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First Commonwealth Announces Third Quarter 2016 Financial Results; Declares Quarterly Dividend

/EINPresswire.com/ -- INDIANA, PA--(Marketwired - October 26, 2016) - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2016.

Third Quarter 2016 Highlights

Franchise Growth

  • First Commonwealth announced the acquisition of DCB Financial Corp. with nine full-service branches, $397 million in loans and $467 million in deposits in the Greater Columbus, Ohio region; and
  • First Commonwealth announced and received all regulatory approvals necessary to complete the acquisition of 13 FirstMerit branches in Canton and Ashtabula, Ohio.

Profitability

  • Return on average assets improved to 1.02% and is at the highest level since the third quarter of 2013;
  • The net interest margin improved two basis points to 3.29%; and
  • The efficiency ratio was 57.3% (or 56.7% on a core basis), driven by higher revenue and well controlled operational expenses.

Net Income

  • Third quarter net income was $17.2 million, or $0.19 diluted earnings per share and is at the highest level since the third quarter of 2006. Net income was impacted by the following items:
    • Net interest income of $50.6 million increased by $0.5 million compared to the prior quarter, primarily as a result of strong commercial loan growth;
    • Noninterest income of $17.0 million, excluding net securities gains, increased by $1.5 million compared to the prior quarter, driven by mortgage gain on sale income and a positive derivative mark-to-market of commercial loan interest rate swaps;
    • Noninterest expense of $38.7 million increased $1.3 million from the previous quarter due to an increase in the reserve for unfunded loan commitments and higher benefits costs; and
    • Provision for credit losses totaled $3.4 million, a decrease of $7.0 million from the previous quarter, primarily due to a $7.5 million specific reserve set aside against an energy-related credit in the second quarter of 2016.

"Our third quarter performance builds on the growing momentum of our core operating performance this year," stated T. Michael Price, President and Chief Executive Officer. "We are certainly encouraged by the achievement of an ROA of over 1.00% this quarter, but we remain focused on delivering on our long-term financial commitments, which include improving credit costs and controlling expenses. And in the near-term, it will be all hands on deck as we work to complete two previously announced acquisitions in our expanding Ohio market."

 
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,
    2016   2016   2015   2016   2015
Net income   $17,196   $12,007   $12,414   $41,676   $40,082
Diluted earnings per share   $0.19   $0.14   $0.14   $0.47   $0.45
Return on average assets   1.02%   0.72%   0.78%   0.83%   0.84%
Return on average equity   9.14%   6.53%   6.86%   7.53%   7.48%
Return on average tangible common equity (1)   11.74%   8.41%   8.87%   9.70%   9.68%
Efficiency ratio (1)   57.27%   57.06%   63.83%   58.12%   63.99%
Core efficiency ratio (1)   56.65%   56.88%   61.65%   57.67%   62.57%
Net interest margin (FTE)   3.29%   3.27%   3.25%   3.28%   3.29%
(1)See Supplemental Information - Definitions and reconciliation of non-GAAP financial measures
 

Financial Results Summary

For the three months ended September 30, 2016, net income was $17.2 million, or $0.19 diluted earnings per share, compared to net income of $12.0 million, or $0.14 diluted earnings per share, in the second quarter of 2016 and net income of $12.4 million, or $0.14 diluted earnings per share, in the third quarter of 2015. The increase in net income compared to the second quarter of 2016 was driven by a $7.0 million decrease in the provision for credit losses, a $1.5 million increase in noninterest income, and a $0.5 million increase in net interest income from the second quarter of 2016, offset by an increase of $1.3 million in noninterest expense. The increase in net income compared to the third quarter of 2015 was primarily driven by an increase of $3.0 million in net interest income, a $1.2 million decrease in the provision for credit losses, an increase in noninterest income of $1.5 million and a decrease of $1.6 million in noninterest expense.

For the nine months ended September 30, 2016, net income was $41.7 million, or $0.47 diluted earnings per share, compared to net income of $40.1 million, or $0.45 diluted earnings per share, for the comparable period in 2015. The increase in net income compared to 2015 was primarily the result of an increase of $7.6 million in net interest income and a decrease in noninterest expense of $6.5 million, offset by an $11.5 million increase in the provision for credit losses.

