SOURCE: First Commonwealth Financial Corporation

First Commonwealth Financial Corporation

January 23, 2018 17:00 ET

First Commonwealth Reports Fourth Quarter and Full Year 2017 Earnings; Declares Quarterly Dividend

INDIANA, PA--(Marketwired - January 23, 2018) - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year 2017.

Full Year 2017 Highlights

Franchise Growth

  • The company successfully completed its acquisition of DCB Financial Corp. located in the Columbus, Ohio metropolitan area on April 3, 2017, which included $383 million in loans and $484 million in deposits at close.
  • The company successfully negotiated a definitive merger agreement to acquire Cincinnati, Ohio based Foundation Bank, which was announced on January 10, 2018.

Earnings

  • For the year ended December 31, 2017, net income was $55.2 million (or $0.58 diluted earnings per share). Core net income (non-GAAP), which excludes acquisition expenses and a previously disclosed $16.7 million non-cash charge for the revaluation of the deferred tax asset (DTA) taken in connection with the passage of the Tax Cuts and Jobs Act, was $78.5 million, or $0.82 diluted earnings per share.
    • Core earnings per share increased $0.13, or 18.8% from the previous year.
  • Total revenue grew $45.9 million, or 17.1% from the prior year.
    • Net interest income (on a fully tax-equivalent (FTE) basis) increased $30.1 million, or 14.9%, from the prior year.
    • Noninterest income grew $15.7 million, or 24.4%, from the prior year.
  • Provision for credit losses totaled $5.1 million, a decrease of $13.4 million as compared to the prior year, in part due to the recognition of two large commercial recoveries of $3.1 million in the second quarter.
  • The return on average equity (ROE) for the year ended December 31, 2017 was 6.45%. The Core return on average tangible common equity (ROTCE) (non-GAAP) for the period was 13.38%, an increase of 259 basis points from the previous year.

Profitability

  • The net interest margin improved 25 basis points to 3.57% compared to the prior year.
  • The return on average assets (ROA) for the year ended December 31, 2017 was 0.77%. The Core ROA (non-GAAP) improved 16 basis points to 1.09% compared to the prior year.

"This was another very productive year for our company," stated T. Michael Price, President and Chief Executive Officer. "Our performance trajectory, especially in our fee income, demonstrates a desire to become one of the top performing community banks in the country. And our recent acquisitions have put additional wind in our sails by allowing us to expand beyond our core Pennsylvania markets and establish a presence in each of Ohio's three major metropolitan markets. As we enter 2018, our efforts will be focused on building on our successful expansion strategy in Ohio, while being mindful to keep costs in line with our revenue streams."

Fourth Quarter 2017 Highlights

Earnings

  • For the quarter ended December 31, 2017, net income was $4.0 million (or $0.04 diluted earnings per share), resulting in an ROA of 0.21% and an ROE of 1.75%. Core net income (non-GAAP), which excludes acquisition expenses and the $16.7 million non-cash charge for the revaluation of the DTA, was $20.6 million, or $0.21 diluted earnings per share, resulting in a Core ROA and Core ROTCE of 1.11% and 13.29%, respectively.
  • Total revenue grew $14.5 million, or 20.4%, from the prior year quarter.
    • Net interest income (FTE) increased $8.1 million, or 15.4%, from the prior year quarter.
    • Noninterest income grew $6.4 million, or 34.8%, from the prior year quarter (or $2.6 million and 14.7%, respectively, excluding securities gains).
  • Total noninterest expense includes $2.5 million of expense for a one-time cash bonus of $1,500 paid to all employees (other than the top five executive officers) following the passage of the Tax Cuts and Jobs Act.
    • Noninterest expense in the fourth quarter also reflected $0.6 million in expense related to growth in unfunded loan commitments.
  • Fourth quarter results also reflect approximately $0.7 million in expense related to expense management strategies associated with the recent tax law change.
  • These expense items were offset by net security gains of $4.3 million following the successful auction call of a pooled trust preferred security held in the company's investment portfolio.
  • Commercial loans grew at an annualized rate of 3.3%.

