First Commonwealth Announces Third Quarter 2009 Financial Results
- Press Release
- Source: First Commonwealth Financial Corporation
- On 8:10 am EDT, Thursday October 22, 2009
INDIANA, Pa., Oct. 22 /PRNewswire-FirstCall/ -- First Commonwealth Financial Corporation (NYSE: FCF - News), the holding company for First Commonwealth Bank, announced today financial results for the third quarter ended September 30, 2009.
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Third Quarter Results
First Commonwealth reported a net loss for the third quarter 2009 of $3.0 million, or $(0.04) per diluted share compared to net income of $10.2 million, or $0.14 per diluted share in the third quarter of 2008 as a result of a $17.5 million ($11.4 million after tax) increase in the provision for credit losses as well as an increase of $1.3 million ($859 thousand after tax) in other-than-temporary impairment charges. The higher provision was related to commercial construction loans primarily outside of Pennsylvania in addition to two out of state commercial and industrial loans which are Shared National Credits (SNC). The other-than-temporary impairment charges resulted from further credit deterioration of the company's pooled trust preferred collateralized debt obligations.
Developments during the third quarter included:
- Total loans increased $112.3 million and low cost (demand and savings) deposits increased $88.6 million from June 30, 2009.
- Non-accrual loans increased $51.9 million from June 30, 2009.
- The provision for credit losses was $21.4 million ($13.9 million after tax) in the third quarter 2009.
- The company recorded impairment losses of $9.9 million ($6.5 million after tax) relating to trust preferred collateralized debt obligations in the third quarter 2009.
- FDIC insurance costs increased $1.9 million ($1.2 million after tax) from the third quarter of 2008.
- Non-interest expense decreased $3.4 million from the quarter ended June 30, 2009.
Total nonperforming loans increased $51.9 million during the third quarter 2009 from June 30, 2009 to $133.8 million, or 2.88% of total loans, as of September 30, 2009. Significant additions to nonperforming loans included:
- A $38.8 million real estate construction loan in Southeastern Florida for land to be used in a condominium development.
- A $10.8 million real estate loan for a landfill in Western Pennsylvania.
- An $8.2 million real estate construction loan in Lake Tahoe, Nevada for the acquisition of land, which was 90 days delinquent at quarter end.
- A $4.9 million commercial loan to a manufacturer of semiconductors in Texas.
- A $4.5 million real estate construction loan for residential lot development in Western Pennsylvania.
The increase in nonperforming loans was partially offset by $14.2 million in charge offs taken on existing nonperforming loans in the third quarter.
"Although our provision for credit losses remains high, our third quarter provision of $21.4 million was down significantly from the previous quarter," said John J. Dolan, President and CEO. "We continue to be disciplined in providing for credit loss provisions as economic conditions affecting the credit quality of commercial construction loans out-of-state have not subsided. We believe these actions are prudent during this distressed economic period. At the same time, our capital ratios are strong, allowing us to work through this difficult environment."
Dolan noted, "Commercial construction loans represent nearly 75% of our total non-performing loans as of September 30, 2009, but represent only 7.5% of our total loan portfolio. Despite these credit quality issues, we are pleased with the strong annualized growth we are experiencing in low cost transaction and savings deposits and commercial, consumer, and small business loans. We continue to fulfill the credit needs of our community."
Average diluted shares in the third quarter 2009 were 16.2% greater than the comparable quarter in 2008 primarily due to the issuance of 11.5 million shares of common stock in connection with a capital raise completed on November 5, 2008.
Net Interest Income and Margin
Net interest income increased $3.1 million, or 6.4%, in the third quarter of 2009 from the third quarter of 2008, despite the negative impact of loans transferred to non-accrual status. The increase was a result of both growth in earning assets and an increase in the net interest margin.
The net interest margin on a tax equivalent basis for the third quarter 2009 increased four basis points to 3.62% compared with 3.58% in the corresponding period last year. The increase in our net interest margin can be attributed to increased loan volume and declines in the cost of interest-bearing liabilities exceeding the declines in yields on total interest-earning assets. The decrease in the cost of interest-bearing liabilities can be attributed to lower interest rates, combined with a shift in the mix of our liabilities to low cost deposits and short-term borrowings from time deposits and long-term debt. The net interest margin for the third quarter 2009 was negatively impacted $1.9 million, or 12 basis points (0.12%), due to reversal of previously recorded income on loans transferred to non-accrual status during the third quarter of 2009.
Average interest-earning assets increased by $251.1 million, or 4.4%, in the third quarter of 2009 compared to the third quarter of 2008, driven by an increase in average loans of $450.8 million, or 10.9%, due primarily from loan growth experienced in the fourth quarter of 2008. This quarter-to-quarter loan growth was funded by investment run-off, deposit growth and short-term borrowings. Average investment securities decreased $199.7 million, average deposits increased $226.8 million and average short-term borrowings, or wholesale borrowings, increased $138.3 million. A portion of the increase in average short-term borrowings was also due to refinancing $190.0 million of longer term Federal Home Loan Bank advances in the fourth quarter of 2008. These advances were due to mature in the first seven months of 2009 and were replaced with lower costing overnight borrowings.