For the nine months ended September 30, 2016, return on average assets and return on average equity were 0.83% and 7.53%, respectively, as compared to 0.84% and 7.48% in the first nine months of 2015. Return on average tangible common equity was 9.70% for the first nine months of 2016 and 9.68% for the first nine months of 2015.

Net Interest Income and Net Interest Margin

Third quarter 2016 net interest income, on a fully taxable-equivalent basis, increased by $0.5 million to $50.6 million compared to the second quarter of 2016. The increase from the prior quarter was primarily the result of favorable replacement rates on commercial and consumer loan yields. The yield on interest-earning assets increased by two basis points and funding costs remained relatively stable during the quarter.

As compared to the third quarter of 2015, net interest income, on a fully taxable-equivalent basis, increased by $3.0 million, driven largely by a $324.3 million, or 5.6%, increase in average interest-earning assets. The net interest margin of 3.29% in the third quarter of 2016 was four basis points higher than in the third quarter of 2015. The increase came despite a seven basis point increase in funding costs that was offset by an eight basis point increase in the yield on interest-earning assets between the periods, and benefited from an increase of $88.7 million in average noninterest-bearing deposits.

For the nine months ended September 30, 2016, net interest income, on a fully taxable-equivalent basis, increased $7.6 million to $150.4 million as compared to the same period of 2015. The increase in net interest income was a result of a $310.2 million increase in the volume of average interest-earning assets and a four basis point increase in the yield on interest-earning assets, offset by a six basis point increase in funding costs.

Total deposits grew by $64.5 million in the third quarter of 2016, or 5.9% annualized. Average deposits increased by $15.9 million in the third quarter of 2016 from the prior quarter. Average deposits increased $163.8 million from the year-ago quarter, which includes the addition of $89.9 million in deposits acquired as part of the First Community acquisition. The year-over-year comparison is driven by decreases of $11.5 million in time deposits and $61.5 million in brokered deposits, offset by $148.0 million of core deposit growth in savings deposits and $88.7 million of core deposit growth in noninterest-bearing deposits.

Average short-term borrowings decreased $55.7 million from the prior quarter as securities maturities were not replaced due to unfavorable replacement yields, but increased $159.0 million over the year-ago period, partly due to the aforementioned runoff in time and brokered deposits compared to the prior year period. Average noninterest-bearing demand deposits increased $16.3 million as compared to the prior quarter and increased $88.7 million from the year-ago quarter, due in part to the addition of $11.6 million related to the First Community acquisition.

Noninterest-bearing demand deposits currently comprise 27.8% of total deposits. Average interest-bearing demand and savings deposits decreased $8.4 million from the prior quarter and increased $148.0 million from the year-ago period, which includes the addition of $36.1 million related to the First Community acquisition.

Credit Quality

The provision for credit losses totaled $3.4 million for the quarter ended September 30, 2016, a decrease of $7.0 million as compared to the prior quarter and a decrease of $1.2 million from the same quarter last year. The decrease from the prior quarter is primarily attributable to a $7.5 million reserve which was established for a credit related to the manufacturing of safety products for the mining industry in the second quarter of 2016.

At September 30, 2016, nonperforming loans were $54.8 million, a decrease of $9.6 million from June 30, 2016 and an increase of $14.0 million from September 30, 2015. The decrease from the second quarter of 2016 was related to the charge-off of the aforementioned energy credit that was placed into nonperforming status in the second quarter of 2016. Nonperforming loans as a percentage of total loans were 1.13%, 1.33% and 0.89% for the periods ended September 30, 2016, June 30, 2016 and September 30, 2015, respectively.

During the third quarter of 2016, net charge-offs were $8.5 million, compared to $5.8 million in the prior quarter and $1.4 million in the third quarter of 2015. Of the $8.5 million in net charge-offs in the third quarter, $6.5 million represented charge-offs related to the aforementioned energy credit that was placed into nonaccrual in the second quarter of 2016.

