First Commonwealth Delivers Record Third Quarter 2017 Earnings; Declares Quarterly Dividend

/EINPresswire.com/ -- INDIANA, PA--(Marketwired - October 25, 2017) - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2017.

Third Quarter 2017 Highlights

Earnings

• Third quarter net income was $21.3 million (or $0.22 diluted earnings per share), the highest level of quarterly net income in the history of the company. Core net income (adjusted for acquisition expenses) was $21.2 million, or $0.22 diluted earnings per share.
  • Core earnings per share increased $0.01 from the previous quarter and $0.03 from the prior year quarter; an increase of 14.9% (annualized) and 15.8%, respectively.
• Total revenue grew $2.7 million, or 13.7% (annualized) from the prior quarter.
  • Net interest income (FTE) increased $1.8 million, or 12.0% (annualized) from the prior quarter.
  • Noninterest income grew $0.9 million, or 18.8% (annualized) from the prior quarter.
• Total noninterest expense decreased $10.9 million from the previous quarter, primarily due to $9.9 million of one-time merger expenses related to the acquisition of DCB Financial Corp. in the previous quarter.
• Provision for credit losses totaled $1.2 million, an increase of $2.8 million as compared to the prior quarter, in part due to the recognition of $3.1 million in recoveries in the previous quarter.
• The annualized return on average tangible common equity for the third quarter of 2017 was 14.04%.

Profitability

• The net interest margin improved seven basis points to 3.61% compared to the prior quarter.
• The core return on average assets (adjusted for acquisition expenses) improved 3 basis points to 1.14% compared to the prior quarter.
• The core efficiency ratio improved to 57.96%, driven by expanding revenue streams and well-controlled operational expenses.

Franchise Growth

• Tangible book value per share grew $0.16, or 10.3% (annualized) from the previous quarter.

"This was another strong quarter for our company. And the successful integration of our recent acquisitions has propelled our earnings to record levels," stated T. Michael Price, President and Chief Executive Officer. "As we look ahead, we must continue to navigate a potentially rising interest rate environment and make decisions that will profitably grow our business without assuming unnecessary risk. As we do, our focus remains centered on those strategies that will ensure long-term benefits for our stakeholders."

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,
	2017		2017		2016		2017		2016
Reported Results
Net income	$21,283		$14,013		$17,196		$51,184		$41,676
Diluted earnings per share	$0.22		$0.14		$0.19		$0.54		$0.47
Return on average assets	1.14%		0.76%		1.02%		0.96%		0.83%
Return on average equity	9.50%		6.44%		9.14%		8.15%		7.53%
Core Operating Results (non-GAAP)(1)
Core net income	$21,238		$20,428		$17,273		$57,952		$41,909
Core diluted earnings per share	$0.22		$0.21		$0.19		$0.61		$0.47
Core return on average assets	1.14%		1.11%		1.03%		1.08%		0.84%
Return on average tangible common equity	14.04%		9.74%		11.77%		11.89%		9.75%
Core return on average tangible common equity	14.01%		14.03%		11.82%		13.42%		9.80%
Core efficiency ratio	57.96%		60.19%		56.65%		59.49%		57.67%
Net interest margin (FTE)	3.61%		3.54%		3.29%		3.55%		3.28%

(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 2017 was $21.3 million, as compared to $17.2 million for the third quarter of 2016, an increase of $4.1 million, or 23.8%, year-over-year.

Net income for the nine months ending September 30, 2017 was $51.2 million, as compared to $41.7 million for the same period in 2016, an increase of $9.5 million, or 22.8%, year-over-year.

Net Interest Margin and Net Interest Income

The net interest margin for the third quarter of 2017 was 3.61%, an increase of 7 basis points from the previous quarter and an increase of 32 basis points from the third quarter of 2016. The increase from the second quarter of 2017 was due primarily to a 10 basis point increase in the yield on interest-earning assets, partially offset by a 3 basis point increase in funding costs. The impact of purchase accounting accretion added 5 basis points to the net interest margin in both the current and the previous quarter.

The increase from the previous year is primarily due to improved yields on variable and adjustable loan portfolios, following the Federal Reserve's decisions to increase short-term rates in December of 2016, March of 2017 and June of 2017, along with the ability to pay down higher cost short-term borrowings following our recent acquisitions.

The yield on interest-earning assets increased by 36 basis points and funding costs increased 4 basis points from the year-ago quarter.

