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Press Release

First Commonwealth Announces Third Quarter 2018 Earnings; Declares Quarterly Dividend and Announces $25 Million Share Repurchase Program

Company Release - 10/23/2018 5:00 PM ET

INDIANA, Pa., Oct. 23, 2018 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2018.

Third Quarter 2018 Highlights      

 Earnings

  • Third quarter net income was $25.1 million, or $0.25 diluted earnings per share, as compared to $21.3 million, or $0.22 diluted earnings per share in the third quarter of 2017 and $32.1 million, or $0.32 diluted earnings per share in the second quarter of 2018.
    • Core net income (adjusted only for acquisition expenses) was $25.2 million, or $0.25 diluted earnings per share, an increase of $0.03 from the third quarter of 2017.
  • Total revenue decreased $6.4 million, or 7.1% from the prior quarter.
    • Net interest income (FTE) increased $0.1 million from the prior quarter, despite the recognition of $1.5 million in unusual items in the prior quarter.
    • Noninterest income decreased $6.6 million from the prior quarter primarily due to $5.3 million in net security gains recognized during the second quarter of 2018 as the result of the successful auction call and open market sale of the company’s remaining pooled trust preferred securities, a $1.2 million gain on the sale of a restructured commercial credit recognized in the second quarter, and a $0.6 million decrease in bank owned life insurance income due to higher death claim benefits recorded during the previous quarter.
  • Total noninterest expense increased $0.4 million, or 0.8% from the previous quarter.
  • Provision for credit losses totaled $3.0 million, an increase of $1.8 million as compared to the prior quarter.

Margin

  • The total cost of interest-bearing demand and savings deposits increased five basis points from the previous quarter, compared to a 25 basis point increase in the Federal Funds Target Rate in the quarter.  This equates to an effective deposit beta of 20%, down from 40% in the previous quarter.
    • Average deposits grew by $78.2 million, or 5.4% (annualized) as compared to the prior quarter, or 2.2% (annualized) excluding deposits acquired with the acquisition of Foundation Bank.
  • Loan yields increased one basis point from the previous quarter; however, loan yields adjusted for the recognition of previously unrecognized interest income in the second quarter improved by 10 basis points during the quarter.
    • End of period loans grew $23.9 million, or 1.7% (annualized) as compared to the prior quarter.
  • The net interest margin was 3.67% in the third quarter of 2018, as compared to 3.61% in the third quarter of 2017 and 3.78% in the prior quarter.
    • During the second quarter of 2018, the company recognized a total of $1.5 million of previously unrecognized interest from the successful resolution of assets that had previously been impaired.  This resulted in a benefit of nine basis points to the net interest margin during the second quarter of 2018.
    • Also during the second quarter of 2018, the company issued $100 million in subordinated debt.  Approximately half of the proceeds were reinvested in securities and the remaining portion was used to pay down short term borrowings, the net effect of which was a 3 basis point negative impact on the net interest margin in the second quarter and a 6 basis point negative impact in the third quarter.
    • In addition, the net interest margin decreased by one basis point from the previous quarter due to reduced purchase accounting accretion.

Profitability

  • Return on average assets improved 16 basis points to 1.30% as compared to the third quarter of 2017, and was 1.44% for the nine months ended September 30, 2018.
    • Core return on average assets (excluding only merger-related expenses) was 1.46% for the nine months ending September 30, 2018, as compared to 1.08% in the prior year period.
  • The annualized return on average tangible common equity for the third quarter of 2018 was 15.01%, and was 16.88% for the nine months ended September 30, 2018.
    • Core return on average tangible common equity (excluding only merger-related expenses) was 17.14% for the nine months ending September 30, 2018, as compared to 13.42% in the prior year period.
  • The core efficiency ratio was 57.82% in the third quarter of 2018, as compared to 55.23% and 57.96% in the second quarter of 2018 and third quarter of 2017, respectively.

