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First Commonwealth Announces Fourth Quarter and Full Year 2020 Earnings; Declares Quarterly Dividend and Announces Share Repurchase Program

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First Commonwealth Financial Corporation
·36 min read
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INDIANA, Pa., Jan. 26, 2021 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year 2020.

Financial Summary

(dollars in thousands,

For the Three Months Ended

For the Years Ended

except per share data)

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Reported Results

Net income

$

25,683

$

19,186

$

26,820

$

73,447

$

105,333

Diluted earnings per share

$

0.27

$

0.20

$

0.27

$

0.75

$

1.07

Return on average assets

1.12

%

0.81

%

1.30

%

0.82

%

1.31

%

Return on average equity

9.48

%

7.01

%

10.13

%

6.82

%

10.32

%

Operating Results (non-GAAP)(1)

Core net income

$

26,120

$

23,905

$

26,634

$

78,951

$

108,126

Core diluted earnings per share

$

0.27

$

0.24

$

0.27

$

0.81

$

1.10

Core pre-tax pre-provision net revenue

$

40,448

$

41,237

$

38,395

$

155,351

$

150,666

Provision expense

$

7,680

$

11,212

$

4,895

$

56,718

$

14,533

Net charge-offs

$

4,825

$

4,346

$

3,293

$

17,193

$

10,660

Reserve build/(release)(2)

$

13,002

$

6,886

$

1,602

$

49,672

$

3,873

Core return on average assets (ROAA)

1.14

%

1.01

%

1.29

%

0.88

%

1.35

%

Core pre-tax pre-provision ROAA

1.76

%

1.75

%

1.86

%

1.73

%

1.88

%

Return on average tangible common equity

13.80

%

10.29

%

14.99

%

10.06

%

14.92

%

Core return on average tangible common equity

14.03

%

12.73

%

14.89

%

10.78

%

15.30

%

Core efficiency ratio

56.00

%

54.31

%

57.23

%

56.28

%

56.97

%

Net interest margin (FTE)

3.26

%

3.11

%

3.73

%

3.32

%

3.75

%

(1) Core operating results are a non-GAAP measure used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. A full reconciliation of non-GAAP financial measures can be found at the end of the financial statements which accompany this release.
(2) Reserve build/(release) represents the net change in the Company’s allowance for credit losses (ACL) from the prior period.

Fourth Quarter 2020 Highlights

Financial results

  • Net income of $25.7 million and diluted earnings per share of $0.27, an increase of $0.07 per share from the previous quarter
    ° Core net income(1) of $26.1 million and diluted earnings per share of $0.27, an increase of $0.03 from the previous quarter

  • Core pre-tax pre-provision net revenue (PPNR)(1) of $40.4 million, a decrease of $0.8 million from the previous quarter and an increase of $2.1 million from the fourth quarter of 2019
    ° Core PPNR ROAA of 1.76% increased by one basis point from the previous quarter

  • Net interest income of $67.8 million increased $1.1 million from the previous quarter

  • Noninterest income of $26.6 million (excluding net security gains) decreased $0.2 million from the previous quarter

  • Noninterest expense of $54.6 million decreased $3.6 million from the previous quarter due to $5.8 million in charges related to the Company’s previously disclosed voluntary early retirement program and the consolidation of 20% of the Company’s branch facilities during the previous quarter

  • Total portfolio loans (excluding Paycheck Protection Program (PPP) loans) decreased $93.9 million from the previous quarter due to lower commercial loan demand

  • Average deposits decreased $270.4 million from the previous quarter due to intentional strategies intended to manage excess liquidity

Asset quality

  • The provision for credit losses, which was calculated under the Current Expected Credit Loss (CECL) accounting standard, was $7.7 million, a decrease of $3.5 million from the previous quarter, and included $3.2 million related to unfunded commitments. The Company elected to defer its adoption of CECL in accordance with relief provided under the U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act until December 31, 2020, effective January 1, 2020.

