751 $ 29,827
Real estate construction 0 0 0 0 0 6,262 6,262
Residential real estate 304 207 221 1,949 2,681 262,873 265,554
Commercial real estate 0 107 0 298 405 158,768 159,173
Loans to individuals 87 89 35 12 223 13,736 13,959
Total $ 392 $ 403 $ 257 $ 2,333 $ 3,385 $ 471,390 $ 474,775


	December 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)
Commercial, financial, agricultural and other	$	146	$	62	$	112	$	3,317	$	3,637	$	1,552,349	$	1,555,986
Time and demand	97		28		23		3,317		3,465		1,537,917		1,541,382
Commercial credit cards	49		34		89		—		172		14,432		14,604
Real estate construction	936		—		—		54		990		426,231		427,221
Residential real estate	3,883		1,492		769		6,824		12,968		1,737,624		1,750,592
Residential first lien	1,775		660		267		3,489		6,191		1,138,132		1,144,323
Residential junior lien/home equity	2,108		832		502		3,335		6,777		599,492		606,269
Commercial real estate	237		160		3		35,072		35,472		2,176,097		2,211,569
Multifamily	—		—		—		460		460		370,779		371,239
Nonowner occupied	18		104		—		31,822		31,944		1,389,207		1,421,151
Owner occupied	219		56		3		2,790		3,068		416,111		419,179
Loans to individuals	2,870		852		639		274		4,635		811,180		815,815
Automobile	2,090		417		94		261		2,862		709,938		712,800
Consumer credit cards	52		39		123		—		214		12,146		12,360
Consumer other	728		396		422		13		1,559		89,096		90,655
Total loans	$	8,072	$	2,566	$	1,523	$	45,541	$	57,702	$	6,703,481	$	6,761,183

Nonaccrual Loans

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.

~~Impaired~~Nonperforming Loans

Management considers loans to be ~~impaired~~nonperforming 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~~Nonperforming loans include nonaccrual loans and all ~~loan categories.~~troubled debt restructured loans. When management identifies a loan as ~~impaired,~~nonperforming, the ~~impairment~~credit loss 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~~a credit loss is recognized through an allowance estimate or a charge-off to the ~~allowance. Troubled debt restructured~~allowance for credit losses.

When the ultimate collectability of the total principal of a nonperforming 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 a nonperforming 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.

At September 30, 2021, there were no nonperforming loans ~~on accrual status are also considered~~held for sale. Subsequent to ~~be impaired loans.~~September 30, 2021, as the result of a borrower initiated sale, a $6.9 million nonperforming commercial real estate loan with a $0.3 million specific reserve was sold

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

at par. At December 31, 2020, there was one nonperforming loan totaling $13 thousand classified as held for sale. During the nine months ended September 30, 2021, a $5.0 million nonperforming relationship was transferred to held for sale and sold, resulting in a $0.4 million gain. During the nine months ended September 30, 2020, there were no gains recognized on the sale of nonperforming loans.

The following tables include the recorded investment and unpaid principal balance for nonperforming loans with the associated allowance amount, if applicable, as of September 30, 2021 and December 31, 2020. Also presented are the average recorded investment in nonperforming loans and the related amount of interest recognized while the loan was considered nonperforming. 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.


	September 30, 2021						December 31, 2020
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(dollars in thousands)
With no related allowance recorded:
Commercial, financial, agricultural and other	$	4,836	$	15,308			$	2,025	$	2,725
Time and demand	4,836		15,308				2,025		2,725

Real estate construction	54		53				54		53
Residential real estate	9,910		12,101				10,939		13,258
Residential first lien	5,599		7,003				6,062		7,575
Residential junior lien/home equity	4,311		5,098				4,877		5,683
Commercial real estate	13,176		13,981				20,650		23,641
Multifamily	—		—				1		82
Nonowner occupied	11,531		12,147				16,786		19,459
Owner occupied	1,645		1,834				3,863		4,100
Loans to individuals	498		537				418		447
Automobile	442		476				405		430

Consumer other	56		61				13		17
Subtotal	28,474		41,980				34,086		40,124
With an allowance recorded:
Commercial, financial, agricultural and other	1,899		1,898		$	479	4,210		9,377		$	1,268
Time and demand	1,899		1,898		479		4,210		9,377		1,268

Real estate construction	—		—		—		—		—		—
Residential real estate	—		—		—		—		—		—
Residential first lien	—		—		—		—		—		—
Residential junior lien/home equity	—		—		—		—		—		—
Commercial real estate	7,713		7,794		501		15,757		15,830		3,638
Multifamily	435		456		103		459		470		116
Nonowner occupied	6,917		6,979		338		15,060		15,122		3,508
Owner occupied	361		359		60		238		238		14
Loans to individuals	—		—		—		—		—		—
Automobile	—		—		—		—		—		—

Consumer other	—		—		—		—		—		—
Subtotal	9,612		9,692		980		19,967		25,207		4,906
Total	$	38,086	$	51,672	$	980	$	54,053	$	65,331	$	4,906

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


		For the Nine Months Ended September 30,
		2021				2020
	Total Loans			Originated Loans				Acquired Loans
		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		$	9,266	$	50	$	4,062	$	15	$	74	$	—
Time and demand		9,266		50

Real estate construction		54		—		6		—		137		—
Residential real estate		10,504		275		10,380		235		1,772		18
Residential first lien		5,734		210
Residential junior lien/home equity		4,770		65
Commercial real estate		20,813		101		13,994		90		1,453		76
Multifamily		—		—
Nonowner occupied		18,050		15
Owner occupied		2,763		86
Loans to individuals		486		12		469		9		11		—
Automobile		433		12

Consumer other		53		—
Subtotal		41,123		438		28,911		349		3,447		94
With an allowance recorded:
Commercial, financial, agricultural and other		1,820		50		4,569		45		—		—
Time and demand		1,820		50

Real estate construction		—		—		—		—		—		—
Residential real estate		—		—		—		—		—		—
Residential first lien		—		—
Residential junior lien/home equity		—		—
Commercial real estate		7,408		—		13,830		9		—		—
Multifamily		451		—
Nonowner occupied		6,917		—
Owner occupied		40		—
Loans to individuals		—		—		—		—		—		—
Automobile		—		—

Consumer other		—		—
Subtotal		9,228		50		18,399		54		—		—
Total		$	50,351	$	488	$	47,310	$	403	$	3,447	$	94

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


		For the Three Months Ended September 30,
		2021				2020
	Total Loans			Originated Loans				Acquired Loans
		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		$	9,858	$	3	$	1,918	$	10	$	74	$	—
Time and demand		9,858		3

Real estate construction		54		—		18		—		308		—
Residential real estate		10,060		54		10,198		72		1,473		1
Residential first lien		5,558		34
Residential junior lien/home equity		4,502		20
Commercial real estate		15,967		68		14,312		23		1,440		76
Multifamily		—		—
Nonowner occupied		13,633		4
Owner occupied		2,334		64
Loans to individuals		504		6		494		3		11		—
Automobile		448		6

Consumer other		56		—
Subtotal		36,443		131		26,940		108		3,306		77
With an allowance recorded:
Commercial, financial, agricultural and other		1,842		19		6,423		16		—		—
Time and demand		1,842		19

Real estate construction		—		—		—		—		—		—
Residential real estate		—		—		—		—		—		—
Residential first lien		—		—
Residential junior lien/home equity		—		—
Commercial real estate		7,476		—		17,407		3		—		—
Multifamily		439		—
Nonowner occupied		6,917		—
Owner occupied		120		—
Loans to individuals		—		—		—		—		—		—
Automobile		—		—

Consumer other		—		—
Subtotal		9,318		19		23,830		19		—		—
Total		$	45,761	$	150	$	50,770	$	127	$	3,306	$	77

Unfunded commitments related to nonperforming loans were $0.2 million at both September 30, 2021 and December 31, 2020. After consideration of the requirements to draw and available collateral related to these commitments, it was determined that no reserve was required at September 30, 2021. At December 31, 2020, a reserve of $26 thousand was established for these off balance sheet exposures.

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~~alternative financing sources.

Troubled debt restructured loans are considered to be nonperforming loans.

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 CARES Act, ~~along with a joint agency statement issued by banking regulators, provides that short-term modifications, meeting certain~~

2229

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

along with a joint agency statement issued by banking regulators, provides that short-term modifications, meeting certain criteria and in response to COVID-19, do not need to be accounted for as a troubled debt restructured loans. Additionally, short-term loan modifications that are not accounted for as a troubled debt restructured loan, in accordance with the CARES Act, would remain classified as current during the deferral period and therefore are not reflected in the past due loan tables provided on the prior page. During the first and second quarters of 2020, the Company granted approximately 6,500 short-term loan modifications to its customers with aggregate principal balances of $1.4 billion. Most of these deferrals were for a 90-day period, which expired during the second and third quarters. Additional 90-day payment deferrals were granted to 136 customers with aggregate principal balances of $244.1 million during the second and third quarters. As of September 30, ~~2020, the~~2021, loans with an aggregate principal balance of ~~loans~~$29.9 million were in ~~deferral status had fallen to $65.4 million. It is likely that some customers that are no longer in the deferral~~a forbearance period ~~will be~~ granted an additional 90 day deferral in order to provide support for the continued impact of COVID-19. The decision to grant an additional forbearance will be credit driven and will be based on a complete evaluation of the customer's financial circumstances.

~~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~~CARES Act compared to $113.8 million as 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.~~

~~At September 30,~~December 31, 2020 and December 31, 2019, there were 0 impaired loans held for sale. During the nine months ended September 30, 2020, there were 0 gains recognized on the sale of impaired loans. During the nine months ended September 30, 2019, there were $0.4$65.4 million ~~in gains recognized on the sale of impaired loans.~~

~~The following tables include the recorded investment and unpaid principal balance for impaired loans with the associated allowance amount, if applicable,~~ as of September 30, 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.