The mix of deposits continued to improve during the third quarter of 2009, as management continued to supplement deposit growth with wholesale borrowing due to the significant spread between wholesale borrowing costs and rates paid on interest-bearing deposits. Average time deposits decreased $230.9 million or 11.9% from September 30, 2008 to September 30, 2009. This run-off was offset with increased levels of lower costing transaction and savings deposits. Average noninterest-bearing demand deposits increased $41.2 million, or 7.4%, and average interest-bearing demand deposits and savings deposits increased $416.5 million, or 23.3%, from the third quarter of 2008 to the third quarter of 2009.
Non-Interest Income
Non-interest income decreased $2.5 million, or 40.5%, in the third quarter of 2009 compared to the same period last year. This decrease was primarily due to higher credit related other-than-temporary impairment losses of $1.3 million and a decline of $866 thousand in net security gains.
Insurance and retail brokerage commissions rose $678 thousand, or 48.8%, as a result of higher sales resulting from additional producers and an enhanced calling program. Card related interchange income increased $274 thousand as a result of growth in usage of debit cards and larger dollar transactions. These were offset by a decline of $357 thousand in income from bank owned life insurance as a result of lower crediting rates.
Non-Interest Expense
Non-interest expense increased $2.9 million, or 7.6%, for the third quarter of 2009 from the third quarter of 2008 primarily due to higher FDIC insurance costs and other operating expenses. FDIC insurance costs rose $1.9 million driven by premium increases. Other operating expenses increased $1.1 million primarily due to collection and repossession costs related to the nonperforming loans.
Credit Quality and Provision for Credit Losses
For the quarter ending September 30, 2009, nonperforming loans increased $51.9 million to $133.8 million from June 30, 2009. Net charge-offs were $15.6 million in the third quarter 2009 compared to $2.9 million in the same period in 2008. $11.1 million of the increase in quarterly net charge-offs was related to one commercial construction loan and one commercial and industrial loan, both of which are SNCs. These charge-offs are a result of management's internal review of these credits and were substantiated by the SNC 2009 annual review. Nonperforming loans as a percentage of total loans increased from 1.81% at June 30, 2009 to 2.88% at September 30, 2009.
Loans past due in excess of 90 days and still accruing at September 30, 2009 decreased $609 thousand to $14.4 million compared to June 30, 2009. The majority of these loans are consumer loans secured by residential real estate.
The provision for credit losses for the third quarter of 2009 was $21.4 million, an increase of $17.5 million compared to the third quarter of 2008. The provision exceeded the net charge-offs in the third quarter of 2009 by $5.8 million. The allowance for credit losses as a percentage of average loans at September 30, 2009 increased to 1.96%, compared to 1.85% at June 30, 2009.
Income Tax
The provision for income taxes for the third quarter of 2009 decreased $6.7 million from the same period in 2008 primarily due to the decrease in income before taxes partly offset by a decline in nontaxable income and tax credits. First Commonwealth's effective tax rate was 64.8% for the tax benefit in the third quarter of 2009 compared to 10.0% for the tax expense in the comparable quarter in 2008. The effective tax rate in the third quarter 2009 reflects the loss before taxes, permanent differences and tax credits. Nontaxable income and tax credits had a greater impact on the effective tax rate during the third quarter of 2009 due to the third quarter 2009 pretax loss compared to pretax income in the third quarter of 2008.
Single Issue Trust Preferred Securities, Subordinated Debentures and Trust Preferred Collateralized Debt Obligations
First Commonwealth's investment portfolio includes single issue trust preferred securities, subordinated debentures and trust preferred collateralized debt obligations.
As of September 30, 2009, our single issue portfolio consists of 18 issues with a book value of $22.5 million and an estimated fair value of $19.0 million, while the book value and estimated fair value of the three subordinated debentures totaled $1.2 million. The single issues and subordinated debentures are issued primarily from money center and large regional banks.
Our pooled trust preferred collateralized debt obligations consist of 14 securities comprised of 376 banks and other financial institutions. Two of our pooled securities are senior tranches and the remainder are mezzanine tranches. As of September 30, 2009, the book value of our pooled securities totaled $77.2 million with an estimated fair value of $34.4 million. In the third quarter of 2009, a $9.9 million other-than-temporary impairment charge was recorded on ten trust preferred collateralized debt obligations that are expected to experience a principal shortfall. The amount of impairment charge recognized represents the expected credit loss on these securities. Additional detail related to our pooled trust preferred securities is provided in the Consolidated Selected Financial Data portion of this press release.
Based on management's valuation analysis as of September 30, 2009, all of the single issues and subordinated debentures and the remainder of the trust preferred collateralized debt obligations are expected to return 100% of their principal and interest. However, additional bank failures or interest deferrals and defaults could result in additional other-than-temporary impairment charges.
We previously disclosed our evaluation of the impact of subsequent events relating to two banks with securities in our pooled trust preferred securities on our impairment analysis of those pools as of December 31, 2008. This evaluation was conducted in response to comments raised by the staff of the Securities and Exchange Commission (SEC) in connection with its review of our Annual Report on Form 10-K for the year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. Based upon this evaluation, we determined that the impact of those events on our impairment analysis at December 31, 2008 was not material and provided our conclusion and supporting analysis to the SEC staff. The staff has subsequently advised us that it has completed its review of our filings and has no further comments at this time.