“We continue to position ourselves for long-term success and I am pleased with the outcome this quarter,” stated T. Michael Price, President and Chief Executive Officer.  “Although somewhat muted by large pay downs, our new loan production this quarter was running at its highest level in several years and our locally sourced core deposit base continues to prove to be a stable source of low-cost funding.  We also remained disciplined in managing our operating expenses while investing in our new geographies and business lines, including our digital delivery platform.”  Price continued, “And as a community bank, we are also committed to our communities.  I am proud of the many ways our employees display this commitment, day in and day out, by helping to improve the lives of our neighbors and their businesses.”

Financial Summary

(dollars in thousands,For the Three Months Ended For the Nine Months Ended
except per share data)September 30, June 30, September 30, September 30, September 30,
  2018
  2018
  2017
  2018
  2017
Reported Results         
Net income$25,149 $32,081 $21,283 $80,500 $51,184
Diluted earnings per share$0.25 $0.32 $0.22 $0.81 $0.54
Return on average assets1.30% 1.71% 1.14% 1.44% 0.96%
Return on average equity10.28% 13.74% 9.50% 11.53% 8.15%
          
Operating Results (non-GAAP)(1)         
Core net income$25,168 $33,087 $21,238 $81,791 $57,952
Core diluted earnings per share$0.25 $0.33 $0.22 $0.82 $0.61
Core return on average assets1.30% 1.76% 1.14% 1.46% 1.08%
Return on average tangible common equity15.01% 20.08% 14.04% 16.88% 11.89%
Core return on average tangible common equity15.02% 20.70% 14.01% 17.14% 13.42%
Core efficiency ratio57.82% 55.23% 57.96% 57.05% 59.49%
Net interest margin (FTE)3.67% 3.78% 3.61% 3.71% 3.55%

(1)       Core operating results are a non-GAAP measure used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. See supplemental information included with the release for "non-GAAP Financial Measures and Key Performance Indicators" and additional information.
               
Earnings

Net income for the third quarter of 2018 was $25.1 million, as compared to $32.1 million in the previous quarter and $21.3 million for the third quarter of 2017.

Excluding merger-related expenses, core net income for the third quarter of 2018 was $25.2 million, as compared to $33.1 million in the previous quarter and $21.2 million for the third quarter of 2017, representing a $7.9 million decrease and $3.9 million increase, respectively.  Core net income in the second quarter of 2018 included net security gains of $5.3 million.  The company did not recognize any security gains in the third quarter of 2018.

Net income for the first nine months of 2018 was $80.5 million, as compared to $51.2 million for the same period in 2017.  Excluding merger-related expenses of $1.3 million after tax, core net income for the first nine months of 2018 was $81.8 million.

Net Interest Income and Net Interest Margin

The total cost of interest-bearing demand and savings deposits increased five basis points from the previous quarter, compared to a 25 basis point increase in the Federal Funds Target Rate in the quarter.  This equates to an effective deposit beta of 20%, down from 40% in the previous quarter.

The increased cost of interest-bearing deposits was partially offset by $16.9 million growth in average noninterest-bearing deposits.  Loan yields increased one basis point from the previous quarter; however, loan yields, as adjusted for the recognition of previously unrecognized interest income in the second quarter from the successful resolution of assets that had been previously impaired, improved by 10 basis points during the quarter.

During the third quarter of 2018, net interest income (FTE) was $64.3 million, an increase of $0.1 million from the previous quarter.  The increase in net interest income was the result of a $132 million increase in average interest-earning assets due, in part, to the acquisition of Foundation Bank on May 1, 2018, and the aforementioned increase in loan yields, largely offset by $1.5 million in interest income recognized in the prior quarter as the result of the sale of one commercial credit and the sale of the company’s remaining pooled trust preferred securities.

The net interest margin for the third quarter of 2018 was 3.67%, a decrease of 11 basis points from the previous quarter and an increase of six basis points from the third quarter of 2017.  The recognition of $1.5 million in interest in the prior quarter related to the sale of one commercial loan and the sale of the trust preferred portfolio accounted for approximately nine basis points of this decline.

The net effect of the subordinated debt on the net interest margin was a three basis point negative impact on the net interest margin in the second quarter and six basis points in the third quarter.  Purchase accounting accretion’s impact on the net interest margin totaled five basis points in the third quarter as compared to six basis points in the second quarter of 2018.