September 30, 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 $ 795 $ 987 $ 1,848 $ 6,997
Real estate construction 54 53 0 0
Residential real estate 9,962 11,965 10,372 12,437
Commercial real estate 14,228 14,523 3,015 3,210
Loans to individuals 495 808 406 640
Subtotal 25,534 28,336 15,641 23,284
With an allowance recorded:
Commercial, financial, agricultural and other 4,750 12,778 $ 1,497 8,290 10,032 $ 1,580
Real estate construction 0 0 0 0 0 0
Residential real estate 0 0 0 474 498 1
Commercial real estate 17,389 17,442 5,921 5,293 5,308 851
Loans to individuals 0 0 0 0 0 0
Subtotal 22,139 30,220 7,418 14,057 15,838 2,432
Total $ 47,673 $ 58,556 $ 7,418 $ 29,698 $ 39,122 $ 2,432

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

September 30, 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 308 308 0 0
Residential real estate 1,429 1,794 2,136 2,585
Commercial real estate 233 257 298 320
Loans to individuals 11 14 12 15
Subtotal 2,055 2,447 2,519 2,993
With an allowance recorded:
Commercial, financial, agricultural and other 0 0 $ 0 0 0 $ 0
Real estate construction 0 0 0 0 0 0
Residential real estate 0 0 0 0 0 0
Commercial real estate 0 0 0 0 0 0
Loans to individuals 0 0 0 0 0 0
Subtotal 0 0 0 0 0 0
Total $ 2,055 $ 2,447 $ 0 $ 2,519 $ 2,993 $ 0

For the Nine Months Ended September 30,
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 $ 4,062 $ 15 $ 74 $ 0 $ 2,129 $ 10 $ 2,255 $ 0
Real estate construction 6 0 137 0 0 0 0 0
Residential real estate 10,380 235 1,772 18 10,751 280 1,966 6
Commercial real estate 13,994 90 1,453 76 3,854 129 636 18
Loans to individuals 469 9 11 0 356 11 14 0
Subtotal 28,911 349 3,447 94 17,090 430 4,871 24
With an allowance recorded:
Commercial, financial, agricultural and other 4,569 45 0 0 4,064 36 0 0
Real estate construction 0 0 0 0 0 0 0 0
Residential real estate 0 0 0 0 347 6 0 0
Commercial real estate 13,830 9 0 0 5,357 2 160 0
Loans to individuals 0 0 0 0 0 0 0 0
Subtotal 18,399 54 0 0 9,768 44 160 0
Total $ 47,310 $ 403 $ 3,447 $ 94 $ 26,858 $ 474 $ 5,031 $ 24

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

For the Three Months Ended September 30,
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 $ 1,918 $ 10 $ 74 $ 0 $ 1,902 $ 3 $ 4,697 $ 0
Real estate construction 18 0 308 0 0 0 0 0
Residential real estate 10,198 72 1,473 1 10,254 86 1,950 1
Commercial real estate 14,312 23 1,440 76 3,582 28 666 0
Loans to individuals 494 3 11 0 389 4 13 0
Subtotal 26,940 108 3,306 77 16,127 121 7,326 1
With an allowance recorded:
Commercial, financial, agricultural and other 6,423 16 0 0 4,677 8 0 0
Real estate construction 0 0 0 0 0 0 0 0
Residential real estate 0 0 0 0 740 1 0 0
Commercial real estate 17,407 3 0 0 6,443 1 155 0
Loans to individuals 0 0 0 0 0 0 0 0
Subtotal 23,830 19 0 0 11,860 10 155 0
Total $ 50,770 $ 127 $ 3,306 $ 77 $ 27,987 $ 131 $ 7,481 $ 1

Unfunded commitments related to nonperforming loans were $0.1 million at September 30, 2020 and $1.7 million at December 31, 2019. After consideration of the requirements to draw and available collateral related to these commitments, a reserve of $23 thousand and $12 thousand was established for these off balance sheet exposures at September 30, 2020 and December 31, 2019, respectively.2020.

The following table provides detail as to the total troubled debt restructured loans and total commitments outstanding on troubled debt restructured loans:


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(dollars in thousands)					(dollars in thousands)
Troubled debt restructured loans	Troubled debt restructured loans					Troubled debt restructured loans
Accrual status	Accrual status	$	7,078	$	7,542	Accrual status	$	7,410	$	8,512
Nonaccrual status	Nonaccrual status	4,511		6,037		Nonaccrual status	16,210		14,740
Total	Total	$	11,589	$	13,579	Total	$	23,620	$	23,252
Commitments	Commitments					Commitments
Letters of credit	Letters of credit	$	60	$	60	Letters of credit	$	60	$	60
Unused lines of credit	Unused lines of credit	21		163		Unused lines of credit	15		11
Total	Total	$	81	$	223	Total	$	75	$	71

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables provide detail, including specific reserves and reasons for modification, related to loans identified as troubled debt restructurings:

The troubled debt restructurings included in the above tables are also included in the ~~impaired~~nonperforming 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 nine months ended September 30, 2021 and 2020, ~~and 2019, $766~~$284 thousand and ~~$149~~$766 thousand, respectively, of total rate modifications represent loans with modifications to the rate as well as payment as a result of re-amortization. For both ~~2020~~2021 and ~~2019~~2020, the changes in loan balances between the pre-modification balance and the post-modification balance are due to customer payments.

For the Three Months Ended September 30, 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 1 $ 0 $ 629 $ 0 $ 629 $ 625 $ 489
Residential real estate 12 $ 0 $ 33 $ 580 $ 613 $ 477 $ 0
Loans to individuals 4 0 43 24 67 63 0
Total 17 $ 0 $ 705 $ 604 $ 1,309 $ 1,165 $ 489

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30, 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 $ 0 $ 0 $ 95 $ 95 $ 96 $ 0
Residential real estate 3 $ 0 $ 32 $ 53 $ 85 $ 85 $ 0
Loans to individuals 2 0 0 37 37 34 0
Total 6 $ 0 $ 32 $ 185 $ 217 $ 215 $ 0
The following tables provide detail, including specific reserves and reasons for modification, related to loans identified as troubled debt restructurings:


	For the Three Months Ended September 30, 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	1	$	—	$	629	$	—	$	629	$	625	$	489

Residential real estate	12	—		33		580		613		477		—

Loans to individuals	4	—		43		24		67		63		—
Total	17	$	—	$	705	$	604	$	1,309	$	1,165	$	489

The troubled debt restructurings included in the above tables are also included in the ~~impaired~~nonperforming 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 September 30, 2021 and 2020, ~~and 2019, $694~~$86 thousand and ~~$32~~$694 thousand, respectively, of total rate modifications represent loans with modifications to the rate as well as payment as a result of re-amortization. For both ~~2020~~2021 and ~~2019,~~2020 the changes in loan balances between the pre-modification balance and the post-modification balance are due to customer payments.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2020 2019
Number of
Contracts Recorded
Investment Number of
Contracts Recorded
Investment
(dollars in thousands)
Residential real estate 1 $ 50 3 $ 70
Commercial real estate 1 112 0 0
Loans to individuals 2 78 0 0
Total 4 $ 240 3 $ 70

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 September 30:

a) The provision expense(credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Nine Months Ended September 30, 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 (5,166) 0 (720) (2,415) (4,958) (13,259)
Recoveries 161 26 274 154 702 1,317
Provision (credit) 9,936 924 4,607 23,132 8,087 46,686
Ending balance 25,152 3,508 8,252 40,602 8,815 86,329
Acquired loans:
Beginning balance 13 0 2 37 0 52
Charge-offs — 0 (213) (2) (287) (502)
Recoveries 28 0 38 0 10 76
Provision (credit) 295 0 173 1,607 277 2,352
Ending balance 336 0 0 1,642 0 1,978
Total ending balance $ 25,488 $ 3,508 $ 8,252 $ 42,244 $ 8,815 $ 88,307
Ending balance: individually evaluated for impairment $ 1,497 $ 0 $ 0 $ 5,921 $ 0 $ 7,418
Ending balance: collectively evaluated for impairment 23,991 3,508 8,252 36,323 8,815 80,889
Loans:
Ending balance 1,736,736 452,989 1,744,020 2,215,311 800,660 6,949,716
Ending balance: individually evaluated for impairment 5,048 308 1,226 30,387 0 36,969
Ending balance: collectively evaluated for impairment 1,731,688 452,681 1,742,794 2,184,924 800,660 6,912,747


	For the Nine Months Ended September 30, 2021
							Loans
	Ending balance		Ending balance: individually evaluated for credit losses		Ending balance: collectively evaluated for credit losses		Ending balance		Ending balance: individually evaluated for credit losses		Ending balance: collectively evaluated for credit losses
	(dollars in thousands)
Commercial, financial, agricultural and other	$	17,862	$	479	$	17,383	$	1,224,591	$	5,561	$	1,219,030
Time and demand	17,582		479		17,103		1,210,694		5,561		1,205,133
Commercial credit cards	280		—		280		13,897		—		13,897
Real estate construction	4,333		—		4,333		424,016		—		424,016
Residential real estate	12,805		—		12,805		1,875,375		254		1,875,121
Residential first lien	7,457		—		7,457		1,254,142		—		1,254,142
Residential junior lien/home equity	5,348		—		5,348		621,233		254		620,979
Commercial real estate	34,640		501		34,139		2,231,890		20,333		2,211,557
Multifamily	3,831		103		3,728		405,720		435		405,285
Nonowner occupied	26,098		338		25,760		1,442,845		18,314		1,424,531
Owner occupied	4,711		60		4,651		383,325		1,584		381,741
Loans to individuals	24,545		—		24,545		976,708		—		976,708
Automobile	21,202		—		21,202		886,367		—		886,367
Consumer credit cards	496		—		496		10,617		—		10,617
Consumer other	2,847		—		2,847		79,724		—		79,724
Total loans	$	94,185	$	980	$	93,205	$	6,732,580	$	26,148	$	6,706,432