Year-to-Date Results
Net loss for the nine months ended September 30, 2009 was $20.0 million, or $(0.24) per diluted share compared to net income of $34.2 million, or $0.47 per diluted share in the same period last year. The decrease was due to the $65.5 million ($42.5 million after tax) increase in the provision for credit losses and a $19.4 million ($12.6 million after tax) increase in other-than-temporary impairment losses related primarily to our trust preferred collateralized debt obligations.
Net Interest Income and Margin
Net interest income for the nine months ended September 30, 2009 increased $17.1 million, or 12.6%, from the comparable period in 2008 despite the negative impact of loans transferred to non-accrual status. The increase was a result of both growth in earning assets and an increase in the net interest margin.
The net interest margin for the nine months ended September 30, 2009 increased 22 basis points to 3.69% compared with 3.47% in the corresponding period last year. The increase in net interest margin is attributable to increased loan volume and decreases in the cost of interest-bearing liabilities exceeding the declines in yields on total interest-earning assets. The decrease in the cost of interest-bearing liabilities is the result of lower interest rates, combined with a shift in the mix of our liabilities to low cost deposits and short-term borrowings from time deposits and long-term debt. In the first nine months of 2009 compared to the corresponding period in 2008, average time deposits declined $276.7 million, or 13.5%, which were offset with increases in lower costing transaction and savings accounts. Average noninterest-bearing demand deposits increased $46.1 million, or 8.6%, and average interest-bearing demand deposits and savings deposits increased $319.7 million, or 18.5%. The net interest margin for the nine months ended September 30, 2009 was negatively impacted $2.3 million, or five basis points (0.05%) due to reversal of previously recorded income on loans transferred to non-accrual status during 2009.
Average interest-earning assets were $274.6 million, or 4.9%, higher in the nine months ended September 30, 2009 compared to the same period in 2008, primarily from an increase in average loans of $513.1 million, or 12.8%. The increase in loans was funded by investment run-off, and deposit and short-term borrowings growth. Average investment securities declined $238.7 million while average deposits increased $89.1 million and average short-term borrowings rose $355.9 million.
Non-Interest Income
Non-interest income decreased $19.6 million in the nine months ended September 30, 2009 compared to the same period in 2008. The decline was primarily due to increased credit related other-than-temporary impairment losses of $18.3 million on trust preferred collateralized debt obligations and $1.1 million on bank equity securities in addition to the $1.4 million decline in net securities gains.
Other operating income increased $2.4 million due to a $2.1 million gain on a favorable legal settlement. Also, insurance and retail brokerage commissions increased $1.4 million as a result of higher sales due to additional producers and an enhanced calling program. These increases were partially offset by decreases in service charges on deposit accounts of $1.2 million, income from bank owned life insurance of $1.1 million and trust income of $910 thousand. The decline in service charges on deposit accounts was due to lower overdraft activity. Income from bank owned life insurance decreased due to lower crediting rates and trust income decreased as a result of lower market values of assets under management.
During the first quarter of 2009, First Commonwealth early adopted FASB Accounting Standards Codification 320-10-65, Transition Related to FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-than-Temporary Impairments which requires that credit related other-than-temporary impairment be recognized in earnings while noncredit-related other-than-temporary impairment on securities not expected to be sold be recognized in other comprehensive income ("OCI").
In accordance with the new accounting guidance, the noncredit-related portion of other-than-temporary impairment losses previously recognized in earnings during 2008 was reclassified as a cumulative effect adjustment that increased retained earnings and decreased accumulated OCI. Of the $13.0 million in other-than-temporary impairment charges recognized in 2008, $6.5 million related to noncredit-related impairment. Therefore, the cumulative effect adjustment to retained earnings totaled $6.5 million or $4.2 million, net of tax.
Non-Interest Expense
Non-interest expense for the nine months ended September 30, 2009 increased $13.9 million, or 11.9%, from the corresponding period in 2008 primarily due to higher FDIC insurance costs, other operating expenses and salaries and employee benefits. FDIC insurance costs rose $8.0 million mainly from premium increases and the $2.9 million special assessment. Other operating expenses rose $3.2 million, or 13.2%, primarily as a result of collection and repossession costs of $1.1 million associated with the two loans that were transferred to other real estate owned in the first quarter of 2009 and costs of $1.0 million related to nonperforming loans. Salaries and employee benefits increased $3.1 million, or 4.3%. Salaries increased $2.0 million, or 4.9%, as a result of annual merit increases and an increase in the number of employees due to new branch offices and enhancing the consumer infrastructure for small business banking and retail brokerage. Employee benefits increased $1.1 million, or 7.7%, primarily due to the $1.4 million rise in hospitalization expense.
Provision for Credit Losses
The provision for credit loss for the nine months ended September 30, 2009 increased $65.5 million from the comparable period in 2008 due primarily to the deterioration in current economic conditions surrounding industries closely linked to the residential housing, hospitality, and recreation markets outside of Pennsylvania, as well as deterioration in commercial loans outside of our local market. For the nine months ended September 30, 2009, the provision of $77.9 million exceeded the net charge-offs of $41.8 million. Please refer to the Credit Quality and Provision for Credit Losses section above for further detail.