  • Reserve build(2) totaled $49.7 million or 0.79% of total portfolio loans (excluding PPP) on a year-to-date basis, bringing reserves to total loans (excluding PPP) to 1.61%

  • Nonaccrual loans of $45.6 million increased $2.9 million from the previous quarter

  • Net charge-offs on loans totaled $4.8 million, an increase of $0.5 million from the previous quarter

Strong liquidity and capital positions

  • Total available liquidity of $3.9 billion

  • Bank-level Tier 1 Capital ratio of 11.7%, which represents $248.3 million in excess capital above the regulatory “well capitalized” requirement of 8.0%

  • The Company completed the remaining $15.6 million of its previously authorized share repurchase program on October 9, 2020, repurchasing 2.0 million shares at a weighted average price of $7.84

Full Year 2020 Highlights

Franchise Growth

  • Total portfolio loans grew $572.0 million, or 9.2% compared to the prior year and $93.2 million, or 1.5% (excluding PPP loans)

  • Average deposits grew $1.1 billion, or 17.1% compared to the prior year, including $551.9 million, or 35.6%, in average noninterest-bearing deposits

  • Tangible book value per share grew 4.4% year-over-year

Earnings

  • For the year ended December 31, 2020, net income was $73.4 million (or $0.75 diluted earnings per share)
    ° Core net income(1) was $79.0 million, or $0.81 diluted earnings per share, compared to $108.1 million, or $1.10 diluted earnings per share in the prior year

  • Core pre-tax pre-provision income(1) grew $4.7 million, or 3.1% from the prior year

  • Operating leverage was positive for the full year
    ° Total core revenue(1) grew $9.3 million, or 2.6% from the prior year
    ° Total core noninterest expense(1) increased $2.8 million, or 1.4%, from the prior year

Profitability

  • The core efficiency ratio(1) improved 69 basis points to 56.28% compared to the prior year

  • The return on average assets (ROA) for the year ended December 31, 2020 was 0.82%
    ° Core ROA(1) for the year ended December 31, 2020 was 0.88% as compared to 1.35% in the prior year
    ° Core pre-tax pre-provision ROA(1) for the year ended December 31, 2020 was 1.73% as compared to 1.88% in the prior year

  • The net interest margin decreased 43 basis points to 3.32% compared to the prior year

“Despite the many challenges we faced in 2020, I am proud of the progress we made as a company and more importantly our ability to deliver for our customers and communities. Our proactive approach through Project Thrive to control expenses, grow our business, mitigate net interest margin compression and protect capital resulted in positive operating leverage, along with growth in loans, deposits and fee income – all while building reserves and maintaining our strong capital position throughout the year,” stated T. Michael Price, President and Chief Executive Officer. “Our core pre-tax pre-provision income in 2020 exceeded the previous year by $4.7 million, producing a pre-tax pre-provision ROA of 1.73%. And our investments in revenue-producing lines of business such as mortgage and indirect auto resulted in a record level of production in 2020, which helped offset a challenging year for commercial businesses.” Price continued, “We continue to work closely with our borrowers most impacted by the pandemic and remain confident that our disciplined approach to credit over the years combined with our strong capital position will ultimately serve our shareholders well as we emerge on the other side of the pandemic.”

Earnings

Net income of $25.7 million resulted in diluted earnings per share of $0.27, an increase of $0.07 per share from the previous quarter and unchanged from the fourth quarter of 2019.

Net income for the year ended December 31, 2020 was $73.4 million, as compared to $105.3 million for the same period in 2019.

Net Interest Income and Net Interest Margin

Net interest income (FTE) increased $1.1 million from the previous quarter due to the accelerated amortization of $1.7 million of PPP loan fees due to PPP loan forgiveness, partially offset by lower commercial loan demand.

The net interest margin for the fourth quarter of 2020 was 3.26%, an increase of 15 basis points from the previous quarter and a decrease of 47 basis points from the fourth quarter of 2019. The increase from the previous quarter was due to aforementioned PPP loan fees (which had a nine basis point impact to the margin) and a seven basis point decrease in the cost of deposits.

Adjusting for the effects of PPP loans and excess liquidity, the core net interest margin(1) was 3.29%, an increase of one basis point from the previous quarter. Loan yields (excluding PPP) decreased 7 basis points from the previous quarter due to the runoff of higher yielding loans and lower commercial originations. Average loans decreased $39.9 million, or 2.3% (annualized) from the previous quarter, including $24.2 million of PPP loan forgiveness.

The total cost of interest-bearing demand and savings deposits decreased six basis points from the previous quarter. Average time deposits decreased $86.9 million from the previous quarter due to the intentional runoff of higher cost funding sources.

For the year ended December 31, 2020, net interest income (FTE) decreased $1.9 million from the prior year due to a 43 basis point decrease in the net interest margin, partially offset by $878.9 million increase in average interest earning assets.

