SOURCE: First Commonwealth Financial Corporation

First Commonwealth Financial Corporation

July 27, 2016 07:00 ET

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

INDIANA, PA --(Marketwired - July 27, 2016) - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the second quarter of 2016.

Second Quarter 2016 Highlights

Profitability

  • The efficiency ratio improved to 57.1%, driven by lower operational expenses and higher revenue;
  • Loans experienced solid growth from the prior quarter of 4.2% on an annualized basis;
  • Deposits grew from the prior quarter at an annualized rate of 8.6%;
  • The net interest margin remained relatively stable at 3.27%; and
  • Noninterest income grew by 13.2% from the prior quarter.

Net Income

  • Second quarter net income was $12.0 million, or $0.14 diluted earnings per share. Net income was impacted by the following items:
    • Net interest income increased by $0.3 million to $50.0 million as compared to the prior quarter, primarily as a result of strong commercial loan growth;
    • Noninterest income increased by $1.8 million, driven by mortgage gain on sale income and commercial swap income;
    • Noninterest expense of $37.4 million decreased $0.7 million from the previous quarter and is now at the lowest level since the fourth quarter of 2007; and
    • Provision for credit losses totaled $10.4 million, an increase of $3.8 million from the previous quarter, primarily due to a $7.5 million specific reserve set aside against an energy-related credit.

"While the additional credit expense due to the ongoing downturn in the energy sector is disappointing, we are pleased with the progression in our second quarter results, as evidenced by growth in loans and deposits and an efficiency ratio below 60%," stated T. Michael Price, President and Chief Executive Officer. "The acquisition of 13 branches in Ohio that we are announcing today is also encouraging, and should improve our financial performance. We must, however, continue to keep our shoulder to the wheel to organically grow revenue while at the same time improving credit costs and keeping operating expenses under control."

 
Financial Summary
       
(dollars in thousands,  For the Three Months Ended  For the Six Months Ended
except per share data)  June 30,  March 31,  June 30,  June 30,  June 30,
   2016  2016  2015  2016  2015
Net income  $12,007  $12,473  $13,447  $24,480  $27,668
Diluted earnings per share  $0.14  $0.14  $0.15  $0.28  $0.31
Return on average assets  0.72%  0.76%  0.85%  0.74%  0.88%
Return on average common equity  6.53%  6.87%  7.57%  6.70%  7.80%
Efficiency ratio (1)  57.06%  60.10%  63.96%  58.56%  64.08%
Core efficiency ratio (1)  57.24%  59.53%  63.25%  58.37%  63.04%
Net interest margin (FTE)  3.27%  3.29%  3.26%  3.28%  3.30%
(1) See Supplemental Information - Definitions and reconciliation of non-GAAP financial measures
 

Financial Results Summary

For the three months ended June 30, 2016, net income was $12.0 million, or $0.14 diluted earnings per share, compared to net income of $12.5 million, or $0.14 diluted earnings per share, in the first quarter of 2016 and net income of $13.4 million, or $0.15 diluted earnings per share, in the second quarter of 2015. The decrease in net income compared to the first quarter of 2016 was driven by a $3.8 million increase in provision for credit losses, offset by a $1.8 million increase in noninterest income and a decrease of $0.7 million in noninterest expense from the first quarter of 2016. The decrease in net income compared to the second quarter of 2015 was primarily driven by an increase of $7.3 million in the provision for credit losses and a decrease in noninterest income of $0.8 million, offset by an increase of $2.8 million in net interest income and a decrease of $3.2 million in noninterest expense.

For the six months ended June 30, 2016, net income was $24.5 million, or $0.28 diluted earnings per share, compared to net income of $27.7 million, or $0.31 diluted earnings per share, for the comparable period in 2015. The decrease in net income compared to 2015 was primarily the result of a $12.7 million increase in the provision for credit losses and a decrease in noninterest income, excluding net securities gains, of $1.2 million, offset by an increase of $4.6 million in net interest income and a decrease in noninterest expense of $4.9 million.

For the six months ended June 30, 2016, return on average assets and return on average equity were 0.74% and 6.70%, respectively, as compared to 0.88% and 7.80% in the first half of 2015. Return on average tangible common equity was 8.7% in the first half of 2016, as compared to 10.1% for the first half of 2015.