The allowance for credit losses was $54.7 million at September 30, 2016, and as a percentage of total loans outstanding was 1.13%, 1.24% and 1.06% for September 30, 2016, June 30, 2016 and September 30, 2015, respectively. General reserves as a percentage of non-impaired loans were 0.97%, 0.93% and 0.97% for September 30, 2016, June 30, 2016 and September 30, 2015, respectively.

Other real estate owned (OREO) acquired through foreclosure was $7.7 million at September 30, 2016 and $8.6 million at June 30, 2016 and $10.5 million at September 30, 2015. There were no significant additions to OREO in the third quarter of 2016.

Noninterest Income

Noninterest income, excluding net securities gains, increased $1.5 million in the third quarter of 2016 as compared to the prior quarter and $1.5 million compared to the same quarter last year. The increase from the prior quarter is primarily the result of a $1.0 million positive variance from the prior quarter in the adjustment for the derivative mark-to-market of commercial loan interest rate swaps, an increase of $0.3 million from the gain on sale of mortgage loans and an increase of $0.2 million in trust income.

The increase in noninterest income from the prior-year period of $1.5 million is primarily related to a positive variance of $1.3 million in the adjustment for the derivative mark-to-market of commercial loan interest rate swaps, as well as a $0.6 million increase in swap income, a $0.4 million increase in gain on sale of mortgage loans, offset by $0.4 million lower gains on sale of other assets.

For the nine months ended September 30, 2016, noninterest income, excluding net securities gains, remained relatively flat at $46.3 million as compared to the same period of 2015. Changes in the composition of noninterest income included increases of $1.0 million in gain on sale of mortgage loans, $1.3 million in swap fee income and $0.3 million in card-related interchange income, offset by a $0.7 million negative variance from prior year in the adjustment for the derivative mark-to-market of commercial loan interest rate swaps, a decrease of $0.4 million in trust income, a decrease of $0.5 million in insurance and retail brokerage commissions and $0.4 million in lower gains on sale of other assets.

Noninterest Expense

Noninterest expense increased $1.3 million to $38.7 million in the third quarter of 2016 as compared to the prior quarter and decreased $1.6 million as compared to the third quarter of 2015. Salaries and benefits increased $0.8 million as compared to the prior quarter primarily due to continued realignment of the staffing levels of our consumer banking businesses and from higher hospitalization costs. Also impacting noninterest expense as compared to the prior quarter was an increase in the reserve for unfunded loan commitments of $1.0 million (which is included in other operating expenses) and an increase of $0.3 million in other professional fees, offset by $0.3 million of lower operational losses.

Noninterest expense decreased $1.6 million in the third quarter of 2016 as compared to the third quarter of 2015, primarily attributable to decreases in salaries and benefits of $1.8 million as compared to the prior year due to the aforementioned realignment of our consumer banking businesses, lower benefits costs and a decline of $0.8 million in Pennsylvania shares tax expense due to a disputed assessment that was settled during the third quarter of 2015. These items were offset by an increase of $0.5 million in the reserve for unfunded loan commitments (which is included in other operating expenses) and $0.3 million increase in data processing costs.

For the nine months ending September 30, 2016, noninterest expense decreased $6.5 million, or 5.4%, as compared to the same period of 2015, driven by a decline in salaries and benefits of $4.1 million due to the previously mentioned realignment of our consumer businesses and lower benefits costs, a $0.9 million decrease in Pennsylvania shares tax expense, $0.4 million of decreased collection and repossession expenses, $0.5 million of lower operational losses, a $1.4 million decrease in loss on sale or write-down of assets and lower provision expense of $1.2 million associated with the reserve for unfunded loan commitments (which is included in other operating expenses). These decreases were offset by an increase of $0.9 million in data processing expense due to the issuance of chip debit cards during the first nine months of 2016.

Full time equivalent staff increased slightly to 1,179 at September 30, 2016 from 1,168 at June 30, 2016 and declined from 1,263 at September 30, 2015, respectively. The slight increase from June 30, 2016 is the result of the continued realignment of our consumer banking businesses. The decrease from September 30, 2015 is primarily attributable to staff reductions due to the realignment of our consumer banking businesses, offset by the recent expansion of our mortgage and commercial banking businesses in our Ohio market.