Income Tax
The provision for income taxes decreased $27.7 million for year-to-date 2009 from the comparable period in 2008 due to the $81.8 million decline in income before taxes. The effective tax rate was 52.8% for the tax benefit in the nine months ended September 30, 2009 compared to 13.6% for the tax expense in the same period in 2008. Nontaxable income and tax credits had a greater impact on the effective tax rate for the nine months ended September 30, 2009 due to the 2009 pretax loss compared to pretax income for the nine months ended September 30, 2008.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation is a $6.5 billion bank holding company headquartered in Indiana, Pennsylvania. It operates 115 retail branch offices in 15 counties in western and central Pennsylvania through First Commonwealth Bank, a Pennsylvania chartered bank and trust company. Financial services and insurance products are also provided through First Commonwealth Insurance Agency and First Commonwealth Financial Advisors, Inc.
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the adequacy of First Commonwealth's allowance for credit losses, liquidity and capital; and expected future cash flows from investments in trust preferred collateralized debt obligations. Forward-looking 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." Forward-looking statements describe First Commonwealth's future plans, strategies and expectations. These plans, strategies and expectations are based on assumptions and involve risks and uncertainties, many of which are beyond the control of First Commonwealth and which may cause actual results, performance or achievements to differ materially from the results, performance or achievements contemplated by the forward-looking statements. Such risks and uncertainties include, among other things:
- Deepened or prolonged weakness in economic and business conditions, nationally and in First Commonwealth's market areas, which could increase credit-related losses and expenses and limit growth;
- Further declines in the market value of investment securities that are considered to be other-than-temporary, which would negatively impact First Commonwealth's earnings and capital levels;
- Increases in defaults by borrowers and other delinquencies, which could result in an increased provision for credit losses on loans and related expenses;
- Reduced wholesale funding capacity or higher borrowing costs due to capital constraints at the Federal Home Loan Bank, which would reduce First Commonwealth's liquidity and negatively impact earnings and net interest margin;
- Fluctuations in interest rates and market prices, which could reduce net interest margin and asset valuations and increase expenses;
- Changes in legislative or regulatory requirements applicable to First Commonwealth and its subsidiaries, which could increase costs, limit certain operations and adversely affect results of operations; and
- Other risks and uncertainties described in First Commonwealth's reports filed 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 SELECTED FINANCIAL DATA
(dollars in thousands, except share data)
For the Quarter Ended
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------------------------------------------------------
Interest Income
Interest and
fees on loans $57,085 $57,793 $58,275 $64,580 $62,285
Interest and
dividends on
investments:
Taxable
interest 12,406 13,177 13,708 14,434 15,013
Interest
exempt from
Federal
income taxes 2,540 2,660 2,894 3,025 3,176
Dividends 31 89 63 389 663
Interest on
Federal funds
sold 0 0 0 0 0
Interest on bank
deposits 1 1 1 1 2
------ ------ ------ ------ ------
Total interest
income 72,063 73,720 74,941 82,429 81,139
Interest Expense
Interest on
deposits 17,014 17,874 19,576 22,045 23,069
Interest on
short-term
borrowings 947 1,133 1,347 2,238 4,634
Interest on
subordinated
debentures 1,447 1,559 1,766 1,908 1,870
Interest on
other long-term
debt 1,672 1,666 1,653 3,582 3,639
------ ------ ------ ------ ------
Total interest
on long-term
debt 3,119 3,225 3,419 5,490 5,509
------ ------ ------ ------ ------
Total
interest
expense 21,080 22,232 24,342 29,773 33,212
------ ------ ------ ------ ------
Net Interest
Income 50,983 51,488 50,599 52,656 47,927
Provision for
credit losses 21,416 48,248 8,242 10,642 3,913
------ ------ ------ ------ ------
Net Interest
Income after
provision for
credit losses 29,567 3,240 42,357 42,014 44,014
Non-Interest Income
Impairment
losses on
securities (24,716) (14,421) (28,589) (3,850) (8,619)
Noncredit-related
losses on
securities not
expected to be
sold (recognized
in other
comprehensive
income) (a) 14,776 5,660 18,723 0 0
------ ------ ------ ------ ------
Net impairment
losses (9,940) (8,761) (9,866) (3,850) (8,619)
Net securities
gains 44 56 24 15 910
Trust income 1,366 1,151 1,087 1,125 1,444
Service charges
on deposit
accounts 4,555 4,406 3,837 4,555 4,792
Insurance and
retail
brokerage
commissions 2,068 1,756 1,616 1,236 1,390
Income from
bank owned life
insurance 1,078 1,034 1,138 1,155 1,435
Card related
interchange
income 2,224 2,138 1,896 1,956 1,950
Other operating
income 2,339 4,935 3,008 3,820 2,972
------ ------ ------ ------ ------
Total non-
interest
income 3,734 6,715 2,740 10,012 6,274
Non-Interest Expense
Salaries and
employee
benefits 21,405 21,081 22,500 21,658 21,091