Net Interest Income and Net Interest Margin

Second quarter 2016 net interest income, on a fully taxable-equivalent basis, increased by $0.3 million to $50.0 million compared to the first quarter of 2016. The increase from the prior quarter was primarily the result of strong commercial loan growth. The yield on interest-earning assets and funding costs remained relatively stable during the quarter. A $77.9 million increase in average interest-earning assets contributed to the improvement in net interest income.

As compared to the second quarter of 2015, net interest income, on a fully taxable-equivalent basis, increased by $2.8 million, driven largely by a $347.4 million, or 6.0%, increase in average interest-earning assets. The net interest margin of 3.27% in the second quarter of 2016 was one basis point higher than in the second quarter of 2015. The increase came despite a seven basis point increase in funding costs that more than offset a six basis point increase in the yield on interest-earning assets between the periods, and benefited from an increase of $92.0 million in average non-interest bearing deposits.

For the six months ended June 30, 2016, net interest income, on a fully taxable-equivalent basis, increased $4.6 million to $99.8 million as compared to the same period of 2015. The increase in net interest income was a result of a $303.0 million increase in average interest-earning assets and a two basis point increase in the yield on interest-earning assets, offset by a five basis point increase in funding costs.

Total deposits grew by $92.9 million in the second quarter of 2016, or 8.6% annualized. Average deposits increased $131.6 million in the second quarter of 2016 from the prior quarter. Average deposits increased $110.0 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 $46.5 million in time deposits and $69.7 million in brokered deposits, offset by $134.2 million of core deposit growth in savings deposits and $92.0 million of core deposit growth in noninterest-bearing deposits.

Average short-term borrowings decreased $55.6 million from the prior quarter as deposit growth outpaced loan growth in the second quarter, but increased $243.0 million over the year-ago period, partly due to the aforementioned runoff in time and brokered deposits compared to a year ago. Average noninterest-bearing demand deposits increased $40.9 million as compared to the prior quarter and increased $92.0 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 25.9% of total deposits. Average interest-bearing demand and savings deposits increased $107.0 million from the prior quarter and $134.2 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 $10.4 million for the quarter ended June 30, 2016, an increase of $3.8 million as compared to the prior quarter and an increase of $7.3 million from the same quarter last year. The second quarter 2016 provision for credit losses included a $7.5 million specific reserve for a credit related to the manufacturing of safety products for the mining industry.

At June 30, 2016, nonperforming loans were $64.4 million, an increase of $2.6 million from March 31, 2016 and an increase of $19.3 million from June 30, 2015. The increase from the first quarter of 2016 was related to the aforementioned commercial credit placed into nonperforming status in the second quarter of 2016. Nonperforming loans as a percentage of total loans were 1.33%, 1.29% and 1.00% for the periods ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.

During the second quarter of 2016, net charge-offs were $5.8 million, compared to $2.1 million in the prior quarter and $4.4 million in the second quarter of 2015. Of the $5.8 million in net charge-offs in the second quarter, $3.3 million represented charge-offs of previously established reserves.

The allowance for credit losses was $59.8 million at June 30, 2016, and as a percentage of total loans outstanding was 1.24%, 1.15% and 1.01% for June 30, 2016, March 31, 2016 and June 30, 2015, respectively. General reserves as a percentage of non-impaired loans were 0.93%, 0.88% and 0.98% for June 30, 2016, March 31, 2016 and June 30, 2015, respectively.

Other real estate owned (OREO) acquired through foreclosure was $8.6 million at June 30, 2016 and March 31, 2016 and $6.5 million at June 30, 2015. There were no significant additions to OREO in the second quarter of 2016.

Noninterest Income

Noninterest income, excluding net securities gains, increased $1.8 million in the second quarter of 2016 as compared to the prior quarter and decreased $0.8 million compared to the same quarter last year. The increase from the prior quarter is primarily the result of a $0.5 million positive variance from prior quarter in the adjustment for the fair market value of commercial loan interest rate swaps, as well as a $0.3 million increase in swap income, an increase of $0.2 million in card-related interchange income and an increase of $0.2 million from the gain on sale of mortgage loans.