The efficiency ratio, calculated as total noninterest expense as a percentage of total revenue (which consists of net interest income on a fully taxable equivalent basis plus total noninterest income, excluding net securities gains), was 57.27% and 58.12% for the three and nine months ended September 30, 2016 as compared to 63.83% and 63.99% for the three and nine months ended September 30, 2015. The core efficiency ratio, which excludes securities gains and losses, amortization of intangible assets and other nonrecurring items, was 56.65% and 57.67% for the three and nine months ended September 30, 2016 as compared to 61.65% and 62.57% for the three and nine months ended September 30, 2015. The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported amounts, including a reconciliation of the core efficiency ratio.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.07 per share, which is payable on November 18, 2016 to shareholders of record as of November 7, 2016. This dividend represents a 2.8% projected annual yield utilizing the October 25, 2016 closing market price of $9.98.

On January 27, 2016, First Commonwealth's Board of Directors authorized an additional $25.0 million common stock repurchase program, under which the corporation repurchased 45,612 shares at an average price of $8.44 per share during 2016, totaling $0.4 million. This repurchase program was suspended in July as a result of the pending acquisition of 13 branches in Ohio. Management believes that the acquisition of these branches and of DCB Financial Corp. represents a better use of capital for shareholders in the near-term.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2016 were 12.6%, 11.6%, 10.0% and 10.3%, respectively. Our current capital levels exceed the fully-phased in Basel III capital requirements issued by the U.S. bank regulators.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its financial results for the third quarter 2016 on Wednesday, October 26, 2016 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 #10093909. 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 $6.7 billion in total assets and 109 banking offices in 17 counties throughout western and central Pennsylvania and central Ohio, as well as a Corporate Banking Center in northeast Ohio and mortgage offices in Stow 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 our 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) with which First Commonwealth must comply; (6) the soundness of other financial institutions; (7) political instability; (8) impairment of First Commonwealth's goodwill or other intangible assets; (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) changes in the financial performance and/or condition of First Commonwealth's borrowers; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) First Commonwealth's ability to attract and retain qualified employees; (16) changes in the competitive environment in First Commonwealth's markets and among banking organizations and other financial service providers; (17) the ability to increase market share and control expenses; (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 reliability of First Commonwealth's vendors, internal control systems or information systems; (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.

 
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,
    2016   2016   2015   2016   2015
SUMMARY RESULTS OF OPERATIONS                    
Net interest income (FTE) (1)   $ 50,569     $ 50,034     $ 47,568     $ 150,352     $ 142,763  
Provision for credit losses     3,408       10,372       4,621       20,306       8,818  
Noninterest income     16,994       15,558       15,505       46,267       46,043  
Noninterest expense     38,696       37,410       40,257       114,250       120,745  
Net income     17,196       12,007       12,414       41,676       40,082  
                                         
Earnings per common share (diluted)   $ 0.19     $ 0.14     $ 0.14     $ 0.47     $ 0.45  
                                         
KEY FINANCIAL RATIOS                                        
                                         
Return on average assets     1.02 %     0.72 %     0.78 %     0.83 %     0.84 %
Return on average shareholders' equity     9.14 %     6.53 %     6.86 %     7.53 %     7.48 %
Return on average tangible common equity (8)     11.74 %     8.41 %     8.87 %     9.70 %     9.68 %
Efficiency ratio (2)     57.27 %     57.06 %     63.83 %     58.12 %     63.99 %
Core efficiency ratio (3)     56.65 %     56.88 %     61.65 %     57.67 %     62.57 %
Net interest margin (FTE) (1)     3.29 %     3.27 %     3.25 %     3.28 %     3.29 %
                                         
Book value per common share   $ 8.45     $ 8.34     $ 8.12                  
Tangible book value per common share (7)     6.59       6.48       6.30                  
Market value per common share     10.09       9.20       9.09                  
Cash dividends declared per common share     0.07       0.07       0.07     $ 0.21     $ 0.21  
                                         