Average short-term borrowings decreased $32.0 million from the previous quarter and $260.3 million from the third quarter of 2017.  Average short-term borrowings represented 8.6% of total funds during the third quarter of 2018 as compared to 12.9% during the prior year quarter.

Average deposits grew $78.2 million from the previous quarter, primarily driven by a $54.2 million increase in retail time deposits and a $16.9 million increase in noninterest bearing deposits.

Credit Quality

The provision for credit losses totaled $3.0 million for the quarter ended September 30, 2018, an increase of $1.8 million from the prior and same quarter last year.  The increase from the prior quarter is primarily due to two commercial real estate credits totaling $5.0 million which were downgraded to nonperforming status during the quarter.

At September 30, 2018, nonperforming loans were $39.8 million, a decrease of $6.0 million from June 30, 2018.  The decrease from the previous quarter was primarily related to a $4.3 million pay down from one commercial and industrial (C&I) borrower and the charge-off and subsequent sale of a $3.8 million C&I credit, partially offset by the aforementioned downgrade of two commercial real estate credits to nonperforming status.  Nonperforming loans as a percentage of total loans were 0.70%, 0.81% and 0.72% for the periods ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively.

During the third quarter of 2018, net charge-offs were $3.5 million, or 0.25% of average loans outstanding, as compared to $3.6 million in the prior quarter and $1.1 million in the third quarter of 2017.  Net charge-offs in the third quarter of 2018 included a $2.2 million charge-off on the aforementioned C&I credit.

For the originated loan portfolio at September 30, 2018, the allowance for credit losses to total originated loans was 0.98%, compared to 1.01% at June 30, 2018 and 0.97% at September 30, 2017.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $19.8 million for the third quarter of 2018 as compared to $21.0 million for the second quarter of 2018 and $19.7 million for the third quarter of 2017.  The decrease from the prior quarter was primarily due to a $1.2 million gain on the sale of a restructured commercial credit in the second quarter of 2018.  Additionally, bank owned life insurance income decreased $0.6 million from the previous quarter due to higher death claim benefits recorded during the previous quarter.

The company did not recognize any net security gains during the third quarter, as compared to $5.3 million during the second quarter of 2018 and $0.1 million during the third quarter of 2017.  The decrease from the previous quarter was the result of the successful auction call and open market sale of the company’s remaining pooled trust preferred securities during the prior quarter.

Noninterest expense (excluding merger-related expenses) totaled $49.5 million in the third quarter of 2018, as compared to $47.9 million for the second quarter of 2018 and $47.4 million for the third quarter of 2017.  The increase from the previous quarter was primarily driven by a $1.1 million increase in mortgage banking and related hedging expense, partially offset by a $0.4 million decrease in FDIC insurance expense as a result of a decrease in the Bank’s assessment rate.

The increase from the prior year quarter was primarily due to a $0.3 million increase in the aforementioned mortgage banking expense and higher salaries, occupancy, data processing and advertising expenses resulting from the company’s aforementioned acquisition of Foundation Bank in the second quarter of 2018 and continued expansion efforts.  The increase from the third quarter of 2017 was partially offset by a $0.5 million decrease in FDIC insurance expense.

Full time equivalent staff was 1,417 at September 30, 2018, as compared to 1,438 at June 30, 2018 and 1,366 at September 30, 2017.  The increase from the prior year period is the result of the addition of employees from the aforementioned acquisition and the company’s ongoing expansion in its mortgage, commercial banking, wealth management, and SBA businesses.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.09 per share, which is payable on November 16, 2018 to shareholders of record as of November 2, 2018. This dividend represents a 2.5% projected annual yield utilizing the October 22, 2018 closing market price of $14.40.

The company also announced today that its Board of Directors has authorized a new $25 million share repurchase program of the company's common stock.  Under this program, management is authorized to repurchase shares through Rule 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or otherwise in a manner that is intended to comply with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934.  First Commonwealth may suspend or discontinue the program at any time.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2018 were 15.1%, 12.6%, 10.5%, and 11.4%, respectively.  First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its financial results for the third quarter 2018 on Wednesday, October 24, 2018 at 2:00 PM (ET).  The call can be accessed by dialing (toll free) 1-844-792-3645 or through the company’s web page, http://www.fcbanking.com/InvestorRelations.  A replay of the call will be available approximately one hour following the conclusion of the conference by dialing 1-877-344-7529 and entering the access code # 10124779.  A link to the webcast replay will also be accessible on the company’s web page for 30 days.