The decrease in noninterest income from the prior-year period of $0.8 million is primarily related to a negative variance of $1.1 million in the adjustment for the fair market value of commercial loan interest rate swaps and a decline of $0.4 million in trust, insurance and retail brokerage commissions, offset by a $0.5 million increase in swap income and a $0.3 million increase in gain on the sale of mortgage loans.

For the six months ended June 30, 2016, noninterest income, excluding net securities gains, decreased $1.2 million, or 3.8%, as compared to the same period of 2015, primarily attributable to a negative variance of $1.9 million in the adjustment for the fair market value of commercial loan interest rate swaps and a decline of $0.8 million in trust, insurance and retail brokerage commissions, offset by a $0.6 million increase in swap income, an increase of $0.6 million from the gain on sale of mortgage loans, an increase of $0.4 million in service charges on deposit accounts, and an increase of $0.2 million in card-related interchange income.

Noninterest Expense

Noninterest expense decreased $0.7 million to $37.4 million in the second quarter of 2016 as compared to the prior quarter and decreased $3.2 million as compared to the second quarter of 2015. Salaries and benefits decreased $1.8 million as compared to the prior quarter primarily due to the realignment of the staffing and capabilities of our consumer banking businesses and from relatively low benefits costs. Also impacting noninterest expense was lower occupancy costs from the prior quarter, offset by higher operational losses, Pennsylvania shares tax expense and the write-down of three OREO properties in the second quarter of 2016.

Noninterest expense decreased $3.2 million in the second quarter of 2016 as compared to the second quarter of 2015, primarily attributable to decreases in salaries and benefits of $2.1 million as compared to the prior year due to the aforementioned realignment of our consumer banking businesses and relatively low benefits costs, decreased collection and repossession expenses, lower write-downs on assets of $1.3 million (primarily due to write-downs of three OREO properties and a loss on the write-down of a building in the second quarter of 2015) and a decline of $0.8 million in the reserve for unfunded loan commitments, included in other operating expenses. These items were offset by higher data processing costs and operational losses during the second quarter of 2016.

For the six months ending June 30, 2016, noninterest expense decreased $4.9 million, or 6.1%, as compared to the same period of 2015, driven by a decline in salaries and benefits of $2.3 million due to the previously mentioned realignment of our consumer businesses and relatively low benefits costs, and a decline of $1.7 million in provision expense associated with the reserve for unfunded loan commitments, included in other operating expenses. The aforementioned lower write-downs on assets of $1.5 million, $0.4 million of decreased collection and repossession expenses and $0.4 million of lower operational losses also contributed to the positive variance. These decreases were offset by higher data processing expense of $0.6 million due to the issuance of chip debit cards during the first six months of 2016.

Full time equivalent staff declined to 1,168 at June 30, 2016 from 1,216 and 1,289 at March 31, 2016 and June 30, 2015, respectively. The decrease is primarily attributable to staff reductions as a result of the realignment of our consumer banking businesses, offset by the recent expansion of 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 57.06% and 58.56% for the three and six months ended June 30, 2016 as compared to 63.96% and 64.08% for the three and six months ended June 30, 2015. The core efficiency ratio, which excludes securities gains and losses, amortization of intangible assets and other nonrecurring items, was 57.24% and 58.37% for the three and six months ended June 30, 2016 as compared to 63.25% and 63.04% for the three and six months ended June 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 August 19, 2016 to shareholders of record as of August 8, 2016. This dividend represents a 3.0% projected annual yield utilizing the July 26, 2016 closing market price of $9.49.