ASSET QUALITY RATIOS                                        
Nonperforming loans as a percent of end-of-period loans (4)     1.13 %     1.33 %     0.89 %                
Nonperforming assets as a percent of total assets (4)     0.94 %     1.09 %     0.81 %                
Net charge-offs as a percent of average loans (annualized)     0.70 %     0.48 %     0.13 %                
Allowance for credit losses as a percent of nonperforming loans (5)     99.83 %     92.88 %     118.84 %                
Allowance for credit losses as a percent of end-of-period loans (5)     1.13 %     1.24 %     1.06 %                
                                         
CAPITAL RATIOS                                        
Shareholders' equity as a percent of total assets     11.3 %     11.0 %     11.3 %                
Tangible common equity as a percent of tangible assets (6)     9.0 %     8.8 %     9.0 %                
Leverage Ratio     10.0 %     9.8 %     10.1 %                
Risk Based Capital - Tier I     11.6 %     11.1 %     11.5 %                
Risk Based Capital - Total     12.6 %     12.2 %     12.5 %                
Common Equity - Tier I     10.3 %     9.9 %     10.2 %                
                                         
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,
    2016   2016   2015   2016   2015
INCOME STATEMENT                    
  Interest income   $ 54,479   $ 53,850     $ 50,501     $ 161,682     $ 151,736  
  Interest expense     4,861     4,759       3,816       14,166       11,509  
Net Interest Income     49,618     49,091       46,685       147,516       140,227  
  Taxable equivalent adjustment (1)     951     943       883       2,836       2,536  
Net Interest Income (FTE)     50,569     50,034       47,568       150,352       142,763  
  Provision for credit losses     3,408     10,372       4,621       20,306       8,818  
Net Interest Income after Provision for Credit Losses (FTE)     47,161     39,662       42,947       130,046       133,945  
                                       
  Net securities (losses) gains     -     28       -       28       125  
  Trust income     1,523     1,320       1,614       4,098       4,511  
  Service charges on deposit accounts     3,975     3,845       4,081       11,528       11,271  
  Insurance and retail brokerage commissions     2,104     1,985       2,163       6,048       6,536  
  Income from bank owned life insurance     1,350     1,311       1,357       3,957       4,089  
  Gain on sale of mortgage loans     1,235     932       832       2,850       1,856  
  Gain on sale of other loans and assets     387     466       808       1,048       1,428  
  Card-related interchange income     3,698     3,784       3,637       11,039       10,784  
  Derivative mark-to-market     470     (531 )     (783 )     (1,075 )     (420 )
  Swap fee income     725     800       84       1,985       727  
  Other income     1,527     1,618       1,712       4,761       5,136  
Total Noninterest Income     16,994     15,558       15,505       46,267       46,043  
                                       
  Salaries and employee benefits     20,647     19,888       22,446       62,212       66,339  
  Net occupancy     3,176     3,186       3,291       9,843       10,518  
  Furniture and equipment     2,847     2,882       2,670       8,596       7,980  
  Data processing     1,832     1,788       1,558       5,379       4,505  
  Pennsylvania shares tax     914     1,092       1,713       2,764       3,617  
  Advertising and promotion     750     664       789       1,940       1,946  
  Intangible amortization     67     114       157       318       469  
  Collection and repossession     760     474       801       1,803       2,229  
  Other professional fees and services     1,202     873       1,002       2,866       2,877  
  FDIC insurance     1,105     1,062       963       3,205       3,047  
  Litigation and operational losses     295     635       314       1,174       1,637  
  Loss on sale or write-down of assets     188     345       140       629       2,037  
  Merger and acquisition related     118     240       28       358       28  
  Other operating expenses     4,795     4,167       4,385       13,163       13,516  
Total Noninterest Expense     38,696     37,410       40,257       114,250       120,745  
                                       
Income before Income Taxes     25,459     17,810       18,195       62,063       59,243  
  Taxable equivalent adjustment (1)     951     943       883       2,836       2,536  
  Income tax provision     7,312     4,860       4,898       17,551       16,625  
Net Income   $ 17,196   $ 12,007     $ 12,414     $ 41,676     $ 40,082  
                                       