Total average earning assets decreased $6.7 million from the previous quarter mostly due to selective runoff in the securities portfolio, partially offset by $40.7 million growth in average loans.

Total average deposits grew by $51.7 million in the third quarter of 2017 compared to the previous quarter. Growth was driven by a $69.7 million increase in transaction accounts, partially offset by an $18.0 million decrease in time deposits.

Credit Quality

The provision for credit losses totaled $1.2 million for the quarter ended September 30, 2017, an increase of $2.8 million as compared to the prior quarter and a decrease of $2.2 million from the same quarter last year. The increase from the prior quarter is primarily due to the recognition of $3.1 million of recoveries in the prior quarter.

At September 30, 2017, nonperforming loans were $38.8 million, a decrease of $1.4 million from June 30, 2017 and a decrease of $16.0 million from September 30, 2016. Nonperforming loans as a percentage of total loans were 0.72%, 0.75% and 1.13% for the periods ended September 30, 2017, June 30, 2017 and September 30, 2016, respectively.

During the third quarter of 2017, net charge-offs (recoveries) were $1.1 million or 0.08% of average loans, compared to ($1.0) million in the prior quarter and $8.5 million in the third quarter of 2016. Net charge-offs (recoveries) in the second quarter of 2017 included recoveries for two large commercial credits totaling $3.1 million.

For the originated loan portfolio at September 30, 2017, the allowance for credit losses to total originated loans was 0.97%, compared to 0.98% at June 30, 2017 and 1.13% at September 30, 2016.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $19.7 million for the third quarter of 2017, as compared to $19.0 million for the second quarter of 2017 and $17.0 million for the third quarter of 2016. Trust income increased $0.4 million and $0.6 million from the prior quarter and the year-ago quarter, respectively, primarily due to acquired customer relationships and higher market values of clients' accounts. Service charges and card-related interchange income increased $1.9 million year-over-year, primarily due to an expanded customer base as a result of recent acquisitions. Gain on sale of mortgage loans totaled $1.4 million and represents the highest quarterly total since the company reentered the traditional mortgage business in 2014.

Noninterest expense (excluding merger-related expenses) totaled $47.4 million for the third quarter of 2017, as compared to $48.4 million for the second quarter of 2017 and $38.6 million for the third quarter of 2016. The $1.0 million decrease from the previous quarter was primarily the result of a $1.1 million decrease in write-downs on OREO properties. The $8.8 million increase from the third quarter of 2016 was driven in part by higher operating expenses following the Company's recent acquisitions, along with increased intangible asset amortization expense.