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 in the first six months of 2016, totaling $0.4 million. This repurchase program was suspended in July as a result of the acquisition of 13 branches in Ohio which management believes represents a better use of capital for shareholders.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at June 30, 2016 were 12.2%, 11.1%, 9.8% and 9.9%, respectively. Our current capital levels meet 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 second quarter 2016 on Wednesday, July 27, 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. A link to the call replay will be accessible at this 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 Six Months Ended
   June 30,  March 31,  June 30,  June 30,  June 30,
   2016  2016  2015  2016  2015
SUMMARY RESULTS OF OPERATIONS               
Net interest income (FTE) (1)  $50,034   $49,749   $47,205   $99,783   $95,195  
Provision for credit losses   10,372    6,526    3,038    16,898    4,197  
Noninterest income   15,558    13,715    16,347    29,273    30,538  
Noninterest expense   37,410    38,144    40,634    75,554    80,488  
Net income   12,007    12,473    13,447    24,480    27,668  
                           
Earnings per common share (diluted)  $0.14   $0.14   $0.15   $0.28   $0.31  
                           
KEY FINANCIAL RATIOS                          
                           
Return on average assets   0.72 %  0.76 %  0.85 %  0.74 %  0.88 %
Return on average shareholders' equity   6.53 %  6.87 %  7.57 %  6.70 %  7.80 %
Return on average tangible common equity (8)   8.41 %  8.88 %  9.82 %  8.65 %  10.10 %
Efficiency ratio (2)   57.06 %  60.10 %  63.96 %  58.56 %  64.08 %
Core efficiency ratio (3)   57.24 %  59.53 %  63.25 %  58.37 %  63.04 %
Net interest margin (FTE) (1)   3.27 %  3.29 %  3.26 %  3.28 %  3.30 %
                           
Book value per common share  $8.34   $8.24   $7.99            
Tangible book value per common share (7)   6.48    6.38    6.16            
Market value per common share   9.20    8.86    9.59            
Cash dividends declared per common share   0.07    0.07    0.07   $0.14   $0.14  
                           
ASSET QUALITY RATIOS                          
Nonperforming loans as a percent of end-of-period loans (4)   1.33 %  1.29 %  1.00 %          
Nonperforming assets as a percent of total assets (4)   1.09 %  1.06 %  0.82 %          
Net charge-offs as a percent of average loans (annualized)   0.48 %  0.18 %  0.39 %          
Allowance for credit losses as a percent of nonperforming loans (5)   92.88 %  89.33 %  106.26 %          
Allowance for credit losses as a percent of end-of-period loans (5)   1.24 %  1.15 %  1.01 %          
                           
CAPITAL RATIOS                          
Shareholders' equity as a percent of total assets   11.0 %  10.9 %  11.3 %          
Tangible common equity as a percent of tangible assets (6)   8.8 %  8.7 %  8.9 %          
Leverage Ratio   9.8 %  9.8 %  10.0 %          
Risk Based Capital - Tier I   11.1 %  11.1 %  11.5 %          
Risk Based Capital - Total   12.2 %  12.1 %  12.4 %          
Common Equity - Tier I   9.9 %  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 Six Months Ended
   June 30,  March 31,  June 30,  June 30,  June 30,
   2016  2016  2015  2016  2015
INCOME STATEMENT               
 Interest income  $53,850   $53,353   $50,150  $107,203   $101,235
 Interest expense   4,759    4,546    3,780   9,305    7,693
Net Interest Income   49,091    48,807    46,370   97,898    93,542
 Taxable equivalent adjustment (1)   943    942    835   1,885    1,653
Net Interest Income (FTE)   50,034    49,749    47,205   99,783    95,195
 Provision for credit losses   10,372    6,526    3,038   16,898    4,197
Net Interest Income after Provision for Credit Losses (FTE)   39,662    43,223    44,167   82,885    90,998
                        
 Net securities (losses) gains   28    -    20   28    125
 Trust income   1,320    1,255    1,476   2,575    2,897
 Service charges on deposit accounts   3,845    3,708    3,872   7,553    7,190
 Insurance and retail brokerage commissions   1,985    1,959    2,178   3,944    4,373
 Income from bank owned life insurance   1,311    1,296    1,378   2,607    2,732
 Gain on sale of mortgage loans   932    683    585   1,615    1,024
 Gain on sale of other loans and assets   466    195    396   661    620
 Card-related interchange income   3,784    3,557    3,729   7,341    7,147
 Derivative mark-to-market   (531 )  (1,014 )  593   (1,545 )  363
 Swap fee income   800    460    283   1,260    643
 Other income   1,618    1,616    1,837   3,234    3,424
Total Noninterest Income   15,558    13,715    16,347   29,273    30,538
                        