Profitability

  • The net interest margin improved 17 basis points to 3.61% compared to the prior year, and was unchanged from the prior quarter as positive replacement yields on loans offset deposit rate increases.
  • The Core return on average assets (non-GAAP) was 1.11%.

"The fourth quarter builds on the success of recent quarters and sets us up well for the coming year," stated T. Michael Price, President and Chief Executive Officer. "We were particularly happy to be able to give back some of the benefit from the tax law change to our employees in the form of a cash bonus. In addition, in light of our recent performance and positive outlook for the future, we are pleased that we will be able to make a total of approximately $500 thousand in cash contributions to our employee's health savings accounts in 2018."

Financial Summary

       
(dollars in thousands,  For the Three Months Ended  For the Year Ended
except per share data)  December 31,  September 30,  December 31,  December 31,  December 31,
   2017  2017  2016  2017  2016
Reported Results               
Net income  $3,981  $21,283  $17,914  $55,165  $59,590
Diluted earnings per share  $0.04  $0.22  $0.20  $0.58  $0.67
Return on average assets  0.21%  1.14%  1.07%  0.77%  0.89%
Return on average equity  1.75%  9.50%  9.46%  6.45%  8.02%
                
Operating Results (non-GAAP)(1)               
Core net income  $20,561  $21,238  $19,744  $78,512  $61,652
Core diluted earnings per share  $0.21  $0.22  $0.22  $0.82  $0.69
Core return on average assets  1.11%  1.14%  1.18%  1.09%  0.93%
Return on average tangible common equity  2.84%  14.04%  12.46%  9.50%  10.43%
Core return on average tangible common equity  13.29%  14.01%  13.73%  13.38%  10.79%
Core efficiency ratio  62.24%  57.96%  61.70%  60.22%  58.71%
Net interest margin (FTE)  3.61%  3.61%  3.44%  3.57%  3.32%
(1)Operating results are non-GAAP measures 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 fourth quarter of 2017 was $4.0 million, as compared to $17.9 million for the fourth quarter of 2016. The current quarter's results were impacted by a previously disclosed valuation adjustment to the company's deferred tax asset which resulted in a non-cash charge of $16.7 million.

Net income for the year ended December 31, 2017 was $55.2 million, as compared to $59.6 million for the same period in 2016, a decrease of $4.4 million. The results for the current year were impacted by the aforementioned non-cash charge of $16.7 million as well as one-time merger-related expenses of $10.2 million (pretax).

Excluding these one-time expenses, core net income for the year ended December 31, 2017 was $78.5 million, an increase of $16.9 million, or 27.3%, from the previous year.

Net Interest Margin and Net Interest Income

The net interest margin for the year ended December 31, 2017 was 3.57%, an increase of 25 basis points from the previous year.

The increase from the prior year was due primarily to a 27 basis point increase in the yield on interest earning assets partially offset by a 2 basis point increase in funding costs. These increases were primarily due to improved yields on variable and adjustable loan portfolios following the Federal Reserve's decision to increase short-term rates in December of 2016, March, June and December of 2017, along with the ability to pay down higher cost short-term borrowings following our recent acquisitions.

The net interest margin for the fourth quarter of 2017 was 3.61%, which was unchanged from the previous quarter and an increase of 17 basis points from the fourth quarter of 2016. The increase from the prior year quarter was primarily due to a 30 basis point increase in the yield on loans, which was partially offset by higher short-term borrowing costs following the Federal Reserve's decisions to raise short-term interest rates.

For the quarter and year ended December 31, 2017, total average earning assets grew $571.7 million and $422.1 million, respectively, from the prior year period primarily due to the aforementioned acquisitions.

Total average deposits grew by $973.9 million for the year ended December 31, 2017 compared to the previous year. Growth from the prior year was driven by a $980.2 million increase in transaction accounts and a $6.3 million decrease in time deposits.