The net interest margin for the year ended December 31, 2020 was 3.32%, a decrease of 43 basis points from the previous year. The decrease from the previous year was due to a 79 basis point decrease in the yield on interest-earning assets, which was partially offset by a 45 basis point decrease in the cost of interest-bearing liabilities. The yield on total loans (excluding PPP) decreased 74 basis points compared to the prior year due primarily to the repricing of variable and adjustable interest rate loans following the Federal Reserve’s decision to cut interest rates 150 basis points in March 2020.

For the year ended December 31, 2020, total average loans grew $749.9 million, or 12.5%, including $382.6 million of average PPP loans. For the year ended December 31, 2020, total average deposits grew $1.1 billion, or 17.1% compared to the prior year, including $551.9 million, or 35.6%, in average noninterest-bearing deposits.

Asset Quality

The Company adopted CECL on December 31, 2020, effective January 1, 2020, resulting in a transition adjustment to retained earnings of $13.4 million. Provision expense in the fourth quarter of 2020 totaled $7.7 million, a decrease of $3.5 million from the previous quarter. The provision expense in the fourth quarter included a $3.2 million reserve established for the life-of-loan loss rates for unfunded commitments.

At December 31, 2020, nonperforming loans totaled $54.1 million, an increase of $4.3 million from the previous quarter. The increase in nonperforming loans was due to the deterioration of a $7.0 million hospitality relationship.

Nonperforming loans as a percentage of total loans (excluding PPP) were 0.86%, 0.78% and 0.52% for the periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

At December 31, 2020, criticized loans totaled $302.8 million, an increase of $113.9 million from the previous quarter and an increase of $202.2 million from December 31, 2019. The increase in criticized loans has been primarily driven by weakened borrower cash flow caused by the COVID-19 pandemic.

During the fourth quarter of 2020, net charge-offs were $4.8 million, compared to $4.3 million in the prior quarter and $3.3 million in the fourth quarter of 2019. Net charge-offs were 0.30%, 0.27% and 0.21% of average loans (excluding PPP, annualized) for the periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $26.6 million for the fourth quarter of 2020 as compared to $26.8 million for the prior quarter and $22.5 million for the fourth quarter of 2019. The $0.2 million decrease from the prior quarter was primarily due to a $0.9 million decrease in gain on sale of mortgage loans, which was partially offset by a $0.7 million increase in swap fee income.

For the year ended December 31, 2020, noninterest income (excluding security gains) totaled $94.4 million, an increase of $8.9 million from the prior year. The increase from the prior year was due to an $11.0 million increase in gain on sale of mortgage loans and a $2.3 million increase in card related interchange income, partially offset by a $2.5 million decrease in service charges on deposit accounts and a $2.3 million decrease in derivative mark-to-market.

There were no material security gains during 2020 or 2019.

Noninterest expense totaled $54.6 million for the fourth quarter of 2020, as compared to $58.2 million for the third quarter of 2020 and $53.1 million for the fourth quarter of 2019.

Core noninterest expense(1) totaled $53.1 million for the fourth quarter of 2020, as compared to $50.9 million for the third quarter of 2020 and $52.6 million for the fourth quarter of 2019. The $2.2 million increase from the previous quarter was primarily the result of a $2.6 million increase in salaries and benefits due to $0.7 million decrease in deferred FAS-91 fees, $0.7 million increase in incentives, $0.6 million increase in hospitalization and $0.4 million true-up of the split-dollar BOLI expense.

For the year ended December 31, 2020, noninterest expense totaled $215.8 million and core noninterest expense(1) totaled $206.4 million, as compared to noninterest expense of $210.0 million and core noninterest expense(1) of $203.6 million in the prior year. The $2.8 million increase in core noninterest expense was primarily driven by a $6.7 million increase in salaries and benefits due to a $3.5 million increase in incentives and a $2.7 million increase in hospitalization as well as a full year impact of the Company’s acquisition of 14 former Santander branches in September 2019. This was partially offset by a $1.3 million decrease in occupancy expense and a $1.0 million decrease in loss on sale or writedown of other assets.

Full time equivalent staff was 1,398 at December 31, 2020, as compared to 1,399 at September 30, 2020 and 1,484 at December 31, 2019. The decrease from the prior year is the result of an ongoing company-wide hiring freeze implemented at the end of the first quarter of 2020.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.11 per share, which is payable on February 19, 2021 to shareholders of record as of February 5, 2021. This dividend represents a 3.5% projected annual yield utilizing the January 25, 2021 closing market price of $12.59.