 Salaries and employee benefits   19,888    21,677    22,001   41,565    43,893
 Net occupancy   3,186    3,481    3,316   6,667    7,227
 Furniture and equipment   2,882    2,867    2,630   5,749    5,310
 Data processing   1,788    1,759    1,509   3,547    2,947
 Pennsylvania shares tax   1,092    758    1,110   1,850    1,904
 Intangible amortization   114    137    156   251    312
 Collection and repossession   474    569    917   1,043    1,428
 Other professional fees and services   913    791    945   1,704    1,875
 FDIC insurance   1,062    1,038    1,025   2,100    2,084
 Litigation and operational losses   635    244    323   879    1,323
 Loss on sale or write-down of assets   345    96    1,635   441    1,897
 Other operating expenses   5,031    4,727    5,067   9,758    10,288
Total Noninterest Expense   37,410    38,144    40,634   75,554    80,488
                        
Income before Income Taxes   17,810    18,794    19,880   36,604    41,048
 Taxable equivalent adjustment (1)   943    942    835   1,885    1,653
 Income tax provision   4,860    5,379    5,598   10,239    11,727
Net Income  $12,007   $12,473   $13,447  $24,480   $27,668
                        
Shares Outstanding at End of Period   88,949,995    88,959,315    88,960,268   88,949,995    88,960,268
Average Shares Outstanding Assuming Dilution   88,838,614    88,845,201    88,939,003   88,840,683    89,903,550
                        
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
          
   June 30,  March 31,  June 30,
   2016  2016  2015
BALANCE SHEET (Period End)         
Assets         
 Cash and due from banks  $68,163   $62,141   $64,321  
 Interest-bearing bank deposits   30,457    11,024    3,120  
 Securities available for sale, at fair value   913,420    950,795    1,143,072  
 Securities held to maturity, at amortized cost   405,976    396,444    131,780  
 Loans held for sale   11,613    5,849    9,817  
                 
  Loans   4,843,776    4,798,755    4,490,854  
  Allowance for credit losses   (59,821 )  (55,222 )  (45,344 )
 Net loans   4,783,955    4,743,533    4,445,510  
                 
 Goodwill and other intangibles   165,481    165,594    162,781  
 Other assets   370,756    363,774    356,327  
Total Assets  $6,749,821   $6,699,154   $6,316,728  
                 
Liabilities and Shareholders' Equity                
 Noninterest-bearing demand deposits  $1,136,629   $1,155,795   $1,068,230  
                 
  Interest-bearing demand deposits   88,777    92,125    76,865  
  Savings deposits   2,582,709    2,467,978    2,441,888  
  Time deposits   586,405    585,757    623,124  
 Total interest-bearing deposits   3,257,891    3,145,860    3,141,877  
                 
 Total deposits   4,394,520    4,301,655    4,210,107  
                 
  Short-term borrowings   1,464,687    1,518,742    1,231,917  
  Long-term borrowings   81,201    81,342    111,356  
 Total borrowings   1,545,888    1,600,084    1,343,273  
                 
 Other liabilities   67,627    64,101    52,142  
 Shareholders' equity   741,786    733,314    711,206  
Total Liabilities and Shareholders' Equity  $6,749,821   $6,699,154   $6,316,728  
             
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in   thousands)
   For the Three Months Ended  For the Six Months Ended
   June 30,  Yield/  March 31,  Yield/  June 30,  Yield/  June 30,  Yield/  June 30,  Yield/
   2016  Rate  2016  Rate  2015  Rate  2016  Rate  2015  Rate
NET INTEREST MARGIN                        
                               
Assets                              
 Loans (FTE)(1)(4)  $4,833,360  3.86 % $4,745,252  3.88 % $4,498,965  3.87 % $4,789,306  3.87 % $4,488,660  3.89 %
 Securities and interest bearing bank deposits (FTE) (1)   1,321,018  2.54 %  1,331,233  2.57 %  1,308,016  2.33 %  1,326,125  2.56 %  1,323,762  2.47 %
  Total Interest-Earning Assets (FTE) (1)   6,154,378  3.58 %  6,076,485  3.59 %  5,806,981  3.52 %  6,115,431  3.59 %  5,812,422  3.57 %
 Noninterest-earning assets   552,754       541,109       554,175       546,932       547,359     
Total Assets  $6,707,132      $6,617,594      $6,361,156      $6,662,363      $6,359,781     
                                          