Full time equivalent staff at September 30, 2017 was 1,366, 1,426 at June 30, 2017 and 1,179 at September 30, 2016. The increase from the prior year is the result of the addition of employees from acquisitions and the continued expansion of the mortgage and commercial banking businesses in Ohio.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.08 per share, which is payable on November 17, 2017 to shareholders of record as of November 6, 2017. This dividend represents a 2.3% projected annual yield utilizing the October 24, 2017 closing market price of $14.12.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2017 were 12.5%, 11.6%, 9.8% and 10.4%, 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 2017 on Wednesday, October 25, 2017 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 #10112938. 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 135 banking offices in 20 counties throughout western and central Pennsylvania and central and northeastern 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 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) 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,
	2017				2017				2016				2017				2016
SUMMARY RESULTS OF OPERATIONS
Net interest income (FTE) (1)	$	60,667			$	58,896			$	50,569			$	172,381			$	150,352
Provision for credit losses		1,214				(1,609	)			3,408				2,834				20,306
Noninterest income		19,790				18,904				16,994				55,626				46,267
Noninterest expense		47,361				58,263				38,696				148,389				114,250
Net income		21,283				14,013				17,196				51,184				41,676
Core net income (5)		21,238				20,428				17,273				57,952				41,909
Earnings per common share (diluted)	$	0.22			$	0.14			$	0.19			$	0.54			$	0.47
Core earnings per common share (diluted) (6)	$	0.22			$	0.21			$	0.19			$	0.61			$	0.47
KEY FINANCIAL RATIOS
Return on average assets		1.14	%			0.76	%			1.02	%			0.96	%			0.83	%
Core return on average assets (7)		1.14	%			1.11	%			1.03	%			1.08	%			0.84	%
Return on average shareholders' equity		9.50	%			6.44	%			9.14	%			8.15	%			7.53	%
Return on average tangible common equity (8)		14.04	%			9.74	%			11.77	%			11.89	%			9.75	%
Core return on average tangible common equity (9)		14.01	%			14.03	%			11.82	%			13.42	%			9.80	%
Core efficiency ratio (2)(10)		57.96	%			60.19	%			56.65	%			59.49	%			57.67	%
Net interest margin (FTE) (1)		3.61	%			3.54	%			3.29	%			3.55	%			3.28	%
Book value per common share	$	9.17			$	9.02			$	8.45
Tangible book value per common share (11)		6.39				6.23				6.59
Market value per common share		14.13				12.68				10.09
Cash dividends declared per common share		0.08				0.08				0.07			$	0.24			$	0.21
ASSET QUALITY RATIOS
Nonperforming loans as a percent of end-of-period loans (3)		0.72	%			0.75	%			1.13	%
Nonperforming assets as a percent of total assets (3)		0.61	%			0.63	%			0.94	%
Net charge-offs as a percent of average loans (annualized)		0.08	%			(0.07	)%			0.70	%
Allowance for credit losses as a percent of nonperforming loans (4)		124.16	%			119.61	%			99.83	%
Allowance for credit losses as a percent of end-of-period loans (4)		0.90	%			0.89	%			1.13	%
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases		0.97	%			0.98	%			1.13	%
CAPITAL RATIOS
Shareholders' equity as a percent of total assets		12.1	%			11.9	%			11.3	%
Tangible common equity as a percent of tangible assets (12)		8.8	%			8.5	%			9.0	%
Leverage Ratio		9.8	%			9.6	%			10.0	%
Risk Based Capital - Tier I		11.6	%			11.3	%			11.6	%
Risk Based Capital - Total		12.5	%			12.2	%			12.6	%
Common Equity - Tier I		10.4	%			10.2	%			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,
		2017				2017				2016			2017				2016
INCOME STATEMENT
	Interest income	$	65,411			$	63,120			$	54,479		$	184,710			$	161,682
	Interest expense		5,848				5,303				4,861			15,500				14,166
Net Interest Income			59,563				57,817				49,618			169,210				147,516
	Taxable equivalent adjustment (1)		1,104				1,079				951			3,171				2,836
Net Interest Income (FTE)			60,667				58,896				50,569			172,381				150,352
	Provision for credit losses		1,214				(1,609	)			3,408			2,834				20,306
Net Interest Income after Provision for Credit Losses (FTE)			59,453				60,505				47,161			169,547				130,046
	Net securities gains (losses)		92				(49	)			-			695				28
	Trust income		2,147				1,711				1,523			5,275				4,098
	Service charges on deposit accounts		4,803				4,736				3,975			13,858				11,528
	Insurance and retail brokerage commissions		2,128				2,442				2,104			6,652				6,048
	Income from bank owned life insurance		1,472				1,449				1,350			4,213				3,957
	Gain on sale of mortgage loans		1,418				1,315				1,235			3,710				2,850
	Gain on sale of other loans and assets		503				457				387			1,267				1,048
	Card-related interchange income		4,780				4,842				3,698			13,873				11,039
	Derivative mark-to-market		(14	)			(37	)			470			(49	)			(1,075	)
	Swap fee income		217				314				725			458				1,985
	Other income		2,244				1,724				1,527			5,674				4,761
Total Noninterest Income			19,790				18,904				16,994			55,626				46,267
	Salaries and employee benefits		26,169				25,298				20,647			74,933				62,212
	Net occupancy		3,715				4,121				3,176			11,597				9,843
	Furniture and equipment		3,342				3,323				2,847			9,753				8,596
	Data processing		2,229				2,345				1,832			6,659				5,379
	Pennsylvania shares tax		1,093				1,161				914			3,070				2,764
	Advertising and promotion		941				988				750			2,735				1,940
	Intangible amortization		844				846				67			2,262				318
	Collection and repossession		402				443				760			1,342				1,803
	Other professional fees and services		1,300				1,096				1,202			3,355				2,866
	FDIC insurance		696				977				1,105			2,466				3,205
	Litigation and operational losses		598				277				295			1,107				1,174
	Loss on sale or write-down of assets		167				1,220				188			1,486				629
	Merger and acquisition related		(69	)			9,870				118			10,412				358
	Other operating expenses		5,934				6,298				4,795			17,212				13,163
Total Noninterest Expense			47,361				58,263				38,696			148,389				114,250
Income before Income Taxes			31,882				21,146				25,459			76,784				62,063
	Taxable equivalent adjustment (1)		1,104				1,079				951			3,171				2,836
	Income tax provision		9,495				6,054				7,312			22,429				17,551
Net Income		$	21,283			$	14,013			$	17,196		$	51,184			$	41,676
Shares Outstanding at End of Period			97,475,575				97,483,067				88,992,077			97,475,575				88,992,077
Average Shares Outstanding Assuming Dilution			97,457,470				97,232,288				88,858,204			94,578,490				88,843,939