About First Commonwealth Financial Corporation

First Commonwealth Financial Corporation (NYSE:FCF), headquartered in Indiana, Pennsylvania, is a financial services company with 140 banking offices in 22 counties throughout western and central Pennsylvania and Ohio, as well as Corporate Banking Centers in Pittsburgh, Pennsylvania and Cleveland and Columbus, Ohio. The company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson and Dublin, Ohio. First Commonwealth provides a full range of commercial banking, consumer banking, mortgage, wealth management and insurance products and services through its subsidiaries First Commonwealth Bank and First Commonwealth Insurance Agency. For more information about First Commonwealth or to open an account today, please visit www.fcbanking.com.

Forward-Looking Statements

This release contains forward-looking statements about First Commonwealth’s future plans, strategies and financial performance.  These statements can be identified by the fact that they do not relate strictly to historical or current facts and often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."  Such statements are based on assumptions and involve risks and uncertainties, many of which are beyond First Commonwealth’s control.  Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national and international economic conditions and the impact they may have on First Commonwealth and its customers; (2) volatility and disruption in national and international financial markets; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (4) inflation, interest rate, commodity price, securities market and monetary fluctuations; (5) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance); (6) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (7)  changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (8) political instability; (9) acts of God or of war or terrorism; (10) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (11) changes in consumer spending, borrowings and savings habits; (12) First Commonwealth’s ability to attract and retain qualified employees; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) the reliability of First Commonwealth’s vendors, internal control systems or information systems; (16) the ability to increase market share and control expenses; (17) impairment of First Commonwealth’s goodwill or other intangible assets; (18) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (19) the soundness of other financial institutions; (20) the costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals; and (21) other risks and uncertainties described in the reports that First Commonwealth files with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. Forward-looking statements speak only as of the date on which they are made. First Commonwealth undertakes no obligation to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Media Relations
Kristine N. Levan
Vice President / Marketing and Communications Manager
Phone:  724-463-4777
E-mail:  [email protected]

Investor Relations
Ryan M. Thomas
Vice President / Finance and Investor Relations
Phone: 724-463-1690
E-mail: [email protected]


       
FIRST COMMONWEALTH FINANCIAL CORPORATION      
CONSOLIDATED FINANCIAL DATA         
Unaudited         
(dollars in thousands, except per share data)         
 For the Three Months Ended For the Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
 2018 2018 2017 2018 2017
SUMMARY RESULTS OF OPERATIONS         
Net interest income (FTE) (1)$64,311  $64,192  $60,667  $188,682  $172,381 
Provision for credit losses2,961  1,168  1,214  11,032  2,834 
Noninterest income19,757  26,308  19,790  68,108  55,626 
Noninterest expense49,530  49,129  47,361  145,532  148,389 
Net income25,149  32,081  21,283  80,500  51,184 
Core net income (5)25,168  33,087  21,238  81,791  57,952 
          
Earnings per common share (diluted)$0.25  $0.32  $0.22  $0.81  $0.54 
Core earnings per common share (diluted) (6)$0.25  $0.33  $0.22  $0.82  $0.61 
          
KEY FINANCIAL RATIOS         
          
Return on average assets1.30% 1.71% 1.14% 1.44% 0.96%
Core return on average assets (7)1.30% 1.76% 1.14% 1.46% 1.08%
Return on average shareholders' equity10.28% 13.74% 9.50% 11.53% 8.15%
Return on average tangible common equity (8)15.01% 20.08% 14.04% 16.88% 11.89%
Core return on average tangible common equity (9)15.02% 20.70% 14.01% 17.14% 13.42%
Core efficiency ratio (2)(10)57.82% 55.23% 57.96% 57.05% 59.49%
Net interest margin (FTE) (1)3.67% 3.78% 3.61% 3.71% 3.55%
          