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30, 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 $ 24,812 $ 3,067 $ 9,239 $ 33,130 $ 9,334 $ 79,582
Charge-offs (3,395) 0 (161) 0 (1,149) (4,705)
Recoveries 44 0 153 110 226 533
Provision (credit) 3,691 441 (979) 7,362 404 10,919
Ending balance 25,152 3,508 8,252 40,602 8,815 86,329
Acquired loans:
Beginning balance 332 171 0 1,356 0 1,859
Charge-offs 0 0 (122) 0 (80) (202)
Recoveries 13 0 13 0 2 28
Provision (credit) (9) (171) 109 286 78 293
Ending balance 336 0 0 1,642 0 1,978
Total ending balance $ 25,488 $ 3,508 $ 8,252 $ 42,244 $ 8,815 $ 88,307
a) The provision expense(credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

For the Three Months Ended September 30, 2019
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 $ 20,678 $ 2,491 $ 4,133 $ 19,287 $ 4,407 $ 50,996
Charge-offs (742) 0 (383) (6) (1,571) (2,702)
Recoveries 41 74 6 81 162 364
Provision (credit) (37) (155) 160 (335) 1,715 1,348
Ending balance 19,940 2,410 3,916 19,027 4,713 50,006
Acquired loans:
Beginning balance 15 0 25 25 0 65
Charge-offs (49) 0 0 (1,376) (3) (1,428)
Recoveries 21 0 11 0 0 32
Provision (credit) 20 0 (35) 1,372 3 1,360
Ending balance 7 0 1 21 0 29
Total ending balance $ 19,947 $ 2,410 $ 3,917 $ 19,048 $ 4,713 $ 50,035


	For the Three Months Ended September 30, 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	$	24,812	$	3,067	$	9,239	$	33,130	$	9,334	$	79,582
Charge-offs	(3,395)		—		(161)		—		(1,149)		(4,705)
Recoveries	44		—		153		110		226		533
Provision (credit)	3,691		441		(979)		7,362		404		10,919
Ending balance	25,152		3,508		8,252		40,602		8,815		86,329
Acquired loans:
Beginning balance	332		171		—		1,356		—		1,859
Charge-offs	—		—		(122)		—		(80)		(202)
Recoveries	13		—		13		—		2		28
Provision (credit)	(9)		(171)		109		286		78		293
Ending balance	336		—		—		1,642		—		1,978
Total ending balance	$	25,488	$	3,508	$	8,252	$	42,244	$	8,815	$	88,307

On January 1, 2019, the Company adopted ASU 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842 using the transition option provided in ASU 2018-11, which provides for the modified retrospective approach. Under this approach, comparative periods were not restated and no cumulative effect adjustment to the opening balance of retained earnings was required.

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

First Commonwealth has elected to apply certain practical expedients provided under ~~the standard~~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, ~~primarily~~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.

~~Adoption of this standard resulted in the Company recognizing right of-use ("ROU") assets of $38.5 million~~

ITEM 1. Financial Statements and ~~a lease liability of $41.8 million on January 1, 2019.~~Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

September 30, 2020 December 31, 2019
Balance sheet:
Operating lease asset classified as premises and equipment $ 43,180 $ 48,642
Operating lease liability classified as other liabilities 47,791 52,894
For the Three Months Ended For the Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Income statement:
Operating lease cost classified as occupancy and equipment expense $ 1,545 $ 1,275 $ 4,281 $ 3,959
Weighted average lease term, in years 15.10 15.44
Weighted average discount rate 3.42 % 3.42 %
Operating cash flows $ 2,007 $ 3,351


					September 30, 2021			December 31, 2020
Balance sheet:
Operating lease asset classified as premises and equipment					$	40,245		$	42,617
Operating lease liability classified as other liabilities					44,473			46,819
	For the Three Months Ended				For the Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021			September 30, 2020
Income statement:
Operating lease cost classified as occupancy and equipment expense	$	1,202	$	1,545	$	3,603		$	4,281

Weighted average lease term, in years					14.36			15.10
Weighted average discount rate					3.34		%	3.42		%
Operating cash flows					$	1,190		$	2,007

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.

In July 2020, the Company announced the consolidation of 29 branch locations, including 12 leased locations, into nearby offices prior to December 31, 2020. As a result, during the third quarter, the Company paid $0.7 million in lease termination fees and decreased the ROU asset and lease liability by $3.8 million and $3.6 million, respectively.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, ~~2020~~2021 were as follows (dollars in thousands):


For the twelve months ended:
September 30, ~~2021~~2022	$	~~4,823~~
~~September 30, 2022~~	~~4,600~~4,623
September 30, 2023	~~4,490~~4,591
September 30, 2024	~~4,427~~4,428
September 30, 2025	~~4,312~~4,306
September 30, 2026	3,849
Thereafter	~~39,752~~35,364
Total future minimum lease payments	~~62,404~~57,161
Less remaining imputed interest	~~14,613~~12,688
Operating lease liability	$	~~47,791~~44,473

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Note 109 Income Taxes

In accordance with FASB ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes,” at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, First Commonwealth had 0no material unrecognized tax benefits or accrued interest and penalties. If applicable, First Commonwealth will record interest and penalties as a component of noninterest expense.

First Commonwealth is subject to routine audits of our tax returns by the Internal Revenue Service (“IRS”) as well as all states in which we conduct business. Generally, tax years prior to the year ended December 31, ~~2017~~2018 are no longer open to examination by federal and state taxing authorities.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1110 Fair Values of Assets and Liabilities

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosures for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). All non-financial assets are included either as a separate line item on the unaudited Consolidated Statements of Financial Condition or in the “Other assets” category of the unaudited Consolidated Statements of Financial Condition. Currently, First Commonwealth does not have any non-financial liabilities to disclose.

FASB ASC Topic 825, “Financial Instruments,” permits entities to irrevocably elect to measure select financial instruments and certain other items at fair value. The unrealized gains and losses are required to be included in earnings each reporting period for the items that fair value measurement is elected. First Commonwealth has elected not to measure any existing financial instruments at fair value under FASB ASC Topic 825; however, in the future we may elect to adopt this guidance for select financial instruments.

In accordance with FASB ASC Topic 820, First Commonwealth groups financial assets and financial liabilities measured at fair value in three levels based on the principal markets in which the assets and liabilities are transacted and the observability of the data points used to determine fair value. These levels are:

•Level 1 – Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange (“NYSE”). Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

•Level 2 – Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained for observable inputs for identical or comparable assets or liabilities from alternative pricing sources with reasonable levels of price transparency. Level 2 includes Obligations of U.S. Government securities issued by Agencies and Sponsored Enterprises, Obligations of States and Political Subdivisions, corporate securities, FHLB stock, loans held for sale, premise held for sale, interest rate derivatives (including interest rate caps, interest rate collars, interest rate swaps and risk participation agreements), certain other real estate owned and certain ~~impaired~~nonperforming loans.

Level 2 investment securities are valued by a recognized third party pricing service using observable inputs. The model used by the pricing service varies by asset class and incorporates available market, trade and bid information as well as cash flow information when applicable. Because many fixed-income investment securities do not trade on a daily basis, the model uses available information such as benchmark yield curves, benchmarking of like investment securities, sector groupings and matrix pricing. The model will also use processes such as an option adjusted spread to assess the impact of interest rates and to develop prepayment estimates. Market inputs normally used in the pricing model include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications.

Management validates the market values provided by the third party service by having another source price 100% of the securities on a monthly basis, monthly monitoring of variances from prior period pricing and, on a monthly basis, evaluating pricing changes compared to expectations based on changes in the financial markets.

Other investments recorded in the unaudited Consolidated Statements of Financial Condition are primarily comprised of FHLB stock whose estimated fair value is based on its par value. Additional information on FHLB stock is provided in Note 7,6, “Investment Securities.”

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Loans held for sale include residential mortgage loans originated for sale in the secondary mortgage market. The estimated fair value for these loans was determined on the basis of rates obtained in the respective secondary market. Loans held for sale also include the Small Business Administration guaranteed portion of small business loans. The estimated fair value of these loans is based on the contract with the third party investor.

~~During the third quarter of 2020, the company announced the consolidation of 29 branch locations into nearby offices prior to December 31, 2020. As a result, 17 owned locations were moved to~~ Also included in loans held for sale ~~and~~ are ~~being carried at the lower of cost or fair value. Four of these locations are carried at~~commercial loans for which fair value is determined byusing an ~~independent market-based appraisal less estimated costs to sell, and are classified as Level 2.~~executed trade or market bid obtained from potential buyers.

Interest rate derivatives are reported at an estimated fair value utilizing Level 2 inputs and are included in other assets and other liabilities, and consist of interest rate swaps where there is no significant deterioration in the counterparties' and/or loan customers' credit risk since origination of the interest rate swap as well as interest rate caps, interest rate collars and risk participation agreements. First Commonwealth values its interest rate swap and cap positions using a yield curve by taking market prices/rates for an appropriate set of instruments. The set of instruments currently used to determine the U.S. Dollar yield curve includes cash LIBOR rates from overnight to one year, Eurodollar futures contracts and swap rates from one year to

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

thirty years. These yield curves determine the valuations of interest rate swaps. Interest rate derivatives are further described in Note ~~12,~~11, “Derivatives.”

For purposes of potential valuation adjustments to our derivative positions, First Commonwealth evaluates the credit risk of its counterparties as well as our own credit risk. Accordingly, we have considered factors such as the likelihood of default, expected loss given default, net exposures and remaining contractual life, among other things, in determining if any estimated fair value adjustments related to credit risk are required. We review our counterparty exposure quarterly, and when necessary, appropriate adjustments are made to reflect the exposure.

We also utilize this approach to estimate our own credit risk on derivative liability positions. In 2020, we have not realized any losses due to a counterparty's inability to pay any uncollateralized positions.