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
			September 30,				June 30,				September 30,
			2017				2017				2016
BALANCE SHEET (Period End)
Assets
	Cash and due from banks		$	98,319			$	103,602			$	76,456
	Interest-bearing bank deposits			29,709				12,310				5,097
	Securities available for sale, at fair value			810,946				820,586				867,725
	Securities held to maturity, at amortized cost			436,081				450,886				389,513
	Loans held for sale			17,100				9,785				7,855
		Loans		5,375,847				5,374,782				4,860,652
		Allowance for credit losses		(48,176	)			(48,067	)			(54,734	)
	Net loans			5,327,671				5,326,715				4,805,918
	Goodwill and other intangibles			271,347				272,030				165,349
	Other assets			393,166				387,472				348,570
Total Assets			$	7,384,339			$	7,383,386			$	6,666,483
Liabilities and Shareholders' Equity
	Noninterest-bearing demand deposits		$	1,416,814			$	1,404,081			$	1,241,627
		Interest-bearing demand deposits		264,731				237,801				87,507
		Savings deposits		3,290,978				3,330,351				2,552,754
		Time deposits		582,534				560,902				577,092
	Total interest-bearing deposits			4,138,243				4,129,054				3,217,353
	Total deposits			5,555,057				5,533,135				4,458,980
		Short-term borrowings		805,825				846,137				1,330,327
		Long-term borrowings		88,155				88,389				81,059
	Total borrowings			893,980				934,526				1,411,386
	Other liabilities			41,001				36,260				44,330
	Shareholders' equity			894,301				879,465				751,787
Total Liabilities and Shareholders' Equity			$	7,384,339			$	7,383,386			$	6,666,483