Net occupancy
expense 3,264 3,528 4,000 3,807 3,613
Furniture and
equipment
expense 3,121 2,977 2,975 2,845 2,995
Data processing
expense 1,136 1,165 1,132 1,161 1,075
Pennsylvania
shares tax
expense 1,310 1,312 1,331 1,357 1,342
Intangible
amortization 684 743 743 743 802
FDIC insurance 2,046 4,863 1,521 182 179
Other operating
expenses 8,980 9,666 9,146 10,124 7,900
------ ------ ------ ------ ------
Total non-
interest
expense 41,946 45,335 43,348 41,877 38,997
------ ------ ------ ------ ------
(Loss) Income
before income
taxes (8,645) (35,380) 1,749 10,149 11,291
Income tax
(benefit)
provision (5,602) (16,761) 62 1,260 1,127
------ ------ ------ ------ ------
Net (Loss) Income ($3,043) ($18,619) $1,687 $8,889 $10,164
======= ======== ====== ====== =======
Average Shares
Outstanding 84,594,952 84,559,889 84,521,266 80,076,383 72,715,709
Average Shares
Outstanding
Assuming
Dilution 84,597,649 84,597,997 84,582,545 80,179,260 72,817,216
Per Share Data:
Basic Earnings
Per Share ($0.04) ($0.22) $0.02 $0.11 $0.14
Diluted
Earnings Per
Share ($0.04) ($0.22) $0.02 $0.11 $0.14
Cash Dividends
Declared per
Common Share $0.03 $0.00 $0.12 $0.17 $0.17
For the Nine Months Ended
September 30, September 30,
2009 2008
---- ----
Interest Income
Interest and fees on loans $173,153 $186,966
Interest and dividends on investments:
Taxable interest 39,291 46,122
Interest exempt from Federal income taxes 8,094 10,118
Dividends 183 1,950
Interest on Federal funds sold 0 2
Interest on bank deposits 3 9
------- -------
Total interest income 220,724 245,167
Interest Expense
Interest on deposits 54,464 79,472
Interest on short-term borrowings 3,427 12,590
Interest on subordinated debentures 4,772 5,659
Interest on other long-term debt 4,991 11,504
------- -------
Total interest on long-term debt 9,763 17,163
------- -------
Total interest expense 67,654 109,225
------- -------
Net Interest Income 153,070 135,942
Provision for credit losses 77,906 12,453
------- -------
Net Interest Income after provision for
credit losses 75,164 123,489
Non-Interest Income
Impairment losses on securities (67,726) (9,161)
Noncredit-related losses on securities not
expected to be sold (recognized in other
comprehensive income)(a) 39,159 0
------- -------
Net impairment losses (28,567) (9,161)
Net securities gains 124 1,502
Trust income 3,604 4,514
Service charges on deposit accounts 12,798 14,003
Insurance and retail brokerage commissions 5,440 4,061
Income from bank owned life insurance 3,250 4,368
Card related interchange income 6,258 5,653
Other operating income 10,282 7,879
------- -------
Total non-interest income 13,189 32,819
Non-Interest Expense
Salaries and employee benefits 64,986 61,849
Net occupancy expense 10,792 11,248
Furniture and equipment expense 9,073 9,131
Data processing expense 3,433 3,122
Pennsylvania shares tax expense 3,953 3,952
Intangible amortization 2,170 2,465
FDIC insurance 8,430 427
Other operating expenses 27,792 24,544
------- -------
Total non-interest expense 130,629 116,738
------- -------
(Loss) Income before income taxes (42,276) 39,570
Income tax (benefit) provision (22,301) 5,372
------- -------
Net (Loss) Income ($19,975) $34,198
======== =======
Average Shares Outstanding 84,558,972 72,597,977
Average Shares Outstanding Assuming
Dilution 84,592,785 72,704,279
Per Share Data:
Basic Earnings Per Share ($0.24) $0.47
Diluted Earnings Per Share ($0.24) $0.47
Cash Dividends Declared per Common Share $0.15 $0.51
(a) In accordance with the early adoption of Financial Accounting
Standards Board Accounting Standards Codification 320-10-65,
Transition Related to FSP FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-than-Temporary Impairments, as of January 1,
2009, prior period net impairment losses are not restated; but rather
reflect both credit and non-credit related impairment.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
(dollars in thousands, except share data)
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------------------------------------------------------
Assets
Cash and due from
banks $79,694 $84,346 $93,259 $88,277 $93,327
Interest-bearing
bank deposits 332 961 392 289 267
Securities available
for sale, at market
value 1,231,772 1,264,685 1,271,925 1,349,920 1,349,561
Securities held to
maturity, at
amortized cost,
(Market value
$42,466 at
September 30, 2009
and $50,558 at
December 31, 2008) 41,397 44,398 46,433 50,840 56,839
Other Investments 51,431 51,431 51,431 51,431 52,967
Loans:
Portfolio loans,
net of unearned
income 4,649,034 4,536,771 4,457,358 4,418,377 4,184,600
Allowance for
credit losses (88,862) (83,056) (41,549) (52,759) (45,482)
------- ------- ------- ------- -------
Net loans 4,560,172 4,453,715 4,415,809 4,365,618 4,139,118
Premises and
equipment, net 72,074 72,379 73,376 72,636 71,141
Other real estate
owned 24,138 25,565 25,936 3,262 3,718
Goodwill 159,956 159,956 159,956 159,956 159,956
Amortizing
intangibles, net 8,063 8,747 9,490 10,233 10,976
Other assets 284,444 282,814 274,567 273,418 265,920
------- ------- ------- ------- -------
Total
assets $6,513,473 $6,448,997 $6,422,574 $6,425,880 $6,203,790
========== ========== ========== ========== ==========
Liabilities
Deposits
(all domestic):
Noninterest-
bearing $599,842 $592,219 $573,573 $566,845 $564,443
Interest-bearing
demand deposits 93,062 99,281 90,217 97,011 101,955