Shares Outstanding at End of Period     88,992,007     88,949,995       88,961,268       88,992,007       88,961,268  
Average Shares Outstanding Assuming Dilution     88,858,204     88,838,614       88,813,746       88,843,939       89,531,498  
                                       
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 
    September 30,   June 30,   September 30,
    2016   2016   2015
BALANCE SHEET (Period End)            
Assets            
  Cash and due from banks   $ 76,456     $ 68,163     $ 69,235  
  Interest-bearing bank deposits     5,097       30,457       3,529  
  Securities available for sale, at fair value     867,725       913,420       1,104,709  
  Securities held to maturity, at amortized cost     389,513       405,976       154,035  
  Loans held for sale     7,855       11,613       4,986  
                         
    Loans     4,860,652       4,843,776       4,575,735  
    Allowance for credit losses     (54,734 )     (59,821 )     (48,518 )
  Net loans     4,805,918       4,783,955       4,527,217  
                         
  Goodwill and other intangibles     165,349       165,481       162,625  
  Other assets     348,570       370,756       358,413  
Total Assets   $ 6,666,483     $ 6,749,821     $ 6,384,749  
                         
Liabilities and Shareholders' Equity                        
  Noninterest-bearing demand deposits   $ 1,241,627     $ 1,136,629     $ 1,077,234  
                         
    Interest-bearing demand deposits     87,507       88,777       70,662  
    Savings deposits     2,552,754       2,582,709       2,427,326  
    Time deposits     577,092       586,405       586,268  
  Total interest-bearing deposits     3,217,353       3,257,891       3,084,256  
                         
  Total deposits     4,458,980       4,394,520       4,161,490  
                         
    Short-term borrowings     1,330,327       1,464,687       1,329,794  
    Long-term borrowings     81,059       81,201       111,219  
  Total borrowings     1,411,386       1,545,888       1,441,013  
                         
  Other liabilities     44,330       67,627       59,478  
  Shareholders' equity     751,787       741,786       722,768  
Total Liabilities and Shareholders' Equity   $ 6,666,483     $ 6,749,821     $ 6,384,749  
 
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/  
    2016   Rate     2016   Rate     2015   Rate     2016   Rate     2015   Rate  
NET INTEREST MARGIN                                                  
                                                   
Assets                                                  
  Loans (FTE)(1)(4)   $ 4,839,206   3.90 %   $ 4,833,360   3.86 %   $ 4,550,882   3.82 %   $ 4,806,061   3.88 %   $ 4,509,628   3.87 %
  Securities and interest bearing bank deposits (FTE) (1)     1,284,493   2.49 %     1,321,018   2.54 %     1,248,495   2.40 %     1,312,146   2.53 %     1,298,397   2.45 %
    Total Interest-Earning Assets (FTE) (1)     6,123,699   3.60 %     6,154,378   3.58 %     5,799,377   3.52 %     6,118,207   3.59 %     5,808,025   3.55 %
  Noninterest-earning assets     555,977           552,754           543,632           549,969           546,103      
Total Assets   $ 6,679,676         $ 6,707,132         $ 6,343,009         $ 6,668,176         $ 6,354,128      
                                                             
Liabilities and Shareholders' Equity                                                            
  Interest-bearing demand and savings deposits   $ 2,652,562   0.18 %   $ 2,660,934   0.16 %   $ 2,504,516   0.11 %   $ 2,622,574   0.15 %   $ 2,510,814   0.11 %
  Time deposits     586,470   0.65 %     578,518   0.62 %     659,445   0.63 %     586,638   0.63 %     714,005   0.70 %
  Short-term borrowings     1,391,766   0.57 %     1,447,452   0.58 %     1,232,795   0.41 %     1,447,207   0.58 %     1,193,122   0.38 %
  Long-term borrowings     81,128   3.67 %     81,268   3.62 %     111,285   2.78 %     81,268   3.62 %     126,896   2.50 %
    Total Interest-Bearing Liabilities     4,711,926   0.41 %     4,768,172   0.40 %     4,508,041   0.34 %     4,737,687   0.40 %     4,544,837   0.34 %
  Noninterest-bearing deposits     1,153,945           1,137,626           1,065,204           1,129,511           1,038,016      
  Other liabilities     65,727           61,821           51,586           61,631           55,075      
  Shareholders' equity     748,078           739,513           718,178           739,347           716,200      
    Total Noninterest-Bearing Funding Sources     1,967,750           1,938,960           1,834,968           1,930,489           1,809,291      
Total Liabilities and Shareholders' Equity   $ 6,679,676         $ 6,707,132         $ 6,343,009         $ 6,668,176         $ 6,354,128      
                                                             