Book value per common share$9.69  $9.57  $9.17     
Tangible book value per common share (11)6.82  6.69  6.39     
Market value per common share16.14  15.51  14.13     
Cash dividends declared per common share0.09  0.09  0.08  $0.26  $0.24 
          
ASSET QUALITY RATIOS         
Nonperforming loans as a percent of end-of-period loans (3)0.70% 0.81% 0.72%    
Nonperforming assets as a percent of total assets (3)0.57% 0.65% 0.61%    
Net charge-offs as a percent of average loans (annualized) (4)0.25% 0.26% 0.08%    
Allowance for credit losses as a percent of nonperforming loans (4)127.35% 111.89% 124.16%    
Allowance for credit losses as a percent of end-of-period loans (4)0.90% 0.91% 0.90%    
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases0.98% 1.01% 0.97%    
          
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets12.7% 12.6% 12.1%    
Tangible common equity as a percent of tangible assets (12)9.3% 9.1% 8.8%    
Leverage Ratio10.5% 10.4% 9.7%    
Risk Based Capital - Tier I12.6% 12.3% 11.5%    
Risk Based Capital - Total15.1% 14.8% 12.3%    
Common Equity - Tier I11.4% 11.2% 10.3%    


     
     
     
FIRST COMMONWEALTH FINANCIAL CORPORATION    
CONSOLIDATED FINANCIAL DATA      
Unaudited      
(dollars in thousands, except per share data)      
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 201820182017 20182017
INCOME STATEMENT      
  Interest income$74,873 $72,940 $65,411  $214,312 $184,710 
  Interest expense11,060 9,265 5,848  27,139 15,500 
Net Interest Income63,813 63,675 59,563  187,173 169,210 
  Taxable equivalent adjustment (1)498 517 1,104  1,509 3,171 
Net Interest Income  (FTE)64,311 64,192 60,667  188,682 172,381 
  Provision for credit losses2,961 1,168 1,214  11,032 2,834 
Net Interest Income after Provision for Credit Losses (FTE)61,350 63,024 59,453  177,650 169,547 
       
  Net securities gains (losses) 5,262 92  8,102 695 
  Trust income2,206 1,880 2,147  6,014 5,275 
  Service charges on deposit accounts4,589 4,423 4,803  13,418 13,858 
  Insurance and retail brokerage commissions1,872 1,820 2,128  5,560 6,652 
  Income from bank owned life insurance1,579 2,168 1,472  5,241 4,213 
  Gain on sale of mortgage loans1,542 1,241 1,418  4,267 3,710 
  Gain on sale of other loans and assets643 2,331 503  3,548 1,267 
  Card-related interchange income5,044 5,143 4,780  14,929 13,873 
Derivative mark-to-market  (14) 789 (49)
Swap fee income528 297 217  1,115 458 
  Other income1,754 1,743 2,244  5,125 5,674 
Total Noninterest Income19,757 26,308 19,790  68,108 55,626 
       
  Salaries and employee benefits26,553 26,154 26,169  77,580 74,933 
  Net occupancy4,341 4,222 3,715  12,932 11,597 
  Furniture and equipment3,424 3,647 3,342  10,611 9,753 
  Data processing2,853 2,478 2,229  7,764 6,659 
  Pennsylvania shares tax1,248 1,247 1,093  3,398 3,070 
  Advertising and promotion1,200 1,176 941  3,185 2,735 
  Intangible amortization817 829 844  2,430 2,262 
  Collection and repossession630 607 402  2,060 1,342 
  Other professional fees and services962 1,031 1,300  3,000 3,355 
  FDIC insurance217 597 696  1,590 2,466 
  Litigation and operational losses435 197 598  811 1,107 
  Loss on sale or write-down of assets181 497 167  875 1,486 
  Merger and acquisition related24 1,273 (69) 1,634 10,412 
  Other operating expenses6,645 5,174 5,934  17,662 17,212 
Total Noninterest Expense49,530 49,129 47,361  145,532 148,389 
       
Income before Income Taxes31,577 40,203 31,882  100,226 76,784 
  Taxable equivalent adjustment (1)498 517 1,104  1,509 3,171 
  Income tax provision5,930 7,605 9,495  18,217 22,429 
Net Income$25,149 $32,081 $21,283  $80,500 $51,184 
       