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/
			2017			Rate			2017			Rate			2016			Rate			2017			Rate			2016			Rate
NET INTEREST MARGIN
Assets
	Loans (FTE)(1)(3)		$	5,398,815		4.28	%		$	5,358,089		4.18	%		$	4,839,206		3.90	%		$	5,226,320		4.17	%		$	4,806,061		3.88	%
	Securities and interest bearing bank deposits (FTE) (1)			1,265,416		2.60	%			1,312,814		2.57	%			1,284,493		2.49	%			1,263,614		2.63	%			1,312,146		2.53	%
		Total Interest-Earning Assets (FTE) (1)		6,664,231		3.96	%			6,670,903		3.86	%			6,123,699		3.60	%			6,489,934		3.87	%			6,118,207		3.59	%
	Noninterest-earning assets			713,142						710,913						555,977						668,517						549,969
Total Assets			$	7,377,373					$	7,381,816					$	6,679,676					$	7,158,451					$	6,668,176
Liabilities and Shareholders' Equity
	Interest-bearing demand and savings deposits		$	3,576,365		0.18	%		$	3,513,479		0.15	%		$	2,652,562		0.18	%		$	3,398,428		0.15	%		$	2,622,574		0.15	%
	Time deposits			562,868		0.64	%			580,874		0.60	%			586,470		0.65	%			572,128		0.62	%			586,638		0.63	%
	Short-term borrowings			829,954		1.16	%			902,547		0.98	%			1,391,766		0.57	%			887,463		0.96	%			1,447,207		0.58	%
	Long-term borrowings			88,256		4.18	%			88,351		4.08	%			81,128		3.67	%			85,843		4.07	%			81,268		3.62	%
		Total Interest-Bearing Liabilities		5,057,443		0.46	%			5,085,251		0.42	%			4,711,926		0.41	%			4,943,862		0.42	%			4,737,687		0.40	%
	Noninterest-bearing deposits			1,393,024						1,386,240						1,153,945						1,337,328						1,129,511
	Other liabilities			38,125						38,092						65,727						37,415						61,631
	Shareholders' equity			888,781						872,233						748,078						839,846						739,347
		Total Noninterest-Bearing Funding Sources		2,319,930						2,296,565						1,967,750						2,214,589						1,930,489
Total Liabilities and Shareholders' Equity			$	7,377,373					$	7,381,816					$	6,679,676					$	7,158,451					$	6,668,176
Net Interest Margin (FTE) (annualized)(1)						3.61	%					3.54	%					3.29	%					3.55	%					3.28	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
					September 30,				June 30,				September 30,
					2017				2017				2016
Loan Portfolio Detail
	Commercial Loan Portfolio:
		Commercial, financial, agricultural and other			$	1,154,225			$	1,199,800			$	1,207,447
		Commercial real estate				1,990,264				1,963,001				1,683,015
		Real estate construction				259,129				249,255				229,375
			Total Commercial			3,403,618				3,412,056				3,119,837
	Consumer Loan Portfolio:
		Closed-end mortgages				893,809				886,335				719,049
		Home equity lines of credit				529,613				530,591				466,710
			Total Real Estate - Consumer			1,423,422				1,416,926				1,185,759
	Auto loans					454,320				450,561				467,222
	Direct installment					24,995				24,501				24,578
	Personal lines of credit					58,880				59,450				50,086
	Student loans					10,612				11,288				13,170
		Total Other Consumer				548,807				545,800				555,056
		Total Consumer Portfolio				1,972,229				1,962,726				1,740,815
			Total Portfolio Loans			5,375,847				5,374,782				4,860,652
		Loans held for sale				17,100				9,785				7,855
			Total Loans		$	5,392,947			$	5,384,567			$	4,868,507
					September 30,				June 30,				September 30,
					2017				2017				2016
ASSET QUALITY DETAIL
Nonperforming Loans:
Loans on nonaccrual basis					$	14,943			$	15,553			$	27,817
Troubled debt restructured loans on nonaccrual basis						11,408				11,868				12,723
Troubled debt restructured loans on accrual basis						12,451				12,764				14,286
		Total Nonperforming Loans			$	38,802			$	40,185			$	54,826
Other real estate owned ("OREO")						5,701				5,964				7,686
Repossessions ("Repos")						200				208				310
		Total Nonperforming Assets			$	44,703			$	46,357			$	62,822
Loans past due in excess of 90 days and still accruing						1,332				1,898				2,343
Classified loans						65,948				69,748				97,259
Criticized loans						125,034				160,220				137,264
Nonperforming assets as a percentage of total loans, plus OREO and Repos						0.83	%			0.86	%			1.29	%
Allowance for credit losses					$	48,176			$	48,067			$	54,734

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,
		2017				2017				2016				2017				2016
Net Charge-offs (Recoveries):
	Commercial, financial, agricultural and other	$	315			$	(1,816	)		$	7,100			$	1,956			$	13,047
	Real estate construction		(373	)			(43	)			-				(470	)			(227	)
	Commercial real estate		(25	)			(4	)			(10	)			(115	)			(385	)
	Residential real estate		276				55				227				676				569
	Loans to individuals		912				808				1,178				2,796				3,380
Net Charge-offs		$	1,105			$	(1,000	)		$	8,495			$	4,843			$	16,384
Net charge-offs as a percentage of average loans outstanding (annualized)			0.08	%			(0.07	)%			0.70	%			0.12	%			0.46	%
Provision for credit losses as a percentage of net charge-offs			109.86	%			160.90	%			40.12	%			58.52	%			123.94	%
Provision for credit losses		$	1,214			$	(1,609	)		$	3,408			$	2,834			$	20,306

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) 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,
			2017				2017				2016				2017				2016
Net Income			$	21,283			$	14,013			$	17,196			$	51,184			$	41,676
	Intangible amortization			844				846				67				2,262				318
	Tax benefit of amortization of intangibles			(295	)			(296	)			(23	)			(792	)			(111	)
		Net Income, adjusted for tax affected amortization of intangibles		21,832				14,563				17,240				52,654				41,883
Average Tangible Equity:
	Total shareholders' equity		$	888,781			$	872,233			$	748,078			$	839,846			$	739,347
	Less: intangible assets			271,670				272,488				165,449				247,679				165,547
		Tangible Equity		617,111				599,745				582,629				592,167				573,800
	Less: preferred stock			-				-				-				-				-
		Tangible Common Equity	$	617,111			$	599,745			$	582,629			$	592,167			$	573,800
(8) Return on Average Tangible Common Equity				14.04	%			9.74	%			11.77	%			11.89	%			9.75	%