Net Interest Margin (FTE) (annualized)(1)         3.29 %         3.27 %         3.25 %         3.28 %         3.29 %
 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    September 30,   June 30,   September 30,
    2016   2016   2015
Loan Portfolio Detail            
  Commercial Loan Portfolio:            
    Commercial, financial, agricultural and other   $ 1,207,447     $ 1,185,062     $ 1,126,881  
    Commercial real estate     1,683,015       1,648,222       1,435,954  
    Real estate construction     229,375       242,132       179,710  
      Total Commercial     3,119,837       3,075,416       2,742,545  
                         
  Consumer Loan Portfolio:                        
    Closed-end mortgages     719,049       732,394       737,916  
    Home equity lines of credit     466,710       466,611       466,304  
      Total Real Estate - Consumer     1,185,759       1,199,005       1,204,220  
                         
    Auto loans     467,222       481,887       540,915  
    Direct installment     24,578       25,160       26,234  
    Personal lines of credit     50,086       48,358       45,527  
    Student loans     13,170       13,950       16,294  
      Total Other Consumer     555,056       569,355       628,970  
      Total Consumer Portfolio     1,740,815       1,768,360       1,833,190  
        Total Portfolio Loans     4,860,652       4,843,776       4,575,735  
      Loans held for sale     7,855       11,613       4,986  
        Total Loans   $ 4,868,507     $ 4,855,389     $ 4,580,721  
                         
                         
    September 30,   June 30,   September 30,
    2016   2016   2015
ASSET QUALITY DETAIL                        
Nonperforming Loans:                        
Loans on nonaccrual basis   $ 27,817     $ 38,404     $ 20,220  
Troubled debt restructured loans held for sale on nonaccrual basis     -       -       -  
Troubled debt restructured loans on nonaccrual basis     12,723       9,672       8,583  
Troubled debt restructured loans on accrual basis     14,286       16,332       12,024  
      Total Nonperforming Loans   $ 54,826     $ 64,408     $ 40,827  
Other real estate owned ("OREO")     7,686       8,604       10,542  
Repossessions ("Repos")     310       291       357  
      Total Nonperforming Assets   $ 62,822     $ 73,303     $ 51,726  
Loans past due in excess of 90 days and still accruing     2,343       1,384       2,054  
Classified loans     97,259       101,998       81,723  
Criticized loans     137,264       128,280       136,919  
                         
Nonperforming assets as a percentage of total loans, plus OREO and Repos     1.29 %     1.51 %     1.13 %
Allowance for credit losses   $ 54,734     $ 59,821     $ 48,518  
                         
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,
    2016   2016   2015   2016   2015
Net Charge-offs (Recoveries):                    
  Commercial, financial, agricultural and other   $ 7,100     $ 4,689     $ 75     $ 13,047     $ 7,657  
  Real estate construction     -       (4 )     -       (227 )     (84 )
  Commercial real estate     (10 )     116       528       (385 )     1,063  
  Residential real estate     227       78       123       569       934  
  Loans to individuals     1,178       894       721       3,380       2,781  
Net Charge-offs   $ 8,495     $ 5,773     $ 1,447     $ 16,384     $ 12,351  
                                         
Net charge-offs as a percentage of average loans outstanding (annualized)     0.70 %     0.48 %     0.13 %     0.46 %     0.37 %
Provision for credit losses as a percentage of net charge-offs     40.12 %     179.66 %     319.35 %     123.94 %     71.40 %
Provision for credit losses   $ 3,408     $ 10,372     $ 4,621     $ 20,306     $ 8,818  
 