Credit Quality

The provision for credit losses totaled $5.1 million for the year ended December 31, 2017, a decrease of $13.4 million as compared to the prior year. The decrease from the prior year is primarily the result of lower net charge-offs and improved asset quality as well as the recognition of $3.1 million of recoveries on two large commercial relationships during the second quarter of 2017.

At December 31, 2017, nonperforming loans were $42.2 million, an increase of $3.4 million from September 30, 2017 and an increase of $0.4 million from December 31, 2016. Nonperforming loans as a percentage of total loans were 0.78%, 0.72% and 0.86% for the periods ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively.

For the year ended December 31, 2017, net charge-offs were $7.0 million, or 0.13% of average loans, compared to $19.1 million in the prior year period. Net charge-offs during the current year period included recoveries for two large commercial credits totaling $3.1 million.

During the fourth quarter of 2017, net charge-offs were $2.1 million, or 0.16% of average loans (annualized), compared to $1.1 million in the prior quarter and $2.7 million in the fourth quarter of 2016.

For the originated loan portfolio at December 31, 2017, the allowance for credit losses to total originated loans was 0.96%, compared to 0.97% at September 30, 2017 and 1.05% at December 31, 2016.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $20.4 million for the fourth quarter of 2017 as compared to $19.7 million for the third quarter of 2017 and $17.7 million for the fourth quarter of 2016. Swap fee income increased $1.3 million and $1.2 million from the prior quarter and the year ago quarter, respectively, primarily due to increased commercial borrower swap activity. Trust fee income and service charges on deposit accounts increased $0.6 million and $0.4 million from the prior year quarter due to an expanded customer base as a result of recent acquisitions. Gain on sale of mortgage loans totaled $1.7 million for the fourth quarter of 2017, an increase of $0.4 million from the prior year quarter, representing the highest quarterly total since the company reentered the traditional mortgage business in 2014.

Net security gains were $4.3 million for the quarter ended December 31, 2017, following the successful auction call of a single pooled trust preferred security for which the company had previously recognized an other-than-temporary impairment charge.

Noninterest expense (excluding merger-related expenses) totaled $52.1 million for the fourth quarter of 2017, as compared to $47.4 million for the third quarter of 2017 and $42.9 million for the fourth quarter of 2016. The $4.7 million increase from the previous quarter was primarily the result of $2.5 million of expense for a one-time bonus of $1,500 paid to all employees (other than the top five named executive officers) following the passage of the Tax Cuts and Jobs Act, a $0.4 million increase in furniture and equipment expense and a $0.3 million increase in occupancy expense primarily due to higher snow removal costs.

Full time equivalent staff was 1,372 at December 31, 2017, 1,366 at September 30, 2017 and 1,274 at December 31, 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 February 16, 2018 to shareholders of record as of February 2, 2018. This dividend represents a 2.1% projected annual yield utilizing the January 22, 2018 closing market price of $15.10.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2017 were 12.3%, 11.5%, 9.7% and 10.3%, 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 quarter and year ended December 31, 2017 on Wednesday, January 24, 2018 at 2:00 PM (ET). The call can be accessed by dialing (toll free) 1-844-792-3645 or through the company's web page, http://www.fcbanking.com/InvestorRelations. A replay of the call will be available approximately one hour following the conclusion of the conference by dialing 1-877-344-7529 and entering the access code #10115427. 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 (including the pending acquisition Garfield Acquisition Corp and its banking subsidiary Foundation Bank); (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 Year Ended  
   December 31,   September 30,   December 31,   December 31,   December 31,  
   2017   2017   2016   2017   2016  
SUMMARY RESULTS OF OPERATIONS                          
Net interest income (FTE) (1)  $60,624   $60,667   $52,529   $233,005   $202,881  
Provision for credit losses   2,253    1,214    (1,826 )  5,087    18,480  
Noninterest income   24,705    19,790    18,332    80,331    64,599  
Noninterest expense   51,909    47,361    45,675    200,298    159,925  
Net income   3,981    21,283    17,914    55,165    59,590  
Core net income (5)   20,561    21,238    19,744    78,512    61,652  
                           