In addition, the Board of Directors has authorized a new $25.0 million share repurchase program of the company’s common stock. Under the new program, management is authorized to repurchase shares through Rule 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or otherwise in a manner that is intended to comply with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934. First Commonwealth may suspend or discontinue the program at any time.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2020 were 14.9%, 12.2%, 9.4%, and 11.2%, 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 fourth quarter 2020 on Wednesday, January 27, 2021 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 #10150975. 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 119 community banking offices in 26 counties throughout western and central Pennsylvania and throughout Ohio, as well as business banking operations in Pittsburgh, Pennsylvania, and Canton, Cleveland, Columbus and Cincinnati, Ohio. The Company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson, and Lewis Center, 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

Certain statements contained in this release that are not historical facts may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the Securities and Exchange Commission, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute “forward-looking statements” as well. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate” or words of similar meaning. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including uncertainties regarding the impact of the COVID-19 pandemic, and could be affected by many factors, including, but not limited to: (1) the length and extent of the economic contraction as a result of the COVID-19 pandemic and the impact of such contraction 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 or its customers 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 this report and in the other reports that we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. Further, statements about the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, clients, third parties and us.

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements in this release. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media Relations:
Jonathan E. Longwill
Vice President / Communications and Media Relations
Phone: 724-463-6806
E-mail: JLongwill@fcbanking.com

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


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

For the Three Months Ended

For the Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

SUMMARY RESULTS OF OPERATIONS

Net interest income (FTE) (1)

$

67,825

$

66,742

$

69,212

$

269,733

$

271,610

Provision for credit losses

7,680

11,212

4,895

56,718

14,533

Noninterest income

26,622

26,769

22,528

94,476

85,485

Noninterest expense

54,552

58,247

53,109

215,826

209,965

Net income

25,683

19,186

26,820

73,447

105,333

Core net income (5)

26,120

23,905

26,634

78,951

108,126

Earnings per common share (diluted)

$

0.27

$

0.20

$

0.27

$

0.75

$

1.07

Core earnings per common share (diluted) (6)

$

0.27

$

0.24

$

0.27

$

0.81

$

1.10

KEY FINANCIAL RATIOS

Return on average assets

1.12

%

0.81

%

1.30

%

0.82

%

1.31

%

Core return on average assets (7)

1.14

%

1.01

%

1.29

%

0.88

%

1.35

%

Return on average assets, pre-provision, pre-tax

1.74

%

1.49

%

1.87

%

1.65

%

1.83

%

Core return on average assets, pre-provision, pre-tax

1.76

%

1.75

%

1.86

%

1.73

%

1.88

%

Return on average shareholders' equity

9.48

%

7.01

%

10.13

%

6.82

%

10.32

%

Return on average tangible common equity (8)

13.80

%

10.29

%

14.99

%

10.06

%

14.92

%

Core return on average tangible common equity (9)

14.03

%

12.73

%

14.89

%

10.78

%

15.30

%

Core efficiency ratio (2)(10)

56.00

%

54.31

%

57.23

%

56.28

%

56.97

%

Net interest margin (FTE) (1)

3.26

%

3.11

%

3.73

%

3.32

%

3.75

%

Book value per common share

$

11.12

$

11.07

$

10.74

Tangible book value per common share (11)

7.82

7.79

7.49

Market value per common share

10.94

7.74

14.51

Cash dividends declared per common share

0.11

0.11

0.10

0.44

0.40

ASSET QUALITY RATIOS

Nonperforming loans as a percent of end-of-period loans (3)

0.80

%

0.71

%

0.52

%

Nonperforming loans as a percent of end-of-period loans, excluding PPP loans (3)

0.86

%

0.78

%

0.52

%

Nonperforming assets as a percent of total assets (3)

0.62

%

0.55

%

0.42

%

Nonperforming assets as a percent of total assets, excluding PPP loans (3)

0.65

%

0.59

%

0.42

%

Net charge-offs as a percent of average loans (annualized) (4)

0.28

%

0.25

%

0.21

%

Net charge-offs as a percent of average loans, excluding PPP loans (annualized) (4)

0.30

%

0.27

%

0.21

%

Allowance for credit losses as a percent of nonperforming loans (4)

187.43

%

177.58

%

160.28

%

Allowance for credit losses as a percent of end-of-period loans (4)

1.50

%

1.27

%

0.83

%

Allowance for credit losses as a percent of end-of-period loans, excluding PPP loans (4)

1.61

%

1.38

%

0.83

%

CAPITAL RATIOS

Shareholders' equity as a percent of total assets

11.8

%

11.5

%

12.7

%

Tangible common equity as a percent of tangible assets (12)