Interest rate derivatives also include interest rate forwards entered into to hedge residential mortgage loans held for sale and the related interest-rate lock commitments. This includes forward commitments to sell mortgage loans. The fair value of these derivative financial instruments are based on derivative market data inputs as of the valuation date and the underlying value of mortgage loans for rate lock commitments.

In addition, the Company hedges foreign currency risk through the use of foreign exchange forward contracts. The fair value of foreign exchange forward contracts is based on the differential between the contract price and the market-based forward rate.

The estimated fair value for other real estate owned included in Level 2 is determined by either an independent market-based appraisal less estimated costs to sell or an executed sales agreement.

•Level 3 – Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. If the inputs used to provide the valuation are unobservable and/or there is very little, if any, market activity for the security or similar securities, the securities would be considered Level 3 securities. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. The assets included in Level 3 are non-marketable equity investments, certain interest rate derivatives, certain other real estate owned and certain ~~impaired~~nonperforming loans.

The estimated fair value of other investments included in Level 3 is based on carrying value as these securities do not have a readily determinable fair value.

The estimated fair value of limited partnership investments included in Level 3 is based on par value.

For interest rate derivatives included in Level 3, the fair value incorporates credit risk by considering such factors as likelihood of default and expected loss given default based on the credit quality of the underlying counterparties (loan customers).

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value (dollars
in thousands) Valuation
Technique Unobservable Inputs Range /
(weighted average)
September 30, 2020
Other Investments $ 1,670 CarryingValue N/A N/A
Impaired Loans 758 (a) Gas Reserve Study Discount rate 10.00%
Gas per MMBTU $1.46 - $1.48 (b)
Oil per BBL/d $36.00 - $36.00 (b)
Limited Partnership Investments 6,546 Par Value N/A N/A
December 31, 2019
Other Investments $ 1,670 CarryingValue 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 Discounted Cash Flow Discount Rate $3.84 - $9.50
Limited Partnership Investments 5,795 Par Value N/A N/A

Fair Value (dollars
in thousands)

Valuation
Technique

Unobservable Inputs

Range /
(weighted average)

September 30, 2021

Other Investments

1,670

Carrying Value

N/A

Nonperforming Loans

657

(a)

Gas Reserve Study

Discount rate

10.00%

Gas per MMBTU

$2.00 - $2.00 (b)

Oil per BBL/d

$50.00 - $50.00 (b)

Limited Partnership Investments

14,613

Par Value

N/A

December 31, 2020

Other Investments

1,670

Carrying Value

N/A

Nonperforming Loans

798

(a)

Gas Reserve Study

Discount rate

10.00%

Gas per MMBTU

$1.46 - $1.48 (b)

Oil per BBL/d

$36 - $36 (b)

Limited Partnership Investments

6,619

Par Value

N/A

(a)The remainder of ~~impaired~~nonperforming 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.

The discount rate is the significant unobservable input used in the fair value measurement of ~~impaired~~nonperforming loans. Significant increases in this rate would result in a decrease in the estimated fair value of the loans, while a decrease in this rate would result in a higher fair value measurement. Other unobservable inputs in the fair value measurement of ~~impaired~~nonperforming loans relate to gas, oil and natural gas prices. Increases in these prices would result in an increase in the estimated fair value of the loans, while a decrease in these prices would result in a lower fair value measurement.

September 30, 2020
Level 1 Level 2 Level 3 Total
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential $ 0 $ 7,541 $ 0 $ 7,541
Mortgage-Backed Securities - Commercial 0 218,552 0 218,552
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential 0 543,543 0 543,543
Other Government-Sponsored Enterprises 0 100,993 0 100,993
Obligations of States and Political Subdivisions 0 13,167 0 13,167
Corporate Securities 0 24,440 0 24,440
Total Securities Available for Sale 0 908,236 0 908,236
Other Investments 0 11,296 1,670 12,966
Loans Held for Sale 0 37,998 0 37,998
Premises and Equipment, net 0 442 0 442
Other Assets(a)
0 60,563 6,546 67,109
Total Assets $ 0 $ 1,018,535 $ 8,216 $ 1,026,751
Other Liabilities(a)
$ 0 $ 67,241 $ 0 $ 67,241
Total Liabilities $ 0 $ 67,241 $ 0 $ 67,241


	September 30, 2021
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential	$	—	$	5,982	$	—	$	5,982
Mortgage-Backed Securities - Commercial	—		393,707		—		393,707
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential	—		685,426		—		685,426

Other Government-Sponsored Enterprises	—		991		—		991
Obligations of States and Political Subdivisions	—		9,610		—		9,610
Corporate Securities	—		29,240		—		29,240



Total Securities Available for Sale	—		1,124,956		—		1,124,956
Other Investments	—		11,049		1,670		12,719
Loans Held for Sale	—		19,925		—		19,925

Other Assets(a)	—		34,631		14,613		49,244
Total Assets	$	—	$	1,190,561	$	16,283	$	1,206,844
Other Liabilities(a)	$	—	$	38,743	$	—	$	38,743
Total Liabilities	$	—	$	38,743	$	—	$	38,743

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

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Liabilities(a)

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

2020
Other Investments Other
Assets Total
(dollars in thousands)
Balance, beginning of period $ 1,670 $ 5,795 $ 7,465
Total gains or losses
Included in earnings 0 0 0
Included in other comprehensive income 0 0 0
Purchases, issuances, sales and settlements
Purchases 0 751 751
Issuances 0 0 0
Sales 0 0 0
Settlements 0 0 0
Transfers from Level 3 0 0 0
Transfers into Level 3 0 0 0
Balance, end of period $ 1,670 $ 6,546 $ 8,216


	2021
	Other Investments		Other Assets		Total
	(dollars in thousands)
Balance, beginning of period	$	1,670	$	6,620	$	8,290
Total gains or losses
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases, issuances, sales and settlements
Purchases	—		8,113		8,113
Issuances	—		—		—
Sales	—		—		—
Settlements	—		(120)		(120)
Transfers from Level 3	—		—		—
Transfers into Level 3	—		—		—
Balance, end of period	$	1,670	$	14,613	$	16,283

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2019
Other Investments Other
Assets Total
(dollars in thousands)
Balance, beginning of period $ 1,670 $ 2,696 $ 4,366
Total gains or losses
Included in earnings 0 198 198
Included in other comprehensive income 0 0 0
Purchases, issuances, sales and settlements
Purchases 0 1,237 1,237
Issuances 0 0 0
Sales 0 0 0
Settlements 0 0 0
Transfers from Level 3 0 0 0
Transfers into Level 3 0 0 0
Balance, end of period $ 1,670 $ 4,131 $ 5,801


	2020
	Other Investments		Other Assets		Total
	(dollars in thousands)
Balance, beginning of period	$	1,670	$	5,795	$	7,465
Total gains or losses
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases, issuances, sales and settlements
Purchases	—		751		751
Issuances	—		—		—
Sales	—		—		—
Settlements	—		—		—
Transfers from Level 3	—		—		—
Transfers into Level 3	—		—		—
Balance, end of period	$	1,670	$	6,546	$	8,216

During the nine months ended September 30, ~~2020~~2021 and 2019, there were 0 transfers between fair value Levels 1, 2 or 3. There were 0 gains or losses included in earnings for the periods presented that are attributable to the change in realized gains (losses) relating to assets held at September 30, 2020, ~~and 2019.~~

~~For the three months ended September 30, changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:~~

2020
Other Investments Other
Assets Total
(dollars in thousands)
Balance, beginning of period $ 1,670 $ 6,406 $ 8,076
Total gains or losses
Included in earnings 0 0 0
Included in other comprehensive income 0 0 0
Purchases, issuances, sales and settlements
Purchases 0 140 140
Issuances 0 0 0
Sales 0 0 0
Settlements 0 0 0
Transfers from Level 3 0 0 0
Transfers into Level 3 0 0 0
Balance, end of period $ 1,670 $ 6,546 $ 8,216

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

2019
Other Investments Other
Assets Total
(dollars in thousands)
Balance, beginning of period $ 1,670 $ 3,312 $ 4,982
Total gains or losses
Included in earnings 0 245 245
Included in other comprehensive income 0 0 0
Purchases, issuances, sales and settlements
Purchases 0 574 574
Issuances 0 0 0
Sales 0 0 0
Settlements 0 0 0
Transfers from Level 3 0 0 0
Transfers into Level 3 0 0 0
Balance, end of period $ 1,670 $ 4,131 $ 5,801

~~During the three months ended September 30, 2020 and 2019,~~ there were no transfers between fair value Levels 1, 2 or 3. There were no gains or losses included in earnings for the periods presented that are attributable to the change in realized gains (losses) relating to assets held at September 30, 2021 and 2020.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the three months ended September 30, 2021 and 2020, there were no transfers between fair value Levels 1, 2 or 3. There were no gains or losses included in earnings for the periods presented that are attributable to the change in realized gains (losses) relating to assets held at September 30, 2021 and ~~2019.~~2020.

The tables below present the balances of assets measured at fair value on a nonrecurring basis at:

The following losses were realized on the assets measured on a nonrecurring basis:

~~Impaired~~Nonperforming loans over $250 thousand are individually reviewed to determine the amount of each loan considered to be at risk of non-collection. The fair value for ~~impaired~~nonperforming loans that are collateral-based is determined by reviewing real property appraisals, equipment valuations, accounts receivable listings and other financial information. A discounted cash flow analysis

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

is performed to determine fair value for ~~impaired~~nonperforming loans when an observable market price or a current appraisal is not available. For real estate secured loans, First Commonwealth’s loan policy requires updated appraisals be obtained at least every twelve months on all ~~impaired~~nonperforming loans with balances of $250 thousand and over. For real estate secured loans with balances under $250

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

thousand, we rely on broker price opinions. For non-real estate secured assets, the Company normally relies on third party valuations specific to the collateral type.