Earnings per common share (diluted)  $0.04   $0.22   $0.20   $0.58   $0.67  
Core earnings per common share (diluted) (6)  $0.21   $0.22   $0.22   $0.82   $0.69  
                           
KEY FINANCIAL RATIOS                          
                           
Return on average assets   0.21 %  1.14 %  1.07 %  0.77 %  0.89 %
Core return on average assets (7)   1.11 %  1.14 %  1.18 %  1.09 %  0.93 %
Return on average shareholders' equity   1.75 %  9.50 %  9.46 %  6.45 %  8.02 %
Return on average tangible common equity (8)   2.84 %  14.04 %  12.46 %  9.50 %  10.43 %
Core return on average tangible common equity (9)   13.29 %  14.01 %  13.73 %  13.38 %  10.79 %
Core efficiency ratio (2)(10)   62.24 %  57.96 %  61.70 %  60.22 %  58.71 %
Net interest margin (FTE) (1)   3.61 %  3.61 %  3.44 %  3.57 %  3.32 %
                           
Book value per common share  $9.11   $9.17   $8.43            
Tangible book value per common share (11)   6.34    6.39    6.20            
Market value per common share   14.32    14.13    14.18            
Cash dividends declared per common share   0.08    0.08    0.07   $0.32   $0.28  
                           
ASSET QUALITY RATIOS                          
Nonperforming loans as a percent of end-of-period loans (3)   0.78 %  0.72 %  0.86 %          
Nonperforming assets as a percent of total assets (3)   0.62 %  0.61 %  0.73 %          
Net charge-offs as a percent of average loans (annualized)   0.16 %  0.08 %  0.22 %          
Allowance for credit losses as a percent of nonperforming loans (4)   114.34 %  124.16 %  120.02 %          
Allowance for credit losses as a percent of end-of-period loans (4)   0.89 %  0.90 %  1.03 %          
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases   0.96 %  0.97 %  1.05 %          
                           
CAPITAL RATIOS                          
Shareholders' equity as a percent of total assets   12.2 %  12.1 %  11.2 %          
Tangible common equity as a percent of tangible assets (12)   8.8 %  8.8 %  8.5 %          
Leverage Ratio   9.7 %  9.7 %  9.8 %          
Risk Based Capital - Tier I   11.5 %  11.5 %  11.3 %          
Risk Based Capital - Total   12.3 %  12.3 %  12.3 %          
Common Equity - Tier I   10.3 %  10.3 %  10.1 %          
                     
 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
   For the Three Months Ended   For the Year Ended
   December 31,   September 30,   December 31,   December 31,   December 31,
   2017   2017   2016   2017   2016
INCOME STATEMENT                        
 Interest income  $65,840   $65,411   $55,932   $250,550   $217,614
 Interest expense   6,270    5,848    4,413    21,770    18,579
Net Interest Income   59,570    59,563    51,519    228,780    199,035
 Taxable equivalent adjustment (1)   1,054    1,104    1,010    4,225    3,846
Net Interest Income (FTE)   60,624    60,667    52,529    233,005    202,881
 Provision for credit losses   2,253    1,214    (1,826 )  5,087    18,480
Net Interest Income after Provision for Credit Losses (FTE)   58,371    59,453    54,355    227,918    184,401
                         
 Net securities gains (losses)   4,345    92    589    5,040    617
 Trust income   1,823    2,147    1,268    7,098    5,366
 Service charges on deposit accounts   4,721    4,803    4,341    18,579    15,869
 Insurance and retail brokerage commissions   2,155    2,128    1,916    8,807    7,964
 Income from bank owned life insurance   1,486    1,472    1,424    5,699    5,381
 Gain on sale of mortgage loans   1,656    1,418    1,236    5,366    4,086
 Gain on sale of other loans and assets   486    503    363    1,753    1,411
 Card-related interchange income   4,907    4,780    3,916    18,780    14,955
 Derivative mark-to-market   (424 )  (14 )  1,294    (473 )  219
 Swap fee income   1,547    217    374    2,005    2,359
 Other income   2,003    2,244    1,611    7,677    6,372
Total Noninterest Income   24,705    19,790    18,332    80,331    64,599
                         