8.6

%

8.4

%

9.2

%

Tangible common equity as a percent of tangible assets, excluding PPP loans (12)

9.1

%

9.0

%

9.2

%

Leverage Ratio

9.4

%

8.9

%

10.2

%

Risk Based Capital - Tier I

12.2

%

11.8

%

12.0

%

Risk Based Capital - Total

14.9

%

14.4

%

14.3

%

Common Equity - Tier I

11.2

%

10.7

%

10.9

%


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

For the Three Months Ended

For the Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

INCOME STATEMENT

Interest income

$

73,306

$

73,593

$

81,038

$

301,209

$

325,264

Interest expense

5,814

7,224

12,233

32,938

55,402

Net Interest Income

67,492

66,369

68,805

268,271

269,862

Taxable equivalent adjustment (1)

333

373

407

1,462

1,748

Net Interest Income (FTE)

67,825

66,742

69,212

269,733

271,610

Provision for credit losses

7,680

11,212

4,895

56,718

14,533

Net Interest Income after Provision for Credit Losses (FTE)

60,145

55,530

64,317

213,015

257,077

Net securities gains

23

20

7

70

22

Trust income

2,327

2,554

2,100

9,101

8,321

Service charges on deposit accounts

4,321

4,035

5,134

16,387

18,926

Insurance and retail brokerage commissions

1,868

2,156

1,696

7,850

7,583

Income from bank owned life insurance

1,589

1,547

1,594

6,552

6,002

Gain on sale of mortgage loans

5,538

6,437

1,664

18,764

7,765

Gain on sale of other loans and assets

1,676

1,871

962

4,827

4,793

Card-related interchange income

6,377

6,441

5,877

23,966

21,677

Derivative mark-to-market

(399

)

(160

)

(181

)

(2,521

)

(269

)

Swap fee income

724

41

1,763

1,588

3,397

Other income

2,578

1,827

1,912

7,892

7,268

Total Noninterest Income

26,622

26,769

22,528

94,476

85,485

Salaries and employee benefits

31,388

28,823

29,032

118,961

112,237

Net occupancy

3,668

4,609

5,045

17,647

18,923

Furniture and equipment

3,925

4,033

3,764

15,393

15,160

Data processing

2,739

2,741

2,704

10,543

10,692

Pennsylvania shares tax

1,254

1,254

1,237

4,500

4,602

Advertising and promotion

879

1,115

639

4,679

4,250

Intangible amortization

897

939

980

3,689

3,344

Collection and repossession

424

260

548

1,589

2,204

Other professional fees and services

1,131

937

1,876

3,886

4,631

FDIC insurance

1,062

876

55

2,699

1,219

Litigation and operational losses

373

329

423

1,411

1,687

Loss on sale or write-down of assets

264

63

326

680

1,724

Merger and acquisition

(236

)

3,536

COVID-19

307

125

874

Voluntary early retirement

118

3,304

3,422

Branch consolidation

128

2,544

2,672

Other operating expenses

5,995

6,295

6,716

23,181

25,756

Total Noninterest Expense

54,552

58,247

53,109

215,826

209,965

Income before Income Taxes

32,215

24,052

33,736

91,665

132,597

Taxable equivalent adjustment (1)

333

373

407

1,462

1,748

Income tax provision

6,199

4,493

6,509

16,756

25,516

Net Income

$

25,683

$

19,186

$

26,820

$

73,447

$

105,333

Shares Outstanding at End of Period

96,130,751

96,924,781

98,311,840

96,130,751

98,311,840

Average Shares Outstanding Assuming Dilution

96,344,398

98,160,143

98,508,219

97,758,965

98,588,164


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

December 31,

September 30,

December 31,

2020

2020

2019

BALANCE SHEET (Period End)

Assets

Cash and due from banks

$

100,009

$

97,060

$

102,346

Interest-bearing bank deposits

256,572

283,037

19,510

Securities available for sale, at fair value

843,450

921,202

919,053

Securities held to maturity, at amortized cost

361,844

268,638

337,123

Loans held for sale

33,436

37,998

15,989

Loans

6,761,183

6,949,716

6,189,148

Allowance for credit losses

(101,309

)

(88,307

)

(51,637

)