Shares Outstanding at End of Period100,361,434100,364,56797,475,575 100,361,43497,475,575
Average Shares Outstanding Assuming Dilution100,490,81299,504,40997,457,470 99,197,56894,578,490
       
       
       


FIRST COMMONWEALTH FINANCIAL CORPORATION   
CONSOLIDATED FINANCIAL DATA     
Unaudited     
(dollars in thousands)     
      
 September 30, June 30, September 30,
 2018 2018 2017
BALANCE SHEET (Period End)     
Assets     
  Cash and due from banks$93,162  $101,744  $98,319 
  Interest-bearing bank deposits3,022  2,237  29,709 
  Securities available for sale, at fair value914,085  876,570  810,946 
  Securities held to maturity, at amortized cost389,621  403,019  436,081 
  Loans held for sale8,287  7,038  17,100 
      
  Loans5,662,782  5,640,106  5,375,847 
  Allowance for credit losses(50,746) (51,314) (48,176)
  Net loans5,612,036  5,588,792  5,327,671 
      
  Goodwill and other intangibles288,028  289,051  271,347 
  Other assets378,104  380,304  393,166 
Total Assets$7,686,345  $7,648,755  $7,384,339 
      
Liabilities and Shareholders' Equity     
  Noninterest-bearing demand deposits$1,451,284  $1,489,058  $1,416,814 
      
  Interest-bearing demand deposits181,504  126,296  264,731 
  Savings deposits3,453,461  3,516,714  3,290,978 
  Time deposits808,894  781,506  582,534 
  Total interest-bearing deposits4,443,859  4,424,516  4,138,243 
      
  Total deposits5,895,143  5,913,574  5,555,057 
      
  Short-term borrowings587,806  545,187  805,825 
  Long-term borrowings185,266  185,568  88,155 
  Total borrowings773,072  730,755  893,980 
      
  Other liabilities45,199  43,641  41,001 
  Shareholders' equity972,931  960,785  894,301 
Total Liabilities and Shareholders' Equity$7,686,345  $7,648,755  $7,384,339 


 
 
 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited  
(dollars in thousands)  
    
 For the Three Months Ended For the Nine Months Ended
 September 30,Yield/June 30,Yield/September 30,Yield/ September 30,Yield/September 30,Yield/
 2018Rate2018Rate2017Rate 2018Rate2017Rate
NET INTEREST MARGIN         
            
Assets           
Loans (FTE)(1)(3)$5,657,390 4.66%$5,551,053 4.65%$5,398,815 4.28% $5,541,600 4.58%$5,226,320 4.17%
Securities and interest bearing bank deposits (FTE) (1)1,289,178 2.73%1,263,956 2.89%1,265,416 2.60% 1,250,952 2.79%1,263,614 2.63%
Total Interest-Earning Assets (FTE) (1)6,946,568 4.30%6,815,009 4.32%6,664,231 3.96% 6,792,552 4.25%6,489,934 3.87%
Noninterest-earning assets715,461  705,076  713,142   702,938  668,517  
Total Assets$7,662,029  $7,520,085  $7,377,373   $7,495,490  $7,158,451  
            
Liabilities and Shareholders' Equity           
Interest-bearing demand and savings deposits$3,657,439 0.40%$3,650,406 0.35%$3,576,365 0.18% $3,627,308 0.34%$3,398,428 0.15%
Time deposits786,912 1.18%732,677 1.02%562,868 0.64% 718,164 1.03%572,128 0.62%
Short-term borrowings569,666 1.81%601,633 1.66%829,954 1.16% 614,103 1.61%887,463 0.96%
Long-term borrowings185,401 5.24%131,851 5.12%88,256 4.18% 135,368 5.05%85,843 4.07%
Total Interest-Bearing Liabilities5,199,418 0.84%5,116,567 0.73%5,057,443 0.46% 5,094,943 0.71%4,943,862 0.42%
Noninterest-bearing deposits1,447,948  1,431,007  1,393,024   1,426,566  1,337,328  
Other liabilities44,261  35,918  38,125   40,492  37,415  
Shareholders' equity970,402  936,593  888,781   933,489  839,846  
Total Noninterest-Bearing Funding Sources2,462,611  2,403,518  2,319,930   2,400,547  2,214,589  
Total Liabilities and Shareholders' Equity$7,662,029  $7,520,085  $7,377,373   $7,495,490  $7,158,451  
            