 Salaries and employee benefits   28,781    26,169    24,913    103,714    87,125
 Net occupancy   4,051    3,715    3,307    15,648    13,150
 Furniture and equipment   3,755    3,342    3,028    13,508    11,624
 Data processing   2,431    2,229    2,050    9,090    7,429
 Pennsylvania shares tax   1,139    1,093    1,061    4,209    3,825
 Advertising and promotion   1,051    941    661    3,786    2,601
 Intangible amortization   819    844    229    3,081    547
 Collection and repossession   563    402    447    1,905    2,250
 Other professional fees and services   1,406    1,300    1,049    4,761    3,915
 FDIC insurance   744    696    698    3,210    3,903
 Litigation and operational losses   943    598    246    2,050    1,420
 Loss on sale or write-down of assets   348    167    526    1,834    1,155
 Merger and acquisition related   (199 )  (69 )  2,815    10,213    3,173
 Other operating expenses   6,077    5,934    4,645    23,289    17,808
Total Noninterest Expense   51,909    47,361    45,675    200,298    159,925
                         
Income before Income Taxes   31,167    31,882    27,012    107,951    89,075
 Taxable equivalent adjustment (1)   1,054    1,104    1,010    4,225    3,846
 Income tax provision   26,132    9,495    8,088    48,561    25,639
Net Income  $3,981   $21,283   $17,914   $55,165   $59,590
                         
 Shares Outstanding at End of Period   97,456,478    97,475,575    89,007,077    97,456,478    89,007,077
 Average Shares Outstanding Assuming Dilution   97,507,465    97,457,470    88,887,387    95,331,037    88,851,573
                         
 
FIRST COMMONWEALTH FINANCIAL CORPORATION       
CONSOLIDATED FINANCIAL DATA         
Unaudited         
(dollars in thousands)         
              
   December 31,   September 30,   December 31,  
   2017   2017   2016  
BALANCE SHEET (Period End)                
Assets                
 Cash and due from banks  $98,624   $98,319   $91,033  
 Interest-bearing bank deposits   8,668    29,709    24,644  
 Securities available for sale, at fair value   761,195    810,946    815,110  
 Securities held to maturity, at amortized cost   422,096    436,081    372,513  
 Loans held for sale   14,850    17,100    7,052  
                 
  Loans   5,407,376    5,375,847    4,879,347  
  Allowance for credit losses   (48,298 )  (48,176 )  (50,185 )
 Net loans   5,359,078    5,327,671    4,829,162  
                 
 Goodwill and other intangibles   270,360    271,347    198,496  
 Other assets   373,668    393,166    346,008  
Total Assets  $7,308,539   $7,384,339   $6,684,018  
                 
Liabilities and Shareholders' Equity                
 Noninterest-bearing demand deposits  $1,416,771   $1,416,814   $1,268,786  
                 
  Interest-bearing demand deposits   187,281    264,731    114,043  
  Savings deposits   3,361,840    3,290,978    2,972,747  
  Time deposits   614,813    582,534    591,832  
 Total interest-bearing deposits   4,163,934    4,138,243    3,678,622  
                 
 Total deposits   5,580,705    5,555,057    4,947,408  
                 
  Short-term borrowings   707,466    805,825    867,943  
  Long-term borrowings   87,918    88,155    80,916  
 Total borrowings   795,384    893,980    948,859  
                 
 Other liabilities   44,323    41,001    37,822  
 Shareholders' equity   888,127    894,301    749,929  
Total Liabilities and Shareholders' Equity  $7,308,539   $7,384,339   $6,684,018  
             