Liabilities and Shareholders' Equity                                         
 Interest-bearing demand and savings deposits  $2,660,934  0.16 % $2,553,896  0.11 % $2,526,744  0.11 % $2,607,415  0.13 % $2,514,015  0.11 %
 Time deposits   578,518  0.62 %  594,929  0.62 %  694,725  0.69 %  586,723  0.62 %  741,738  0.73 %
 Short-term borrowings   1,447,452  0.58 %  1,503,013  0.60 %  1,204,466  0.37 %  1,475,233  0.59 %  1,172,957  0.36 %
 Long-term borrowings   81,268  3.62 %  81,409  3.57 %  122,410  2.57 %  81,339  3.59 %  134,831  2.38 %
  Total Interest-Bearing Liabilities   4,768,172  0.40 %  4,733,247  0.39 %  4,548,345  0.33 %  4,750,710  0.39 %  4,563,541  0.34 %
 Noninterest-bearing deposits   1,137,626       1,096,692       1,045,659       1,117,159       1,024,197     
 Other liabilities   61,821       57,301       55,042       59,561       56,848     
 Shareholders' equity   739,513       730,354       712,110       734,933       715,195     
  Total Noninterest-Bearing Funding Sources   1,938,960       1,884,347       1,812,811       1,911,653       1,796,240     
Total Liabilities and Shareholders' Equity  $6,707,132      $6,617,594      $6,361,156      $6,662,363      $6,359,781     
                                          
Net Interest Margin (FTE) (annualized)(1)      3.27 %     3.29 %     3.26 %     3.28 %     3.30 %
                               
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
   June 30,  March 31,  June 30,
   2016  2016  2015
Loan Portfolio Detail         
 Commercial Loan Portfolio:         
  Commercial, financial, agricultural and other  $1,185,062   $1,190,384   $1,098,019  
  Commercial real estate   1,648,222    1,552,904    1,416,841  
  Real estate construction   242,132    256,856    125,010  
   Total Commercial   3,075,416    3,000,144    2,639,870  
                 
 Consumer Loan Portfolio:                
  Closed-end mortgages   732,394    745,924    746,554  
  Home equity lines of credit   466,611    467,038    457,945  
   Total Real Estate - Consumer   1,199,005    1,212,962    1,204,499  
                 
  Auto loans   481,887    499,897    559,438  
  Direct installment   25,160    25,126    26,095  
  Personal lines of credit   48,358    45,905    43,877  
  Student loans   13,950    14,721    17,075  
   Total Other Consumer   569,355    585,649    646,485  
   Total Consumer Portfolio   1,768,360    1,798,611    1,850,984  
    Total Portfolio Loans   4,843,776    4,798,755    4,490,854  
   Loans held for sale   11,613    5,849    9,817  
    Total Loans  $4,855,389   $4,804,604   $4,500,671  
                 
                 
   June 30,  March 31,  June 30,
   2016  2016  2015
ASSET QUALITY DETAIL                
Nonperforming Loans:                
Loans on nonaccrual basis  $38,404   $33,470   $21,776  
Troubled debt restructured loans held for sale on nonaccrual basis   -    -    2,432  
Troubled debt restructured loans on nonaccrual basis   9,672    13,366    8,619  
Troubled debt restructured loans on accrual basis   16,332    14,979    12,276  
   Total Nonperforming Loans  $64,408   $61,815   $45,103  
Other real estate owned ("OREO")   8,604    8,636    6,539  
Repossessions ("Repos")   291    345    348  
   Total Nonperforming Assets  $73,303   $70,796   $51,990  
Loans past due in excess of 90 days and still accruing   1,384    1,330    1,592  
Classified loans   101,998    110,816    79,924  
Criticized loans   128,280    142,625    120,506  
                 
Nonperforming assets as a percentage of total loans, plus OREO and Repos   1.51 %  1.47 %  1.16 %
Allowance for credit losses  $59,821   $55,222   $45,344  
                 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
 