Net Interest Margin (FTE) (annualized)(1) 3.67% 3.78% 3.61%  3.71% 3.55%


  
  
  
FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA   
Unaudited   
(dollars in thousands)   
 September 30,June 30,September 30,
 201820182017
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,116,204 $1,130,638 $1,154,225 
Commercial real estate2,136,431 2,172,615 1,990,264 
Real estate construction298,395 259,825 259,129 
Total Commercial3,551,030 3,563,078 3,403,618 
    
Consumer Loan Portfolio:   
Closed-end mortgages1,008,411 996,324 893,809 
Home equity lines of credit524,927 522,526 529,613 
Total Real Estate - Consumer1,533,338 1,518,850 1,423,422 
    
Auto loans476,536 459,333 454,320 
Direct installment33,415 31,915 24,995 
Personal lines of credit59,927 57,789 58,880 
Student loans8,536 9,141 10,612 
Total Other Consumer578,414 558,178 548,807 
Total Consumer Portfolio2,111,752 2,077,028 1,972,229 
  Total Portfolio Loans5,662,782 5,640,106 5,375,847 
Loans held for sale8,287 7,038 17,100 
  Total Loans$5,671,069 $5,647,144 $5,392,947 
    
    
 September 30,June 30,September 30,
 201820182017
ASSET QUALITY DETAIL   
Nonperforming Loans:   
Loans on nonaccrual basis$17,921 $16,128 $14,943 
Troubled debt restructured loans on nonaccrual basis13,876 18,573 11,408 
Troubled debt restructured loans on accrual basis8,052 11,162 12,451 
  Total Nonperforming Loans$39,849 $45,863 $38,802 
Other real estate owned ("OREO")3,874 3,757 5,701 
Repossessions ("Repos")135 298 200 
  Total Nonperforming Assets$43,858 $49,918 $44,703 
Loans past due in excess of 90 days and still accruing1,647 1,725 1,332 
Classified loans50,079 60,511 65,948 
Criticized loans141,591 142,145 125,034 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos0.77%0.88%0.83%
Allowance for credit losses$50,746 $51,314 $48,176 
    
    
    


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 201820182017 20182017
Net Charge-offs (Recoveries):      
  Commercial, financial, agricultural and other$2,516 $291 $315  $2,834 $1,956 
  Real estate construction(92) (373) (99)(470)
  Commercial real estate(36)2,225 (25) 2,288 (115)
  Residential real estate226 104 276  709 676 
  Loans to individuals915 966 912  2,852 2,796 
Net Charge-offs$3,529 $3,586 $1,105  $8,584 $4,843 
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4)0.25%0.26%0.08% 0.21%0.12%
Provision for credit losses as a percentage of net charge-offs83.90%32.57%109.86% 128.52%58.52%
Provision for credit losses$2,961 $1,168 $1,214  $11,032 $2,834 


DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES   
       
(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the 21% federal income tax statutory rate.
(2) Core efficiency ratio excludes from total revenue the impact of derivative mark-to-market and excludes from "total noninterest expense" the amortization of intangibles, unfunded commitment expense and any other unusual items deemed by management to not be related to normal operations, such as merger, acquisition and severance costs.
(3) Includes held for sale loans.
(4) Excludes held for sale loans.  
       
       
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 201820182017 20182017
       
Net Income$25,149 $32,081 $21,283  $80,500 $51,184 
Intangible amortization817 829 844  2,430 2,262 
Tax benefit of amortization of intangibles(172)(174)(295) (510)(792)
Net Income, adjusted for tax affected amortization of intangibles25,794 32,736 21,832  82,420 52,654 
       
Average Tangible Equity:      
  Total shareholders' equity$970,402 $936,593 $888,781  $933,489 $839,846 
  Less: intangible assets288,570 282,734 271,670  280,485 247,679 
    Tangible Equity681,832 653,859 617,111  653,004 592,167 
  Less: preferred stock      
    Tangible Common Equity$681,832 $653,859 $617,111  $653,004 $592,167 
       