 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
          
   For the Three Months Ended   For the Year Ended  
   December 31,  Yield/   September 30,  Yield/   December 31,  Yield/   December 31,  Yield/   December 31,  Yield/  
   2017  Rate   2017  Rate   2016  Rate   2017  Rate   2016  Rate  
NET INTEREST MARGIN                              
                                          
Assets                                         
 Loans (FTE)(1)(3)  $5,433,384  4.29 % $5,398,815  4.28 % $4,856,579  3.99 % $5,278,511  4.20 % $4,818,759  3.91 %
 Securities and interest bearing bank deposits (FTE) (1)   1,220,469  2.63 %  1,265,416  2.60 %  1,225,600  2.66 %  1,252,739  2.63 %  1,290,392  2.56 %
  Total Interest-Earning Assets (FTE) (1)   6,653,853  3.99 %  6,664,231  3.96 %  6,082,179  3.72 %  6,531,250  3.90 %  6,109,151  3.63 %
 Noninterest-earning assets   710,946       713,142       555,920       679,212       551,465     
Total Assets  $7,364,799      $7,377,373      $6,638,099      $7,210,462      $6,660,616     
                                          
Liabilities and Shareholders' Equity                                         
 Interest-bearing demand and savings deposits  $3,521,485  0.20 % $3,576,365  0.18 % $2,768,287  0.14 % $3,429,445  0.17 % $2,659,202  0.14 %
 Time deposits   596,051  0.73 %  562,868  0.64 %  577,851  0.63 %  578,158  0.65 %  584,429  0.63 %
 Short-term borrowings   807,831  1.19 %  829,954  1.16 %  1,210,619  0.58 %  867,391  1.01 %  1,387,737  0.58 %
 Long-term borrowings   88,019  4.24 %  88,256  4.18 %  80,984  3.82 %  86,391  4.12 %  81,197  3.67 %
  Total Interest-Bearing Liabilities   5,013,386  0.50 %  5,057,443  0.46 %  4,637,741  0.38 %  4,961,385  0.44 %  4,712,565  0.39 %
 Noninterest-bearing deposits   1,411,902       1,393,024       1,195,862       1,356,125       1,146,189     
 Other liabilities   39,011       38,125       50,837       37,818       58,918     
 Shareholders' equity   900,500       888,781       753,659       855,134       742,944     
  Total Noninterest-Bearing Funding Sources   2,351,413       2,319,930       2,000,358       2,249,077       1,948,051     
Total Liabilities and Shareholders' Equity  $7,364,799      $7,377,373      $6,638,099      $7,210,462      $6,660,616     
                                          
Net Interest Margin (FTE) (annualized)(1)      3.61 %     3.61 %     3.44 %     3.57 %     3.32 %
                               
   
FIRST COMMONWEALTH FINANCIAL CORPORATION  
CONSOLIDATED FINANCIAL DATA  
Unaudited  
(dollars in thousands)  
   December 31,   September 30,   December 31,  
   2017   2017   2016  
Loan Portfolio Detail                
 Commercial Loan Portfolio:                
  Commercial, financial, agricultural and other  $1,163,383   $1,154,225   $1,139,547  
  Commercial real estate   2,019,096    1,990,264    1,742,210  
  Real estate construction   248,868    259,129    219,621  
   Total Commercial   3,431,347    3,403,618    3,101,378  
                 
 Consumer Loan Portfolio:                
  Closed-end mortgages   897,284    893,809    713,471  
  Home equity lines of credit   529,086    529,613    515,721  
   Total Real Estate - Consumer   1,426,370    1,423,422    1,229,192  
                 
  Auto loans   454,932    454,320    458,610  
  Direct installment   24,560    24,995    24,381  
  Personal lines of credit   60,023    58,880    53,339  
  Student loans   10,144    10,612    12,447  
   Total Other Consumer   549,659    548,807    548,777  
   Total Consumer Portfolio   1,976,029    1,972,229    1,777,969  
    Total Portfolio Loans   5,407,376    5,375,847    4,879,347  
  Loans held for sale   14,850    17,100    7,052  
   Total Loans  $5,422,226   $5,392,947   $4,886,399  
                 