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
 
(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the 35% federal income tax statutory rate.
(2) Efficiency ratio is "total noninterest expense" as a percentage of total revenue. Total revenue consists of "net interest income, on a fully taxable equivalent basis," plus "total noninterest income," excluding "net impairment losses" and "net securities gains."
(3) 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.
(4) Includes held for sale loans.
(5) 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,
    2016   2016   2015   2016   2015
Core Efficiency Ratio:                    
  Total Noninterest Expense   $ 38,696     $ 37,410     $ 40,257     $ 114,250     $ 120,745  
    Adjustments to Noninterest Expense:                                        
      Unfunded commitment reserve     503       (540 )     (3 )     (412 )     738  
      Pennsylvania shares tax dispute     -       -       709       -       709  
      Intangible amortization     67       114       157       318       469  
      Severance     -       -       -       -       -  
      Merger and acquisition related     118       240       28       358       28  
      Loss on sale or writedown of assets     -       -       -       -       486  
        Noninterest Expense - Core   $ 38,008     $ 37,596     $ 39,366     $ 113,986     $ 118,315  
                                         
    Net interest income, fully tax equivalent   $ 50,569     $ 50,034     $ 47,568     $ 150,352     $ 142,763  
    Total noninterest income     16,994       15,558       15,505       46,267       46,043  
    Net securities (losses) gains     -       28       -       28       125  
        Total Revenue   $ 67,563     $ 65,564     $ 63,073     $ 196,591     $ 188,681  
                                         
    Adjustments to Revenue:                                        
      Derivative mark-to-market     470       (531 )     (783 )     (1,075 )     (420 )
        Total Revenue - Core   $ 67,093     $ 66,095     $ 63,856     $ 197,666     $ 189,101  
                                         
(3)Core Efficiency Ratio     56.65 %     56.88 %     61.65 %     57.67 %     62.57 %
 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
         
    September 30,   June 30,   September 30,        
    2016   2016   2015        
Tangible Equity:                    
  Total shareholders' equity   $ 751,787     $ 741,786     $ 722,768                  
  Less: intangible assets     165,349       165,481       162,625                  
    Tangible Equity     586,438       576,305       560,143                  
  Less: preferred stock     -       -       -                  
    Tangible Common Equity   $ 586,438     $ 576,305     $ 560,143                  
                                         
Tangible Assets:                                        
  Total assets   $ 6,666,483     $ 6,749,821     $ 6,384,749                  
  Less: intangible assets     165,349       165,481       162,625                  
    Tangible Assets   $ 6,501,134     $ 6,584,340     $ 6,222,124                  
                                         
(6)Tangible Common Equity as a percentage of Tangible Assets     9.02 %     8.75 %     9.00 %                
                                         
  Shares Outstanding at End of Period     88,992,007       88,949,995       88,961,268                  
(7)Tangible Book Value Per Common Share   $ 6.59     $ 6.48     $ 6.30                  
                     
    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
    2016   2016   2015   2016   2015
Average Tangible Equity:                                        
  Total shareholders' equity   $ 748,078     $ 739,513     $ 718,178     $ 739,347     $ 716,200  
  Less: intangible assets     165,449       165,527       162,709       165,547       162,864  
    Tangible Equity     582,629       573,986       555,469       573,800       553,336  
  Less: preferred stock     -       -       -       -       -  
    Tangible Common Equity   $ 582,629     $ 573,986     $ 555,469     $ 573,800     $ 553,336  
                                         
(8)Return on Average Tangible Common Equity     11.74 %     8.41 %     8.87 %     9.70 %     9.68 %
Note: Management believes that it is a 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.
 

Media Relations:
Amy Jeffords
Assistant Vice President / Communications and Community Relations
Phone: 724-463-6806
E-mail: AJeffords@fcbanking.com

Investor Relations:
Ryan M. Thomas
Vice President / Finance and Investor Relations
724-463-1690
RThomas1@fcbanking.com

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