(8)Return on Average Tangible Common Equity15.01%20.08%14.04% 16.88%11.89%
       


 
 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
      
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES     
   
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 201820182017 20182017
       
Core Net Income:      
Total Net Income$25,149 $32,081 $21,283  $80,500 $51,184 
Merger & Acquisition related expenses24 1,273 (69) 1,634 10,412 
Tax benefit of merger & acquisition related expenses(5)(267)24  (343)(3,644)
(5) Core net income25,168 33,087 21,238  81,791 57,952 
Average Shares Outstanding Assuming Dilution100,490,81299,504,40997,457,470 99,197,56894,578,490
(6) Core Earnings per common share (diluted)$0.25 $0.33 $0.22  $0.82 $0.61 
       
      Intangible amortization817 829 844  2,430 2,262 
      Tax benefit of amortization of intangibles(172)(174)(295) (510)(792)
        Core Net Income, adjusted for tax affected amortization of               intangibles$25,813 $33,742 $21,787  $83,711 $59,422 
       
(9) Core Return on Average Tangible Common Equity15.02%20.70%14.01% 17.14%13.42%
       
       
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 201820182017 20182017
Core Return on Average Assets:      
Total Net Income$25,149 $32,081 $21,283  $80,500 $51,184 
Total Average Assets7,662,029 7,520,085 7,377,373  7,495,490 7,158,451 
Return on Average Assets1.30%1.71%1.14% 1.44%0.96%
       
Core Net Income (5)$25,168 $33,087 $21,238  $81,791 $57,952 
Total Average Assets7,662,029 7,520,085 7,377,373  7,495,490 7,158,451 
(7) Core Return on Average Assets1.30%1.76%1.14% 1.46%1.08%


      
      
      
FIRST COMMONWEALTH FINANCIAL CORPORATION     
CONSOLIDATED FINANCIAL DATA     
Unaudited     
(dollars in thousands)     
      
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES     
       
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 201820182017 20182017
Core Efficiency Ratio:      
Total Noninterest Expense$49,530 $49,129 $47,361  $145,532 $148,389 
Adjustments to Noninterest Expense:      
Unfunded commitment reserve82 (46)(1) 41 451 
Intangible amortization817 829 844  2,430 2,262 
Merger and acquisition related24 1,273 (69) 1,634 10,412 
   Noninterest Expense - Core$48,607 $47,073 $46,587  $141,427 $135,264 
       
Net interest income, fully tax equivalent$64,311 $64,192 $60,667  $188,682 $172,381 
Total noninterest income19,757 26,308 19,790  68,108 55,626 
Net securities gains (5,262)(92) (8,102)(695)
Total Revenue$84,068 $85,238 $80,365  $248,688 $227,312 
       
Adjustments to Revenue:      
Derivative mark-to-market  (14) 789 (49)
   Total Revenue - Core$84,068 $85,238 $80,379  $247,899 $227,361 
       
(10)Core Efficiency Ratio57.82%55.23%57.96% 57.05%59.49%
       
       
 September 30,June 30,September 30,   
 201820182017   
Tangible Equity:      
  Total shareholders' equity$972,931 $960,785 $894,301    
  Less: intangible assets288,028 289,051 271,347    
    Tangible Equity684,903 671,734 622,954    
  Less: preferred stock      
    Tangible Common Equity$684,903 $671,734 $622,954    
       
Tangible Assets:      
  Total assets$7,686,345 $7,648,755 $7,384,339    
  Less: intangible assets288,028 289,051 271,347    
    Tangible Assets$7,398,317 $7,359,704 $7,112,992    
       
(12)Tangible Common Equity as a percentage of Tangible Assets9.26%9.13%8.76%   
       
  Shares Outstanding at End of Period100,361,434 100,364,567 97,475,575    
(11)Tangible Book Value Per Common Share$6.82 $6.69 $6.39    
       
Note: Management believes that it is standard practice in the banking industry to present these non-GAAP measures.  These measures provide useful information to management and investors by allowing them to make peer comparisons.

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Source: First Commonwealth Financial Corporation