              
   December 31,   September 30,   December 31,  
   2017   2017   2016  
ASSET QUALITY DETAIL                
Nonperforming Loans:                
Loans on nonaccrual basis  $19,455   $14,943   $16,301  
Troubled debt restructured loans on nonaccrual basis   11,222    11,408    11,722  
Troubled debt restructured loans on accrual basis   11,563    12,451    13,790  
  Total Nonperforming Loans  $42,240   $38,802   $41,813  
Other real estate owned ("OREO")   2,765    5,701    6,805  
Repossessions ("Repos")   292    200    242  
  Total Nonperforming Assets  $45,297   $44,703   $48,860  
Loans past due in excess of 90 days and still accruing   1,854    1,332    2,131  
Classified loans   73,017    65,948    92,705  
Criticized loans   124,417    125,034    134,372  
                 
Nonperforming assets as a percentage of total loans, plus OREO and Repos   0.83 %  0.83 %  1.00 %
Allowance for credit losses  $48,298   $48,176   $50,185  
                 
  
FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands) 
   For the Three Months Ended   For the Year Ended  
   December 31,   September 30,   December 31,   December 31,   December 31,  
   2017   2017   2016   2017   2016  
Net Charge-offs (Recoveries):                          
 Commercial, financial, agricultural and other  $777   $315   $2,392   $2,733   $15,439  
 Real estate construction   -    (373 )  (335 )  (470 )  (562 )
 Commercial real estate   177    (25 )  (567 )  62    (952 )
 Residential real estate   240    276    139    916    708  
 Loans to individuals   937    912    1,094    3,733    4,474  
Net Charge-offs  $2,131   $1,105   $2,723   $6,974   $19,107  
                           
Net charge-offs as a percentage of average loans outstanding (annualized)   0.16 %  0.08 %  0.22 %  0.13 %  0.40 %
Provision for credit losses as a percentage of net charge-offs   105.73 %  109.86 %  (67.06 )%  72.94 %  96.72 %
Provision for credit losses  $2,253   $1,214   $(1,826 ) $5,087   $18,480  
                     
 
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 Year Ended  
   December 31,   September 30,   December 31,   December 31,   December 31,  
   2017   2017   2016   2017   2016  
                           
Net Income  $3,981   $21,283   $17,914   $55,165   $59,590  
 Intangible amortization   819    844    229    3,081    547  
 Tax benefit of amortization of intangibles   (287 )  (295 )  (80 )  (1,078 )  (191 )
  Net Income, adjusted for tax affected amortization of intangibles   4,513    21,832    18,063    57,168    59,946  
                           
Average Tangible Equity:                          
 Total shareholders' equity  $900,500   $888,781   $753,659   $855,134   $742,944  
 Less: intangible assets   270,906    271,670    177,081    253,533    168,446  
  Tangible Equity   629,594    617,111    576,578    601,601    574,498  
 Less: preferred stock   -    -    -    -    -  
  Tangible Common Equity  $629,594   $617,111   $576,578   $601,601   $574,498  
                           
(8) Return on Average Tangible Common Equity   2.84 %  14.04 %  12.46 %  9.50 %  10.43 %
                           
  
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 Year Ended  
   December 31,   September 30,   December 31,   December 31,   December 31,  
   2017   2017   2016   2017   2016  
                           
Core Net Income:                          
 Total Net Income  $3,981   $21,283   $17,914   $55,165   $59,590  
  Deferred tax asset writedown   16,709    -    -    16,709    -  
  Merger & Acquisition related expenses   (199 )  (69 )  2,815    10,213    3,173  
  Tax benefit of merger & acquisition related expenses   70    24    (985 )  (3,575 )  (1,111 )
 (5) Core net income   20,561    21,238    19,744    78,512    61,652  
  Average Shares Outstanding Assuming Dilution   97,507,465    97,457,470    88,887,387    95,331,037    88,851,573  
  (6) Core Earnings per common share (diluted)  $0.21   $0.22   $0.22   $0.82   $0.69  
                           