The fair value for other real estate owned, determined by either an independent market-based appraisal less estimated costs to sell or an executed sales agreement, is classified as Level 2. The fair value for other real estate owned, determined using an internal valuation, is classified as Level 3. Other real estate owned has a current carrying value of ~~$1.1~~$0.5 million as of September 30, ~~2020~~2021 and consists primarily of residential and commercial real estate properties in Pennsylvania. We review whether events and circumstances subsequent to a transfer to other real estate owned have occurred that indicate the balance of those assets may not be recoverable. If events and circumstances indicate further impairment we will record a charge to the extent that the carrying value of the assets exceed their fair values, less estimated cost to sell, as determined by valuation techniques appropriate in the circumstances.

Certain other assets and liabilities, including goodwill, core deposit intangibles and customer list intangibles are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Additional information related to goodwill is provided in Note ~~13,~~12, “Goodwill.” There were no other assets or liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, ~~2020.~~2021.

FASB ASC 825-10, “Transition Related to FSP FAS 107-1” and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or nonrecurring basis are as discussed above. The methodologies for other financial assets and financial liabilities are discussed below.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The following table presents carrying amounts and fair values of First Commonwealth’s financial instruments:


	September 30, 2021
			Fair Value Measurements Using:
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(dollars in thousands)
Financial assets
Cash and due from banks	$	94,579	$	94,579	$	94,579	$	—	$	—
Interest-bearing deposits	240,095		240,095		240,095		—		—
Securities available for sale	1,124,956		1,124,956		—		1,124,956		—
Securities held to maturity	548,057		547,343		—		547,343		—
Other investments	12,719		12,719		—		11,049		1,670
Loans held for sale	19,925		19,925		—		19,925		—
Loans	6,732,580		7,118,886		—		24,512		7,094,374
Financial liabilities
Deposits	7,936,485		7,936,033		—		7,936,033		—
Short-term borrowings	117,754		117,602		—		117,602		—
Subordinated debt	170,734		175,178		—		—		175,178
Long-term debt	5,746		6,385		—		6,385		—
Capital lease obligation	6,039		6,039		—		6,039		—

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 $ 0 $ 0
Interest-bearing deposits 19,510 19,510 19,510 0 0
Securities available for sale 902,292 902,292 0 902,292 0
Securities held to maturity 337,123 338,718 0 338,718 0
Other investments 16,761 16,761 0 15,091 1,670
Loans held for sale 15,989 15,989 0 15,989 0
Loans 6,189,148 6,393,872 0 12,267 6,381,605
Financial liabilities
Deposits 6,677,615 6,677,595 0 6,677,595 0
Short-term borrowings 201,853 201,151 0 201,151 0
Subordinated debt 170,450 171,772 0 0 171,772
Long-term debt 56,917 58,051 0 58,051 0
Capital lease obligation 6,815 6,815 0 6,815 0


	December 31, 2020
			Fair Value Measurements Using:
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(dollars in thousands)
Financial assets
Cash and due from banks	$	100,009	$	100,009	$	100,009	$	—	$	—
Interest-bearing deposits	256,572		256,572		256,572		—		—
Securities available for sale	831,223		831,223		—		831,223		—
Securities held to maturity	361,844		369,851		—		369,851		—
Other investments	12,227		12,227		—		10,557		1,670
Loans held for sale	33,436		33,436		—		33,436		—
Loans	6,761,183		7,202,763		—		35,543		7,167,220
Financial liabilities
Deposits	7,438,666		7,440,906		—		7,440,906		—
Short-term borrowings	117,373		117,037		—		117,037		—
Subordinated debt	170,612		165,665		—		—		165,665
Long-term debt	56,258		57,881		—		57,881		—
Capital lease obligation	6,385		6,385		—		6,385		—

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1211 Derivatives

Derivatives Not Designated as Hedging Instruments

First Commonwealth is a party to interest rate derivatives that are not designated as hedging instruments. These derivatives relate to interest rate swaps that First Commonwealth enters into with customers to allow customers to convert variable rate loans to a fixed rate. First Commonwealth pays interest to the customer at a floating rate on the notional amount and receives interest from the customer at a fixed rate for the same notional amount. At the same time the interest rate swap is entered into with the customer, an offsetting interest rate swap is entered into with another financial institution. First Commonwealth pays the other financial institution interest at the same fixed rate on the same notional amount as the swap entered into with the customer, and receives interest from the financial institution for the same floating rate on the same notional amount.

The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties.

We have 3835 risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. We have 1416 risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are the lead bank. The risk participation agreement provides credit protection to us should the borrower fail to perform on its interest rate derivative contract with us.

First Commonwealth is also party to interest rate caps and collars that are not designated as hedging instruments. The interest rate caps relate to contracts that First Commonwealth enters into with loan customers that provide a maximum interest rate on their variable rate loan. At the same time the interest rate cap is entered into with the customer, First Commonwealth enters into an offsetting interest rate cap with another financial institution. The notional amount and maximum interest rate on both interest cap contracts are identical. The interest rate collars relate to contracts that First Commonwealth enters into with loan customers that provides both a maximum and minimum interest rate on their variable rate loan. At the same time the interest rate collar is entered into with the customer, First Commonwealth enters into an offsetting interest rate collar with another financial institution. The notional amount and the maximum and minimum interest rates on both interest collar contracts are identical.

The fee received, less the estimate of the loss for the credit exposure, was recognized in earnings at the time of the transaction.

Derivatives Designated as Hedging Instruments

In August 2019, the Company entered into two interest rate swap contracts that are designated as cash flow hedges. These contracts mature on August 15, 2024 and August 15, 2026 and have notional amounts of $30.0 million and $40.0 million, respectively. The Company's risk management objective for these hedges is to reduce its exposure to variability in expected future cash flows related to interest payments made on subordinated debentures benchmarked to the 3-month LIBOR rate. Therefore, the interest rate swaps convert the interest rate benchmark on the first $70.0 million of 3-month LIBOR based subordinated debentures to a fixed rate.

During 2021, the Company entered into four interest rate swap contracts that were designated as cash flow hedges. The interest rate swaps have a total notional amount of $350.0 million: $25.0 million with an original maturity of three years, $175.0 million with an original maturity of four years and $150.0 million with an original maturity of five years. The Company's risk management objective for these hedges is to reduce its exposure to variability in expected future cash flows related to interest payments on commercial loans benchmarked to the 1-month LIBOR rate. Therefore, the interest rate swaps convert the interest payments on the first $350.0 million of 1-month LIBOR based commercial loans into fixed rate payments.

The periodic net settlement of these interest rate swaps are recorded as an adjustment to "Interest on subordinated debentures" or "Interest and fees on loans" in the unaudited Consolidated Statements of Income. For the three and nine months ended September 30, ~~2020~~2021 there was a ~~negative~~positive impact of ~~$208~~$272 thousand and ~~$219~~$115 thousand, respectively, on net interest income as a result of these interest rate swaps. Changes in the fair value of the cash flow hedges are reported on the balance sheet and in OCI. When the cash flows associated with the hedged item are realized, the gain or loss included in OCI is recognized in "Interest on subordinated debentures," or "Interest and fees on loans", the same line ~~item~~items in the unaudited Consolidated Statements of Income as the income on the hedged items. The cash flow hedges were highly effective at September 30, ~~2020,~~2021, and changes in the fair value attributed to hedge ineffectiveness were not material.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company also enters into interest rate lock commitments in conjunction with its mortgage origination business. These are commitments to originate loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. The Company locks the rate in with an investor and commits to deliver the loan if settlement occurs (“best efforts”) or commits to deliver the locked loan in a binding (“mandatory”) delivery program with an investor. Loans under mandatory rate lock commitments are covered under forward sales contracts of mortgage-backed securities (“MBS”). Forward sales contracts of MBS are recorded at fair value with changes in fair value recorded in "Noninterest income" in the unaudited Consolidated Statements of Income. The impact to noninterest income for the three and nine months ended September 30, ~~2020~~2021 was ~~an increase~~a decrease of ~~$0.3~~$0.4 million and ~~$1.5~~$1.3 million, respectively.

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. We determine the fair value of rate lock commitments and delivery contracts by measuring the fair value of the underlying asset, which is impacted by current interest rates and taking into consideration the probability that the rate lock commitments will close or will be funded. At September 30, ~~2020,~~2021, the underlying funded mortgage loan commitments had a carrying value of ~~$21.2~~$11.1 million and a fair value of ~~$24.5~~$12.5 million, while the underlying unfunded mortgage loan commitments had a notional amount of ~~$49.1~~$38.5 million. At December 31, ~~2019,~~2020, the underlying funded mortgage loan commitments had a carrying value of ~~$9.8~~$25.0 million and a fair value of ~~$10.7~~$28.4 million, while the underlying unfunded mortgage loan commitments had a notional amount of ~~$25.5~~$47.9 million. The interest rate lock commitments ~~decreased noninterest income by $0.1 million and~~ increased other noninterest income by ~~$0.1~~$0.3 million and $0.7 million for the three and nine months ended September 30, ~~2020,~~2021, respectively.