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,
					2017				2017				2016				2017				2016
Core Net Income:
	Total Net Income				$	21,283			$	14,013			$	17,196			$	51,184			$	41,676
		Merger & Acquisition related expenses				(69	)			9,870				118				10,412				358
		Tax benefit of merger & acquisition related expenses				24				(3,455	)			(41	)			(3,644	)			(125	)
	(5) Core net income					21,238				20,428				17,273				57,952				41,909
		Average Shares Outstanding Assuming Dilution				97,457,470				97,232,288				88,858,204				94,578,490				88,843,939
		(6) Core Earnings per common share (diluted)			$	0.22			$	0.21			$	0.19			$	0.61			$	0.47
			Intangible amortization			844				846				67				2,262				318
			Tax benefit of amortization of intangibles			(295	)			(296	)			(23	)			(792	)			(111	)
				Core Net Income, adjusted for tax affected amortization of intangibles	$	21,787			$	20,978			$	17,317			$	59,422			$	42,116
(9) Core Return on Average Tangible Common Equity						14.01	%			14.03	%			11.82	%			13.42	%			9.80	%
					For the Three Months Ended												For the Nine Months Ended
					September 30,				June 30,				September 30,				September 30,				September 30,
					2017				2017				2016				2017				2016
Core Return on Average Assets:
	Total Net Income				$	21,283			$	14,013			$	17,196			$	51,184			$	41,676
	Total Average Assets					7,377,373				7,381,816				6,679,676				7,158,451				6,668,176
		Return on Average Assets				1.14	%			0.76	%			1.02	%			0.96	%			0.83	%
	Core Net Income (5)				$	21,238			$	20,428			$	17,273			$	57,952			$	41,909
	Total Average Assets					7,377,373				7,381,816				6,679,676				7,158,451				6,668,176
		(7) Core Return on Average Assets				1.14	%			1.11	%			1.03	%			1.08	%			0.84	%

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,
				2017				2017				2016				2017				2016
Core Efficiency Ratio:
	Total Noninterest Expense			$	47,361			$	58,263			$	38,696			$	148,389			$	114,250
		Adjustments to Noninterest Expense:
		Unfunded commitment reserve			(1	)			664				503				451				(412	)
		Intangible amortization			844				846				67				2,262				318
		Merger and acquisition related			(69	)			9,870				118				10,412				358
			Noninterest Expense - Core	$	46,587			$	46,883			$	38,008			$	135,264			$	113,986
		Net interest income, fully tax equivalent		$	60,667			$	58,896			$	50,569			$	172,381			$	150,352
		Total noninterest income			19,790				18,904				16,994				55,626				46,267
		Net securities gains			(92	)			49				-				(695	)			(28	)
			Total Revenue	$	80,365			$	77,849			$	67,563			$	227,312			$	196,591
	Adjustments to Revenue:
		Derivative mark-to-market			(14	)			(37	)			470				(49	)			(1,075	)
			Total Revenue - Core	$	80,379			$	77,886			$	67,093			$	227,361			$	197,666
(10)Core Efficiency Ratio					57.96	%			60.19	%			56.65	%			59.49	%			57.67	%
				September 30,				June 30,				September 30,
				2017				2017				2016
Tangible Equity:
	Total shareholders' equity			$	894,301			$	879,465			$	751,787
	Less: intangible assets				271,347				272,030				165,349
		Tangible Equity			622,954				607,435				586,438
	Less: preferred stock				-				-				-
		Tangible Common Equity		$	622,954			$	607,435			$	586,438
Tangible Assets:
	Total assets			$	7,384,339			$	7,383,386			$	6,666,483
	Less: intangible assets				271,347				272,030				165,349
		Tangible Assets		$	7,112,992			$	7,111,356			$	6,501,134
(12) Tangible Common Equity as a percentage of Tangible Assets					8.76	%			8.54	%			9.02	%
Shares Outstanding at End of Period					97,475,575				97,483,067				88,992,077
(11) Tangible Book Value Per Common Share				$	6.39			$	6.23			$	6.59
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.