   Intangible amortization   819    844    229    3,081    547  
   Tax benefit of amortization of intangibles   (287 )  (295 )  (80 )  (1,078 )  (191 )
    Core Net Income, adjusted for tax affected amortization of intangibles  $21,093   $21,787   $19,893   $80,515   $62,008  
                           
(9) Core Return on Average Tangible Common Equity   13.29 %  14.01 %  13.73 %  13.38 %  10.79 %
                           
                           
   For the Three Months Ended   For the Year Ended  
   December 31,   September 30,   December 31,   December 31,   December 31,  
   2017   2017   2016   2017   2016  
Core Return on Average Assets:                          
 Total Net Income  $3,981   $21,283   $17,914   $55,165   $59,590  
 Total Average Assets   7,364,799    7,377,373    6,638,099    7,210,462    6,660,616  
  Return on Average Assets   0.21 %  1.14 %  1.07 %  0.77 %  0.89 %
                           
 Core Net Income (5)  $20,561   $21,238   $19,744   $78,512   $61,652  
 Total Average Assets   7,364,799    7,377,373    6,638,099    7,210,462    6,660,616  
  (7) Core Return on Average Assets   1.11 %  1.14 %  1.18 %  1.09 %  0.93 %
                       
  
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 Year Ended  
   December 31,   September 30,   December 31,   December 31,   December 31,  
   2017   2017   2016   2017   2016  
Core Efficiency Ratio:                          
 Total Noninterest Expense  $51,909   $47,361   $45,675   $200,298   $159,925  
  Adjustments to Noninterest Expense:                          
   Unfunded commitment reserve   624    (1 )  71    1,075    (341 )
   Intangible amortization   819    844    229    3,081    547  
   Merger and acquisition related   (199 )  (69 )  2,815    10,213    3,173  
    Noninterest Expense - Core  $50,665   $46,587   $42,560   $185,929   $156,546  
                           
  Net interest income, fully tax equivalent  $60,624   $60,667   $52,529   $233,005   $202,881  
  Total noninterest income   24,705    19,790    18,332    80,331    64,599  
  Net securities gains   (4,345 )  (92 )  (589 )  (5,040 )  (617 )
   Total Revenue  $80,984   $80,365   $70,272   $308,296   $266,863  
                           
  Adjustments to Revenue:                          
   Derivative mark-to-market   (424 )  (14 )  1,294    (473 )  219  
    Total Revenue - Core  $81,408   $80,379   $68,978   $308,769   $266,644  
                           
(10) Core Efficiency Ratio   62.24 %  57.96 %  61.70 %  60.22 %  58.71 %
                           
                           
   December 31,   September 30,   December 31,          
   2017   2017   2016          
Tangible Equity:                          
 Total shareholders' equity  $888,127   $894,301   $749,929            
 Less: intangible assets   270,360    271,347    198,496            
  Tangible Equity   617,767    622,954    551,433            
 Less: preferred stock   -    -    -            
  Tangible Common Equity  $617,767   $622,954   $551,433            
                           
Tangible Assets:                          
 Total assets  $7,308,539   $7,384,339   $6,684,018            
 Less: intangible assets   270,360    271,347    198,496            
  Tangible Assets  $7,038,179   $7,112,992   $6,485,522            
                           
(12) Tangible Common Equity as a percentage of Tangible Assets   8.78 %  8.76 %  8.50 %          
                           
Shares Outstanding at End of Period   97,456,478    97,475,575    89,007,077            
(11) Tangible Book Value Per Common Share  $6.34   $6.39   $6.20            
                           
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.  
  

Contact Information

  • 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
    Phone: 724-463-1690
    E-mail: RThomas1@fcbanking.com