In addition, a small amount of interest income on loans is exposed to changes in foreign exchange rates. Several commercial borrowers have a portion of their operations outside of the United States and borrow funds on a short-term basis to fund those operations. In order to reduce the risk related to the translation of foreign denominated transactions into U.S. dollars, the Company enters into foreign exchange forward contracts. These contracts relate principally to the Euro and the Canadian dollar. The contracts are recorded at fair value with changes in fair value recorded in "Other operating expense" in the unaudited Consolidated Statements of Income. The increase in other noninterest expense for the three and nine months ended September 30, ~~2020~~2021 totaled $3$2 thousand and ~~$15~~$7 thousand, respectively. At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the underlying loans had a carrying value of ~~$2.4~~$2.6 million and ~~$4.8~~$2.1 million, respectively, and a fair value of ~~$2.4~~$2.6 million and ~~$4.8~~$2.1 million, respectively.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table depicts the credit value and fair value adjustments recorded related to the notional amount of derivatives outstanding as well as the notional amount of risk participation agreements participated to other banks:

September 30, 2020 December 31, 2019
(dollars in thousands)
Derivatives not Designated as Hedging Instruments
Credit value adjustment $ (2,394) $ (272)
Notional amount:
Interest rate derivatives 610,994 587,275
Interest rate caps 75,685 87,188
Interest rate collars 35,354 35,354
Risk participation agreements 228,853 164,632
Sold credit protection on risk participation agreements (78,656) (69,011)
Interest rate options 49,105 25,460
Derivatives Designated as Hedging Instruments
Interest rate swaps:
Fair value adjustment (4,091) 801
Notional amount 70,000 70,000
Interest rate forwards:
Fair value adjustment (195) (63)
Notional amount 42,000 30,000
Foreign exchange forwards:
Fair value adjustment 2 (41)
Notional amount 2,362 4,789


	September 30, 2021		December 31, 2020
	(dollars in thousands)
Derivatives not Designated as Hedging Instruments
Credit value adjustment	$	(1,422)	$	(2,792)
Notional amount:
Interest rate derivatives	704,383		631,446
Interest rate caps	66,137		66,527
Interest rate collars	35,354		35,354
Risk participation agreements	214,736		220,280
Sold credit protection on risk participation agreements	(90,539)		(78,522)
Interest rate options	38,509		47,874
Derivatives Designated as Hedging Instruments
Interest rate swaps:
Fair value adjustment	(2,890)		(3,665)
Notional amount	420,000		70,000
Interest rate forwards:
Fair value adjustment	182		(483)
Notional amount	36,000		65,000
Foreign exchange forwards:
Fair value adjustment	17		(5)
Notional amount	2,589		2,119

~~ITEM 1.~~ ~~Financial Statements and Supplementary Data~~

~~FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

The table below presents the change in the fair value of derivative assets and derivative liabilities attributable to credit risk or fair value changes included in "Other income," 'Other expense," "Interest on subordinated debentures" or "Interest and fees on loans" in the unaudited Consolidated Statements of Income:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(dollars in thousands)
Non-hedging interest rate derivatives
Increase (decrease) in other income $ 142 $ (33) $ (611) $ 420
Increase in other expense 0 0 0 0
Hedging interest rate derivatives
Decrease in interest and fees on loans 0 0 0 (118)
Increase (decrease) in interest from subordinated debentures 208 (70) 219 (70)
Increase in other expense 0 0 0 7
Hedging interest rate forwards
(Decrease) increase in other income (102) 201 132 122
Increase in other expense 0 0 0 0
Hedging foreign exchange forwards
Increase in other expense 3 3 15 4


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(dollars in thousands)
Non-hedging interest rate derivatives
(Decrease) increase in other income	$	(202)	$	142	$	106	$	(611)

Hedging interest rate derivatives
Decrease in interest and fees on loans	(520)		—		(825)		—
Increase in interest from subordinated debentures	248		208		710		219

Hedging interest rate forwards
(Decrease) increase in other income	(265)		(102)		(666)		132

Hedging foreign exchange forwards
Increase in other expense	2		3		7		15

The fair value of our derivatives is included in a table in Note ~~11,~~10, “Fair Values of Assets and Liabilities,” in the line items

“Other assets” and “Other liabilities.”


		~~PAGE~~

~~PART I.~~	~~Financial Information~~

~~ITEM 1.~~	~~Financial Statements and Supplementary Data~~

	~~Included in Part I of this report:~~

	~~First Commonwealth Financial Corporation and Subsidiaries~~

	~~Consolidated Statements of Financial Condition (Unaudited)~~	3
	~~Consolidated Statements of Income (Unaudited)~~	4
	~~Consolidated Statements of Comprehensive Income (Unaudited)~~	5
	~~Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)~~	6
	~~Consolidated Statements of Cash Flows (Unaudited)~~	8
	~~Notes to the Unaudited Consolidated Financial Statements~~	9

~~ITEM 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	47

~~ITEM 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	72

~~ITEM 4.~~	~~Controls and Procedures~~	72

~~PART II.~~	~~Other Information~~

~~ITEM 1.~~	~~Legal Proceedings~~	73

~~ITEM 1A.~~	~~Risk Factors~~	73

~~ITEM 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	73

~~ITEM 3.~~	~~Defaults Upon Senior Securities~~	73

~~ITEM 4.~~	~~Mine Safety Disclosures~~	73

~~ITEM 5.~~	~~Other Information~~	73

~~ITEM 6.~~	~~Exhibits~~	74

	~~Signatures~~	75


		PAGE

PART I.	Financial Information

ITEM 1.	Financial Statements and Supplementary Data

	Included in Part I of this report:

	First Commonwealth Financial Corporation and Subsidiaries

	Consolidated Statements of Financial Condition (Unaudited)	3
	Consolidated Statements of Income (Unaudited)	4
	Consolidated Statements of Comprehensive Income (Unaudited)	6
	Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	7
	Consolidated Statements of Cash Flows (Unaudited)	9
	Notes to the Unaudited Consolidated Financial Statements	10

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	78

ITEM 4.	Controls and Procedures	78

PART II.	Other Information

ITEM 1.	Legal Proceedings	79

ITEM 1A.	Risk Factors	79

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79

ITEM 3.	Defaults Upon Senior Securities	79

ITEM 4.	Mine Safety Disclosures	79

ITEM 5.	Other Information	79

ITEM 6.	Exhibits	80

	Signatures	81


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(dollars in thousands, except share data)
Interest Income
Interest and fees on loans	$	67,474	$	74,714	$	207,290	$	218,524
Interest and dividends on investments:
Taxable interest	5,598		6,995		19,064		22,871
Interest exempt from federal income taxes	268		398		850		1,231
Dividends	159		387		536		1,419
Interest on bank deposits	94		81		163		181
Total interest income	73,593		82,575		227,903		244,226
Interest Expense
Interest on deposits	4,621		9,846		18,756		27,298
Interest on short-term borrowings	35		1,620		670		8,075
Interest on subordinated debentures	2,146		2,232		6,434		6,930
Interest on other long-term debt	356		362		1,065		656
Interest on lease obligations	66		70		199		210

Total interest expense	7,224		14,130		27,124		43,169
Net Interest Income	66,369		68,445		200,779		201,057
Provision for credit losses	11,212		2,708		49,038		9,638
Net Interest Income after Provision for Credit Losses	55,157		65,737		151,741		191,419
Noninterest Income



Net securities gains	20		9		47		15
Trust income	2,554		2,325		6,774		6,221
Service charges on deposit accounts	4,035		4,954		12,066		13,792
Insurance and retail brokerage commissions	2,156		1,912		5,982		5,887
Income from bank owned life insurance	1,547		1,540		4,963		4,408
Gain on sale of mortgage loans	6,437		2,599		13,226		6,101
Gain on sale of other loans and assets	1,871		970		3,151		3,831
Card-related interchange income	6,441		5,629		17,589		15,800
Derivatives mark to market	(160)		(45)		(2,122)		(88)

Swap fee income	41		421		864		1,634
Other income	1,827		1,865		5,314		5,356
Total noninterest income	26,769		22,179		67,854		62,957
Noninterest Expense
Salaries and employee benefits	28,823		28,674		87,573		83,205
Net occupancy	4,609		4,521		13,979		13,878
Furniture and equipment	4,033		3,904		11,468		11,396
Data processing	2,741		2,825		7,804		7,988
Advertising and promotion	1,115		1,140		3,800		3,611
Pennsylvania shares tax	1,254		1,189		3,246		3,365
Intangible amortization	939		865		2,792		2,364

Other professional fees and services	937		969		2,755		2,755
FDIC insurance	876		35		1,637		1,164
Loss on sale or write-down of assets	63		152		416		1,398

Litigation and operational losses	329		308		1,038		1,264

Merger and acquisition related	0		3,738		0		3,772
COVID-19 related	125		0		567		0
Voluntary early retirement	3,304		0		3,304		0
Branch consolidation	2,544		0		2,544		0
Other operating	6,555		6,577		18,351		20,696
Total noninterest expense	58,247		54,897		161,274		156,856
Income Before Income Taxes	23,679		33,019		58,321		97,520
Income tax provision	4,493		6,375		10,557		19,007
Net Income	$	19,186	$	26,644	$	47,764	$	78,513
Average Shares Outstanding	97,917,096		98,267,229		97,990,749		98,363,539
Average Shares Outstanding Assuming Dilution	98,160,143		98,547,898		98,224,506		98,615,787

Per Share Data: Basic Earnings per Share	$	0.20	$	0.27	$	0.49	$	0.80
Diluted Earnings per Share	$	0.20	$	0.27	$	0.49	$	0.80
Cash Dividends Declared per Common Share	$	0.11	$	0.10	$	0.33	$	0.30


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(dollars in thousands, except share data)
Interest Income
Interest and fees on loans	$	67,259	$	67,474	$	200,939	$	207,290
Interest and dividends on investments:
Taxable interest	6,560		5,598		18,226		19,064
Interest exempt from federal income taxes	142		268		460		850
Dividends	105		159		386		536
Interest on bank deposits	130		94		297		163
Total interest income	74,196		73,593		220,308		227,903
Interest Expense
Interest on deposits	1,269		4,621		4,753		18,756
Interest on short-term borrowings	19		35		77		670
Interest on subordinated debentures	2,146		2,146		6,410		6,434
Interest on other long-term debt	56		356		596		1,065
Interest on lease obligations	61		66		185		199

Total interest expense	3,551		7,224		12,021		27,124
Net Interest Income	70,645		66,369		208,287		200,779
Provision for credit losses	330		11,212		1,353		49,038
Net Interest Income after Provision for Credit Losses	70,315		55,157		206,934		151,741
Noninterest Income