Savings
deposits 2,133,203 2,045,970 1,850,809 1,773,843 1,703,804
Time deposits 1,670,930 1,748,420 1,803,829 1,842,644 1,890,928
--------- --------- --------- --------- ---------
Total interest-
bearing 3,897,195 3,893,671 3,744,855 3,713,498 3,696,687
--------- --------- --------- --------- ---------
Total
deposits 4,497,037 4,485,890 4,318,428 4,280,343 4,261,130
Short-term
borrowings 1,043,447 998,259 1,111,220 1,139,737 875,424
Other liabilities 42,275 44,866 56,255 63,778 43,385
Subordinated
debentures 105,750 105,750 105,750 105,750 105,750
Other long-term
debt 179,784 180,922 183,421 183,493 386,288
------- ------- ------- ------- -------
Total long-term
debt 285,534 286,672 289,171 289,243 492,038
------- ------- ------- ------- -------
Total
liabil-
ities 5,868,293 5,815,687 5,775,074 5,773,101 5,671,977
Shareholders' Equity
Preferred stock,
$1 par value per
share, 3,000,000
shares authorized,
none issued 0 0 0 0 0
Common stock, $1
par value per
share, 200,000,000
shares authorized;
86,600,431 shares
issued and
85,056,516 shares
outstanding at
September 30, 2009;
86,600,431 shares
issued and 85,050,744
shares outstanding
at December 31,
2008 86,600 86,600 86,600 86,600 75,100
Additional paid-in
capital 302,418 302,602 302,862 303,008 205,953
Retained earnings 281,513 287,092 305,712 309,947 315,404
Accumulated other
comprehensive loss,
net (1,545) (18,618) (22,763) (21,269) (38,133)
Treasury stock
(1,543,915 and
1,549,687 shares at
September 30, 2009
and December 31,
2008, respectively,
at cost) (17,706) (17,766) (17,811) (17,907) (18,411)
Unearned ESOP shares (6,100) (6,600) (7,100) (7,600) (8,100)
------ ------ ------ ------ ------
Total
shareholders'
equity 645,180 633,310 647,500 652,779 531,813
------- ------- ------- ------- -------
Total
liabilities
and
shareholders'
equity $6,513,473 $6,448,997 $6,422,574 $6,425,880 $6,203,790
========== ========== ========== ========== ==========
Book value per share $7.59 $7.45 $7.61 $7.68 $7.23
Market value per share $5.68 $6.34 $8.87 $12.38 $13.47
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Loans by Categories
(dollars in thousands)
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Commercial,
financial,
agricultural
and other $1,265,546 $1,233,131 $1,259,498 $1,272,014 $1,148,601
Real estate -
construction 347,805 476,762 449,771 464,806 382,225
Real estate -
residential 1,226,519 1,223,690 1,199,472 1,210,985 1,223,611
Real estate -
commercial 1,259,063 1,075,659 1,047,331 974,772 938,044
Loans to
individuals 550,101 527,529 501,286 495,800 492,119
------- ------- ------- ------- -------
Total loans
and leases,
net of
unearned
income $4,649,034 $4,536,771 $4,457,358 $4,418,377 $4,184,600
========== ========== ========== ========== ==========
The amount reflected in "Real estate-construction" as of June 30, 2009
includes $50.6 million in respect of loans that were previously classified
as "Commercial, financial, agricultural and other", "Real estate-
residential" and "Real estate-commercial". Amounts for prior periods have
been adjusted to reflect the effect of this reclassification.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Quarter To Date Average Balance Sheets and Net Interest Analysis at
September 30,
(dollars in thousands)
2009 2008
------------------------- -------------------------
Average Income/ Yield or Average Income/ Yield or
Balance Expense Rate(a) Balance Expense Rate(a)
------------------------- -------------------------
Assets
Interest-earning assets:
Interest-bearing
deposits with
banks $461 $1 1.04% $355 $2 1.94%
Tax-free investment
securities 228,271 2,540 6.79% 279,792 3,176 6.95%
Taxable investment
securities 1,097,923 12,437 4.49% 1,246,144 15,676 5.01%
Federal funds sold 0 0 0.00% 48 0 1.90%
Loans, net of
unearned income
(b)(c) 4,600,016 57,085 5.07% 4,149,186 62,285 6.11%
--------- ------ --------- ------
Total interest-
earning assets 5,926,671 72,063 5.03% 5,675,525 81,139 5.91%
--------- ------ --------- ------
Noninterest-earning assets:
Cash 78,497 80,393
Allowance for
credit losses (82,681) (44,621)
Other assets 562,449 512,996
------- -------
Total noninterest-
earning assets 558,265 548,768
------- -------
Total Assets $6,484,936 $6,224,293
========== ==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing
demand deposits(d) $603,830 $388 0.25% $623,686 $1,225 0.78%
Savings deposits(d) 1,601,898 4,421 1.10% 1,165,568 4,348 1.48%
Time deposits 1,707,787 12,205 2.84% 1,938,709 17,496 3.59%
Short-term
borrowings 996,416 947 0.38% 858,165 4,634 2.15%
Long-term debt 286,427 3,119 4.32% 495,170 5,509 4.43%
------- ----- ------- -----
Total interest-
bearing
liabilities 5,196,358 21,080 1.61% 5,081,298 33,212 2.60%
--------- ------ --------- ------
Noninterest-bearing liabilities and capital:
Noninterest-
bearing demand
deposits(d) 599,606 558,373
Other liabilities 40,149 36,527
Shareholders'
equity 648,823 548,095
------- -------
Total
noninterest-
bearing funding
sources 1,288,578 1,142,995
--------- ---------
Total
Liabilities
and
Shareholders'
Equity $6,484,936 $6,224,293
========== ==========
Net Interest Income and Net
Yield on Interest-Earning
Assets $50,983 3.62% $47,927 3.58%
======= =======
(a) Yields on interest-earning assets have been computed on a tax
equivalent basis using the 35% Federal income tax statutory rate.