(dollars in   thousands)
   For the Three Months Ended  For the Six Months Ended
   June 30,  March 31,  June 30,  June 30,  June 30,
   2016  2016  2015  2016  2015
Net Charge-offs (Recoveries):               
 Commercial, financial, agricultural and other  $4,689   $1,258   $2,702   $5,947   $7,582  
 Real estate construction   (4 )  (223 )  (84 ) (227 ) (84 )
 Commercial real estate   116    (491 )  471   (375 ) 535  
 Residential real estate   78    264    341   342   811  
 Loans to individuals   894    1,308    961   2,202   2,060  
Net Charge-offs  $5,773   $2,116   $4,391   $7,889   $10,904  
                         
Net charge-offs as a percentage of average loans outstanding (annualized)   0.48 %  0.18 %  0.39 % 0.33 % 0.49 %
Provision for credit losses as a percentage of net charge-offs   179.66 %  308.41 %  69.19 % 214.20 % 38.49 %
Provision for credit losses  $10,372   $6,526   $3,038   $16,898   $4,197  
                   
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 Six Months Ended 
   June 30,  March 31,  June 30,  June 30,  June 30,
   2016  2016  2015  2016  2015
Core Efficiency Ratio:               
 Total Noninterest Expense  $37,410   $38,144   $40,634   $75,554   $80,488  
  Adjustments to Noninterest Expense:                          
   Unfunded commitment reserve   (540 )  (375 )  235    (915 )  741  
   Intangible amortization   114    137    156    251    312  
   Severance   -    -    -    -    -  
   Merger and acquisition related   -    -    -    -    -  
   Loss on sale or writedown of assets   -    -    436    -    486  
    Noninterest Expense - Core  $37,836   $38,382   $39,807   $76,218   $78,949  
                           
  Net interest income, fully tax equivalent  $50,034   $49,749   $47,205   $99,783   $95,195  
  Total noninterest income   15,558    13,715    16,347    29,273    30,538  
  Net securities (losses) gains   28    -    20    28    125  
   Total Revenue  $65,564   $63,464   $63,532   $129,028    $125,608  
                           
  Adjustments to Revenue:                          
   Derivative mark-to-market   (531 )  (1,014 )  593    (1,545 )  363  
    Total Revenue - Core  $66,095   $64,478   $62,939   $130,573   $125,245  
                           
(3)Core Efficiency Ratio   57.24 %  59.53 %  63.25 %  58.37 %  63.04 %
                     
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in   thousands, except per share data)
 
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES        
       
   June 30,  March 31,  June 30,      
   2016  2016  2015      
Tangible Equity:               
 Total shareholders' equity  $741,786   $733,314   $711,206            
 Less: intangible assets   165,481    165,594    162,781            
  Tangible Equity   576,305    567,720    548,425            
 Less: preferred stock   -    -    -            
  Tangible Common Equity  $576,305   $567,720   $548,425            
                           
Tangible Assets:                          
 Total assets  $6,749,821   $6,699,154   $6,316,728            
 Less: intangible assets   165,481    165,594    162,781            
  Tangible Assets  $6,584,340   $6,533,560   $6,153,947            
                           
(6)Tangible Common Equity as a percentage of Tangible Assets   8.75 %  8.69 %  8.91 %          
                           
 Shares Outstanding at End of Period   88,949,995    88,959,315    88,960,268            
(7)Tangible Book Value Per Common Share  $6.48   $6.38   $6.16            
                           
   For the Three Months Ended  For the Six Months Ended
   June 30,  March 31,  June 30,  June 30,  June 30,
   2016  2016  2015  2016  2015
Average Tangible Equity:                          
 Total shareholders' equity  $739,513   $730,354   $712,110   $734,933   $715,195  
 Less: intangible assets   165,527    165,666    162,865    165,597    162,942  
  Tangible Equity   573,986    564,688    549,245    569,336    552,253  
 Less: preferred stock   -    -    -    -    -  
  Tangible Common Equity  $573,986   $564,688   $549,245   $569,336   $552,253  
                           
(8)Return on Average Tangible Common Equity   8.41 %  8.88 %  9.82 %  8.65 %  10.10 %
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.
 

Contact Information

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