Net securities gains	—		20		16		47
Trust income	3,118		2,554		8,340		6,774
Service charges on deposit accounts	4,770		4,035		13,127		12,066
Insurance and retail brokerage commissions	2,218		2,156		6,368		5,982
Income from bank owned life insurance	1,486		1,547		4,946		4,963
Gain on sale of mortgage loans	3,485		6,437		11,615		13,226
Gain on sale of other loans and assets	2,480		1,871		6,281		3,151
Card-related interchange income	7,052		6,441		20,885		17,589
Derivatives mark to market	218		(160)		1,371		(2,122)

Swap fee income	317		41		1,715		864
Other income	2,101		1,827		6,022		5,314
Total noninterest income	27,245		26,769		80,686		67,854
Noninterest Expense
Salaries and employee benefits	31,066		28,823		88,084		87,573
Net occupancy	3,960		4,609		12,614		13,979
Furniture and equipment	4,052		4,033		11,866		11,468
Data processing	3,196		2,741		9,440		7,804
Advertising and promotion	1,150		1,115		3,829		3,800

Pennsylvania shares tax	1,257		1,254		3,347		3,246
Intangible amortization	868		939		2,597		2,792

Other professional fees and services	1,308		937		3,150		2,755
FDIC insurance	830		876		1,964		1,637
Loss on sale or write-down of assets	171		63		223		416

Litigation and operational losses	589		329		1,624		1,038


COVID-19 related	50		125		357		567
Voluntary early retirement	—		3,304		—		3,304
Branch consolidation	—		2,544		18		2,544
Other operating	6,530		6,555		19,316		18,351
Total noninterest expense	55,027		58,247		158,429		161,274
Income Before Income Taxes	42,533		23,679		129,191		58,321
Income tax provision	8,441		4,493		25,710		10,557
Net Income	$	34,092	$	19,186	$	103,481	$	47,764


	September 30, 2020						December 31, 2019
	Originated		Acquired		Total		Originated		Acquired		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,711,614	$	25,122	$	1,736,736	$	1,212,026	$	29,827	$	1,241,853
Real estate construction	450,589		2,400		452,989		442,777		6,262		449,039
Residential real estate	1,534,949		209,071		1,744,020		1,415,808		265,554		1,681,362
Commercial real estate	2,088,217		127,094		2,215,311		1,958,346		159,173		2,117,519
Loans to individuals	790,471		10,189		800,660		685,416		13,959		699,375
Total loans	$	6,575,840	$	373,876	$	6,949,716	$	5,714,373	$	474,775	$	6,189,148



	2021			2020
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(dollars in thousands)


Residential real estate	—	$	—	1	$	50
Commercial real estate	—	—		1	112
Loans to individuals	—	—		2	78
Total	—	$	—	4	$	240


		September 30, 2020			December 31, 2019
	Due	Amount		Rate	Amount		Rate
		(dollars in thousands)
Owed to:

First Commonwealth Bank	2028	$	49,291	4.875% until June 1, 2023, then LIBOR + 1.845%	$	49,222	4.875% until June 1, 2023, then LIBOR + 1.845%
First Commonwealth Bank	2033	49,114		5.50% until June 1, 2028, then LIBOR + 2.37%	49,061		5.50% until June 1, 2028, then LIBOR + 2.37%
First Commonwealth Capital Trust II	2034	30,929		LIBOR + 2.85%	30,929		LIBOR + 2.85%
First Commonwealth Capital Trust III	2034	41,238		LIBOR + 2.85%	41,238		LIBOR + 2.85%
Total		$	170,572		$	170,450


	2020						2019
	Average Balance		Income / Expense (a)		Yield or Rate		Average Balance		Income / Expense (a)		Yield or Rate
	(dollars in thousands)
Assets
Interest-earning assets:
Interest-bearing deposits with banks	$	173,058	$	163	0.13	%	$	5,591	$	181	4.33	%
Tax-free investment securities	47,197		1,075		3.04		67,158		1,557		3.10
Taxable investment securities	1,187,354		19,600		2.20		1,200,845		24,290		2.70
Loans, net of unearned income (b)(c)(e)	6,670,819		208,194		4.17		5,935,427		219,539		4.95
Total interest-earning assets	8,078,428		229,032		3.79		7,209,021		245,567		4.55
Noninterest-earning assets:
Cash	98,345						91,954
Allowance for credit losses	(72,256)						(51,192)
Other assets	820,798						722,655
Total noninterest-earning assets	846,887						763,417
Total Assets	$	8,925,315					$	7,972,438
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand deposits (d)	$	1,534,147	$	1,702	0.15	%	$	1,272,065	$	5,511	0.58	%
Savings deposits (d)	3,000,925		8,494		0.38		2,524,703		10,906		0.58
Time deposits	766,106		8,560		1.49		866,746		10,881		1.68
Short-term borrowings	146,270		670		0.61		489,562		8,075		2.21
Long-term debt	233,818		7,698		4.40		210,353		7,796		4.96
Total interest-bearing liabilities	5,681,266		27,124		0.64		5,363,429		43,169		1.08
Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits (d)	2,030,364						1,507,826
Other liabilities	136,655						90,956
Shareholders’ equity	1,077,030						1,010,227
Total Noninterest-Bearing Funding Sources	3,244,049						2,609,009
Total Liabilities and Shareholders’ Equity	$	8,925,315					$	7,972,438
Net Interest Income and Net Yield on Interest-Earning Assets			$	201,908	3.34	%			$	202,398	3.75	%


	Analysis of Year-to-Year Changes in Net Interest Income
	Total Change		Change Due To Volume		Change Due To Rate (a)
	(dollars in thousands)
Interest-earning assets:
Interest-bearing deposits with banks	$	(18)	$	5,424	$	(5,442)
Tax-free investment securities	(482)		(463)		(19)
Taxable investment securities	(4,690)		(272)		(4,418)
Loans	(11,345)		27,227		(38,572)
Total interest income (b)	(16,535)		31,916		(48,451)
Interest-bearing liabilities:
Interest-bearing demand deposits	(3,809)		1,137		(4,946)
Savings deposits	(2,412)		2,066		(4,478)
Time deposits	(2,321)		(1,265)		(1,056)
Short-term borrowings	(7,405)		(5,674)		(1,731)
Long-term debt	(98)		871		(969)
Total interest expense	(16,045)		(2,865)		(13,180)
Net interest income	$	(490)	$	34,781	$	(35,271)


	2020				2019
	Dollars		Percentage		Dollars		Percentage
	(dollars in thousands)
Commercial, financial, agricultural and other	$	10,231	21	%	$	2,525	26	%
Real estate construction	924		2		250		2
Residential real estate	4,780		10		375		4
Commercial real estate	24,739		50		2,183		23
Loans to individuals	8,364		17		4,305		45

Total	$	49,038	100	%	$	9,638	100	%


	September 30, 2020		September 30, 2019		December 31, 2019
	(dollars in thousands)
Balance, beginning of period	$	51,637	$	47,764	$	47,764
Loans charged off:
Commercial, financial, agricultural and other	5,166		2,185		3,393
Real estate construction	—		—		—
Residential real estate	933		663		1,042
Commercial real estate	2,417		1,681		2,008
Loans to individuals	5,245		4,058		5,831
Total loans charged off	13,761		8,587		12,274
Recoveries of loans previously charged off:
Commercial, financial, agricultural and other	189		233		326
Real estate construction	26		158		158
Residential real estate	312		236		315
Commercial real estate	154		160		189
Loans to individuals	712		433		626
Total recoveries	1,393		1,220		1,614
Net credit losses	12,368		7,367		10,660
Provision charged to expense	49,038		9,638		14,533
Balance, end of period	$	88,307	$	50,035	$	51,637


		2020		2019		$ Change		% Change			2021		2020		$ Change		% Change
		(dollars in thousands)									(dollars in thousands)
Noninterest Income:	Noninterest Income:									Noninterest Income:
Trust income	Trust income	$	6,774	$	6,221	$	553	9	%	Trust income	$	8,340	$	6,774	$	1,566	23	%
Service charges on deposit accounts	Service charges on deposit accounts	12,066		13,792		(1,726)		(13)		Service charges on deposit accounts	13,127		12,066		1,061		9
Insurance and retail brokerage commissions	Insurance and retail brokerage commissions	5,982		5,887		95		2		Insurance and retail brokerage commissions	6,368		5,982		386		6
Income from bank owned life insurance	Income from bank owned life insurance	4,963		4,408		555		13		Income from bank owned life insurance	4,946		4,963		(17)		—
Card-related interchange income	Card-related interchange income	17,589		15,800		1,789		11		Card-related interchange income	20,885		17,589		3,296		19
Swap fee income	Swap fee income	864		1,634		(770)		(47)		Swap fee income	1,715		864		851		98
Other income	Other income	5,314		5,356		(42)		(1)		Other income	6,022		5,314		708		13
Subtotal	Subtotal	53,552		53,098		454		1		Subtotal	61,403		53,552		7,851		15
Net securities gains	Net securities gains	47		15		32		213		Net securities gains	16		47		(31)		(66)
Gain on sale of mortgage loans	Gain on sale of mortgage loans	13,226		6,101		7,125		117		Gain on sale of mortgage loans	11,615		13,226		(1,611)		(12)
Gain on sale of other loans and assets	Gain on sale of other loans and assets	3,151		3,831		(680)		(18)		Gain on sale of other loans and assets	6,281		3,151		3,130		99
Derivatives mark to market	Derivatives mark to market	(2,122)		(88)		(2,034)		2,311		Derivatives mark to market	1,371		(2,122)		3,493		(165)

Total noninterest income	Total noninterest income	$	67,854	$	62,957	$	4,897	8	%	Total noninterest income	$	80,686	$	67,854	$	12,832	19	%