(b) Income on nonaccrual loans is accounted for on the cash basis, and
the loan balances are included in interest-earning assets.
(c) Loan income includes loan fees.
(d) Average balances do not include reallocations from noninterest-
bearing demand deposits and interest-bearing demand deposits into
savings deposits which were made for regulatory purposes.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Year To Date Average Balance Sheets and Net Interest Analysis at
September 30,
(dollars in thousands)
2009 2008
------------------------- -------------------------
Average Income/ Yield or Average Income/ Yield or
Balance Expense Rate(a) Balance Expense Rate(a)
------------------------- -------------------------
Assets
Interest-earning assets:
Interest-bearing
deposits with banks $679 $3 0.60% $416 $9 2.74%
Tax-free investment
securities 241,709 8,094 6.89% 300,125 10,118 6.93%
Taxable investment
securities 1,120,005 39,474 4.71% 1,300,267 48,072 4.94%
Federal funds sold 0 0 0.00% 125 2 2.49%
Loans, net of
unearned income
(b)(c) 4,524,567 173,153 5.26% 4,011,476 186,966 6.37%
--------- ------- --------- -------
Total interest-
earning assets 5,886,960 220,724 5.22% 5,612,409 245,167 6.07%
--------- ------- --------- -------
Noninterest-earning assets:
Cash 75,994 76,386
Allowance for
credit losses (59,811) (43,003)
Other assets 548,765 499,632
------- -------
Total noninterest-
earning assets 564,948 533,015
------- -------
Total Assets $6,451,908 $6,145,424
========== ==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing
demand deposits(d) $600,230 $1,367 0.30% $602,340 $4,213 0.93%
Savings deposits(d) 1,450,336 12,715 1.17% 1,128,539 13,845 1.64%
Time deposits 1,766,375 40,382 3.06% 2,043,109 61,414 4.02%
Short-term
borrowings 1,065,530 3,427 0.43% 709,586 12,590 2.37%
Long-term debt 288,221 9,763 4.53% 521,543 17,163 4.40%
------- ----- ------- ------
Total interest-
bearing
liabilities 5,170,692 67,654 1.75% 5,005,117 109,225 2.91%
--------- ------ --------- -------
Noninterest-bearing liabilities and capital:
Noninterest-
bearing demand
deposits(d) 582,952 536,837
Other liabilities 41,766 36,201
Shareholders'
equity 656,498 567,269
------- -------
Total noninterest-
bearing funding
sources 1,281,216 1,140,307
--------- ---------
Total Liabilities
and Shareholders'
Equity $6,451,908 $6,145,424
========== ==========
Net Interest Income and
Net Yield on Interest-
Earning Assets $153,070 3.69% $135,942 3.47%
======== ========
(a) Yields on interest-earning assets have been computed on a tax
equivalent basis using the 35% Federal income tax statutory rate.
(b) Income on nonaccrual loans is accounted for on the cash basis, and
the loan balances are included in interest-earning assets.
(c) Loan income includes loan fees.