	9/30/2020		9/30/2019		12/31/2019
	(dollars in thousands)
Balance, beginning of period	$	81,441	$	51,061	$	47,764
Loans charged off:
Commercial, financial, agricultural and other	3,395		791		3,393
Real estate construction	—		—		—
Residential real estate	283		383		1,042
Commercial real estate	—		1,382		2,008
Loans to individuals	1,229		1,574		5,831
Total loans charged off	4,907		4,130		12,274
Recoveries of loans previously charged off:
Commercial, financial, agricultural and other	57		62		326
Real estate construction	—		74		158
Residential real estate	166		17		315
Commercial real estate	110		81		189
Loans to individuals	228		162		626
Total recoveries	561		396		1,614
Net credit losses	4,346		3,734		10,660
Provision charged to expense	11,212		2,708		14,533
Balance, end of period	$	88,307	$	50,035	$	51,637


	9/30/2021		9/30/2020		12/31/2020
	(dollars in thousands)
Balance, beginning of period	$	97,038	$	81,441	$	51,637
Adoption of accounting standard - ASU 2016-13(1)	—		—		13,393
Loans charged off:
Commercial, financial, agricultural and other	2,066		3,395		6,318
Real estate construction	—		—		—
Residential real estate	11		283		1,040
Commercial real estate	102		—		4,939
Loans to individuals	727		1,229		6,953
Total loans charged off	2,906		4,907		19,250
Recoveries of loans previously charged off:
Commercial, financial, agricultural and other	106		57		314
Real estate construction	—		—		26
Residential real estate	98		166		414
Commercial real estate	90		110		312
Loans to individuals	335		228		991
Total recoveries	629		561		2,057
Net charge-offs	2,277		4,346		17,193
Provision for credit losses on loans charged to expense	(576)		11,212		53,472
Balance, end of period	$	94,185	$	88,307	$	101,309


		September 30, 2020																			September 30, 2021
		0-90 Days			91-180 Days			181-365 Days			Cumulative 0-365 Days			Over 1 Year Through 5 Years			Over 5 Years				0-90 Days			91-180 Days			181-365 Days			Cumulative 0-365 Days			Over 1 Year Through 5 Years			Over 5 Years
		(dollars in thousands)																			(dollars in thousands)
Loans	Loans	$	600,799		$	549,600		$	951,753		$	2,102,152		$	3,700,971		$	1,095,176		Loans	$	578,757		$	447,361		$	948,738		$	1,974,856		$	3,752,879		$	952,679
Investments	Investments	217,878			95,452			166,510			479,840			531,602			128,234			Investments	121,940			98,055			182,492			402,487			777,763			474,791
Other interest-earning assets	Other interest-earning assets	283,037			—			—			283,037			—			—			Other interest-earning assets	240,095			—			—			240,095			—			—
Total interest-sensitive assets (ISA)	Total interest-sensitive assets (ISA)	1,101,714			645,052			1,118,263			2,865,029			4,232,573			1,223,410			Total interest-sensitive assets (ISA)	940,792			545,416			1,131,230			2,617,438			4,530,642			1,427,470
Certificates of deposit	Certificates of deposit	204,060			141,316			172,511			517,887			140,922			2,086			Certificates of deposit	97,627			77,165			111,155			285,947			117,579			1,450
Other deposits	Other deposits	4,740,926			—			—			4,740,926			—			—			Other deposits	4,875,175			—			—			4,875,175			—			—
Borrowings	Borrowings	194,627			104			50,208			244,939			1,665			104,344			Borrowings	190,120			199			398			190,717			3,182			101,769
Total interest-sensitive liabilities (ISL)	Total interest-sensitive liabilities (ISL)	5,139,613			141,420			222,719			5,503,752			142,587			106,430			Total interest-sensitive liabilities (ISL)	5,162,922			77,364			111,553			5,351,839			120,761			103,219
Gap	Gap	$	(4,037,899)		$	503,632		$	895,544		$	(2,638,723)		$	4,089,986		$	1,116,980		Gap	$	(4,222,130)		$	468,052		$	1,019,677		$	(2,734,401)		$	4,409,881		$	1,324,251
ISA/ISL	ISA/ISL	0.21			4.56			5.02			0.52			29.68			11.49			ISA/ISL	0.18			7.05			10.14			0.49			37.52			13.83
Gap/Total assets	Gap/Total assets	43.47		%	5.42		%	9.64		%	28.41		%	44.03		%	12.02		%	Gap/Total assets	44.55		%	4.94		%	10.76		%	28.85		%	46.53		%	13.97		%


	Net interest income change (12 months) for basis point movements of:
	-200			-100			+100			+200
	(dollars in thousands)
September 30, 2021 ($)	$	(8,343)		$	(5,367)		$	6,730		$	11,130
September 30, 2021 (%)	(3.00)		%	(1.93)		%	2.42		%	4.00		%

December 31, 2020 ($)	$	(4,911)		$	(2,621)		$	3,340		$	6,229
December 31, 2020 (%)	(1.79)		%	(0.95)		%	1.22		%	2.27		%


	For the Nine Months Ended September 30, 2020						As of September 30, 2020
	Net Charge- offs		% of Total Net Charge-offs		Net Charge- offs as a % of Average Loans (annualized)		Nonperforming Loans		% of Total Nonperforming Loans		Nonperforming Loans as a % of Total Loans
	(dollars in thousands)
Commercial, financial, agricultural and other	$	4,977	40.24	%	0.10	%	$	5,619	11.30	%	0.08	%
Real estate construction	(26)		(0.21)		—		362		0.73		0.01
Residential real estate	621		5.02		0.01		11,391		22.91		0.16
Commercial real estate	2,263		18.30		0.05		31,850		64.04		0.45
Loans to individuals	4,533		36.65		0.09		506		1.02		0.01
Total loans, net of unearned income	$	12,368	100.00	%	0.25	%	$	49,728	100.00	%	0.71	%


	For the Nine Months Ended September 30, 2021						As of September 30, 2021
	Net Charge- offs		% of Total Net Charge-offs		Net Charge- offs as a % of Average Loans (annualized)		Nonperforming Loans		% of Total Nonperforming Loans		Nonperforming Loans as a % of Total Loans
	(dollars in thousands)
Commercial, financial, agricultural and other	$	6,223	65.69	%	0.12	%	$	6,735	17.68	%	0.10	%
Real estate construction	(135)		(1.43)		—		54		0.14		—
Residential real estate	(179)		(1.89)		—		9,910		26.02		0.14
Commercial real estate	1,529		16.14		0.03		20,889		54.85		0.31
Loans to individuals	2,036		21.49		0.04		498		1.31		0.01
Total loans, net of unearned income	$	9,474	100.00	%	0.19	%	$	38,086	100.00	%	0.56	%


		Actual				Minimum Capital Required			Required to be Considered Well Capitalized					Actual								Minimum Capital Required	Required to be Considered Well Capitalized
		Capital Amount		Ratio			Capital Amount		Ratio			Capital Amount			Ratio			Capital Amount		Ratio			Capital Amount		Ratio		Capital Amount		Ratio
		(dollars in thousands)									(dollars in thousands)
Total Capital to Risk Weighted Assets	Total Capital to Risk Weighted Assets																Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	First Commonwealth Financial Corporation	$	992,342	14.44	%		$	721,538	10.50	%		$	687,179		10.00	%	First Commonwealth Financial Corporation	$	1,064,222	14.95	%		$	747,543	10.50	%	$	711,946	10.00	%
First Commonwealth Bank	First Commonwealth Bank	967,486		14.11			719,943		10.50			685,660			10.00		First Commonwealth Bank	1,024,770		14.44			745,329		10.50		709,837		10.00
Tier I Capital to Risk Weighted Assets	Tier I Capital to Risk Weighted Assets																Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	First Commonwealth Financial Corporation	$	807,968	11.76	%		$	584,102	8.50	%		$	549,744		8.00	%	First Commonwealth Financial Corporation	$	885,720	12.44	%		$	605,154	8.50	%	$	569,557	8.00	%
First Commonwealth Bank	First Commonwealth Bank	783,300		11.42			582,811		8.50			548,528			8.00		First Commonwealth Bank	846,268		11.92			603,362		8.50		567,870		8.00
Tier I Capital to Average Assets	Tier I Capital to Average Assets																Tier I Capital to Average Assets
First Commonwealth Financial Corporation	First Commonwealth Financial Corporation	$	807,968	8.94	%		$	361,699	4.00	%		$	452,124		5.00	%	First Commonwealth Financial Corporation	$	885,720	9.63	%		$	367,761	4.00	%	$	459,701	5.00	%
First Commonwealth Bank	First Commonwealth Bank	783,300		8.68			360,923		4.00			451,154			5.00		First Commonwealth Bank	846,268		9.22			366,973		4.00		458,717		5.00
Common Equity Tier I to Risk Weighted Assets	Common Equity Tier I to Risk Weighted Assets																Common Equity Tier I to Risk Weighted Assets
First Commonwealth Financial Corporation	First Commonwealth Financial Corporation	$	737,968	10.74	%		$	481,026	7.00	%		$	446,667		6.50	%	First Commonwealth Financial Corporation	$	815,720	11.46	%		$	498,362	7.00	%	$	462,765	6.50	%
First Commonwealth Bank	First Commonwealth Bank	783,300		11.42			479,962		7.00			445,679			6.50		First Commonwealth Bank	846,268		11.92			496,886		7.00		461,394		6.50


Month Ending:	Total Number of Shares Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs*
July 31, 2020	—	—		—	1,985,972
August 31, 2020	—	—		—	1,906,048
September 30, 2020	1,207,916	7.58		1,207,916	836,734

Total	1,207,916	$	7.58	1,207,916

* Remaining number of shares approved under the Plan is based on the market value of the Company's common stock of $7.87 at July 31, 2020, $8.20 at August 31, 2020 and $7.74 at September 30, 2020.


DATED: November ~~6, 2020~~8, 2021						/s/ T. Michael Price
						T. Michael Price President and Chief Executive Officer

DATED: November ~~6, 2020~~8, 2021						/s/ James R. Reske
						James R. Reske Executive Vice President, Chief Financial Officer and Treasurer