(d) Average balances do not include reallocations from noninterest-
bearing demand deposits and interest-bearing demand deposits into
savings deposits which were made for regulatory purposes.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Asset Quality Data
(dollars in thousands)
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
------------------------------------------------------------
Loans on non-
accrual basis $133,200 $81,285 $29,049 $55,922 $49,692
Troubled debt
restructured
loans 627 637 128 132 135
--- --- --- --- ---
Total
nonperforming
loans $133,827 $81,922 $29,177 $56,054 $49,827
Non-accrual
securities at
market value $3,738 $530 $0 $0 $0
Loans past due in
excess of 90 days
and still
accruing $14,369 $14,978 $17,532 $16,189 $13,719
Loans outstanding
at end of
period $4,649,034 $4,536,771 $4,457,358 $4,418,377 $4,184,600
Average loans
outstanding $4,524,567 $4,486,216 $4,460,337 $4,084,506 $4,011,476
Allowance for
credit losses $88,862 $83,056 $41,549 $52,759 $45,482
Nonperforming
loans as a
percentage of
total loans 2.88% 1.81% 0.65% 1.27% 1.19%
Provision for
credit losses
(Year To Date) $77,906 $56,490 $8,242 $23,095 $12,453
Net credit losses
(Year To Date) $41,803 $26,193 $19,451 $12,732 $9,367
Net credit losses
as a percentage
of average loans
outstanding
(annualized) 1.24% 1.18% 1.77% 0.31% 0.31%
Allowance for
credit losses as
a percentage of
average loans
outstanding 1.96% 1.85% 0.93% 1.29% 1.13%
Allowance for
credit losses as
a percentage of
nonperforming
loans 66.40% 101.38% 142.40% 94.12% 91.28%
Other real estate
owned $24,138 $25,565 $25,936 $3,262 $3,718
Profitability Ratios
(dollars in thousands)
For the
For the Quarter Ended Nine Months Ended
------------------------------------- -----------------
Sept- Sept- Sept- Sept-
ember June March December ember ember ember
30, 30, 31, 31, 30, 30, 30,
2009 2009 2009 2008 2008 2009 2008
Return on average
assets -0.19% -1.16% 0.11% 0.56% 0.65% -0.41% 0.74%
Return on average
equity -1.86% -11.34% 1.03% 5.79% 7.38% -4.07% 8.05%
Net interest
margin(a) 3.62% 3.73% 3.72% 3.87% 3.58% 3.69% 3.47%
Efficiency ratio(b) 61.95% 64.71% 65.29% 60.10% 59.07% 63.99% 65.33%
Fully tax equivalent
adjustment $3,052 $3,091 $3,185 $3,166 $3,202 $9,328 $9,928
(a) Net interest margin has been computed on a tax equivalent basis using
the 35% Federal income tax statutory rate.
(b) Efficiency ratio is "total non-interest expense" as a percentage of
total revenue.
Total revenue consists of "net interest income, on a fully
tax-equivalent basis," plus "total non-interest income," excluding
"net impairment losses."
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Pooled Trust Preferred Security Detail
(dollars in thousands)
Deferr- Excess
als Subord-
and ination
Defaults as a
as a % of
% of Current
Curr- Per-
Unrealized Moody's/ Number ent forming
Book Fair Gain Fitch of Collat Collat
Deal Class Value Value (Loss) Ratings Banks -eral -eral
--------------------------------------------------------------------------
Pre TSL I Senior $3,681 $3,203 $(478) A1/A 32 19.46% 83.66%
Pre TSL IV Mezzanine 1,830 692 (1,138) Ca/B 6 27.07% 19.33%
Pre TSL V Mezzanine 456 174 (282) Ba3/A 4 65.87% 0.00%
Pre TSL VI Mezzanine 340 166 (174) Caa1/CCC 5 61.35% 0.00%
Pre TSL VII Mezzanine 5,591 1,975 (3,616) Ca/CC 20 57.26% 0.00%
Pre TSL VIII Mezzanine 2,025 423 (1,602) Ca/CC 36 42.84% 0.00%
Pre TSL IX Mezzanine 2,423 955 (1,468) Ca/CC 49 26.33% 0.00%
Pre TSL X Mezzanine 2,439 644 (1,795) Ca/CC 58 31.85% 0.00%
Pre TSL XII Mezzanine 7,809 2,671 (5,138) Ca/CC 78 24.05% 0.00%
Pre TSL XIII Mezzanine 14,598 5,229 (9,369) Ca/CC 65 17.79% 0.00%
Pre TSL XIV Mezzanine 15,690 6,066 (9,624) Ca/CC 64 15.08% 0.00%
MMCap I Senior 8,731 7,182 (1,549) A3/A 29 9.15% 93.00%
MMCap I Mezzanine 1,058 523 (535) Ca/CCC 29 9.15% 4.65%
MM Comm IX Mezzanine 10,574 4,484 (6,090) Caa3/CC 34 33.00% 0.00%
------ ----- ------
Total $77,245 $34,387 $(42,858)
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Commercial Portfolio Loans
Original Balance $1 Million and Greater
(dollars in thousands)
Commercial, Loans Past Due
Financial 90 Days
Agricultural Real Estate Real Estate and Still Non-
and Other Construction Commercial Total Accruing accrual
-----------------------------------------------------------------
Pennsylvania $795,935 $170,395 $779,590 $1,745,920 $0 $31,065
Ohio 59,277 11,893 20,656 91,826 0 3,004
Maryland 47,075 0 5,196 52,271 0 1,982
West Virginia 40,505 5,836 34,667 81,008 0 0
Virginia 27,274 0 0 27,274 0 0
New York 3,762 7,342 24,902 36,006 0 0
Florida 20,390 73,637 1,857 95,884 0 61,638
Arizona 0 0 13,883 13,883 0 0
Other 41,005 72,425 31,570 145,000 0 18,065
---------- -------- -------- ---------- -- --------
Total $1,035,223 $341,528 $912,321 $2,289,072 $0 $115,754
========== ======== ======== ========== == ========
Related Headlines
- FIRST COMMONWEALTH FINANCIAL CORP /PA/ Financials - EDGAR Online Financials
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