Net loans

6,659,874

6,861,409

6,137,511

Goodwill and other intangibles

316,820

317,423

319,694

Other assets

496,099

502,599

457,547

Total Assets

$

9,068,104

$

9,289,366

$

8,308,773

Liabilities and Shareholders' Equity

Noninterest-bearing demand deposits

$

2,319,958

$

2,301,821

$

1,690,247

Interest-bearing demand deposits

250,353

315,806

254,981

Savings deposits

4,305,391

4,425,119

3,896,536

Time deposits

562,964

661,161

835,851

Total interest-bearing deposits

5,118,708

5,402,086

4,987,368

Total deposits

7,438,666

7,703,907

6,677,615

Short-term borrowings

117,373

122,356

201,853

Long-term borrowings

233,255

233,490

234,182

Total borrowings

350,628

355,846

436,035

Other liabilities

210,193

156,782

139,458

Shareholders' equity

1,068,617

1,072,831

1,055,665

Total Liabilities and Shareholders' Equity

$

9,068,104

$

9,289,366

$

8,308,773



FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

For the Three Months Ended

For the Years Ended

December 31,

Yield/

September 30,

Yield/

December 31,

Yield/

December 31,

Yield/

December 31,

Yield/

2020

Rate

2020

Rate

2019

Rate

2020

Rate

2019

Rate

NET INTEREST MARGIN

Assets

Loans, excluding PPP loans (FTE) (1)(3)

$

6,387,174

3.90

%

$

6,402,968

3.97

%

$

6,141,614

4.76

%

$

6,354,749

4.16

%

$

5,987,397

4.90

%

PPP Loans

548,279

4.00

%

572,434

2.67

%

%

382,590

3.16

%

%

Securities and interest-bearing bank deposits (FTE) (1)

1,340,756

1.62

%

1,553,252

1.59

%

1,226,892

2.51

%

1,390,804

1.89

%

1,261,822

2.68

%

Total Interest-Earning Assets (FTE) (1)

8,276,209

3.54

%

8,528,654

3.45

%

7,368,506

4.39

%

8,128,143

3.72

%

7,249,219

4.51

%

Noninterest-earning assets

845,094

861,311

832,509

846,437

780,833

Total Assets

$

9,121,303

$

9,389,965

$

8,201,015

$

8,974,580

$

8,030,052

Liabilities and Shareholders' Equity

Interest-bearing demand and savings deposits

$

4,603,255

0.14

%

$

4,818,576

0.20

%

$

4,171,663

0.55

%

$

4,552,211

0.26

%

$

3,891,262

0.57

%

Time deposits

609,350

1.05

%

696,227

1.28

%

856,076

1.69

%

726,702

1.40

%

864,056

1.68

%

Short-term borrowings

131,806

0.10

%

124,670

0.11

%

100,698

0.88

%

142,634

0.49

%

391,547

2.12

%

Long-term borrowings

233,352

4.37

%

233,588

4.37

%

234,274

4.37

%

233,701

4.39

%

216,383

4.80

%

Total Interest-Bearing Liabilities

5,577,763

0.41

%

5,873,061

0.49

%

5,362,711

0.91

%

5,655,248

0.58

%

5,363,248

1.03

%

Noninterest-bearing deposits

2,313,009

2,281,200

1,673,188

2,101,412

1,549,507

Other liabilities

152,396

147,603

114,523

140,612

96,896

Shareholders' equity

1,078,135

1,088,101

1,050,593

1,077,308

1,020,401

Total Noninterest-Bearing Funding Sources

3,543,540

3,516,904

2,838,304

3,319,332

2,666,804

Total Liabilities and Shareholders' Equity

$

9,121,303

$

9,389,965

$

8,201,015

$

8,974,580

$

8,030,052

Net Interest Margin (FTE) (annualized) (1)

3.26

%

3.11

%

3.73

%

3.32

%

3.75

%


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

December 31,

September 30,

December 31,

2020

2020

2019

Loan Portfolio Detail

Commercial Loan Portfolio:

Commercial, financial, agricultural and other

$

1,077,132

$

1,163,268

$

1,241,853

Paycheck Protection Program

478,854

573,468

Commercial real estate

2,211,569

2,215,311

2,117,519

Real estate construction

340,850

366,936

375,149

Total Commercial

4,108,405

4,318,983

3,734,521

Consumer Loan Portfolio:

Closed-end mortgages

1,165,951

1,154,366

1,094,281

Home equity lines of credit

584,641

589,654

587,081

Real estate construction

86,371

86,053

73,890

Total Real Estate - Consumer

1,836,963

1,830,073

1,755,252

Auto loans

712,800

692,475

573,699

Direct installment

36,165

40,081

47,738

Personal lines of credit

61,072

62,155

71,103

Student loans

5,778

5,949

6,835

Total Other Consumer

815,815

800,660

699,375

Total Consumer Portfolio

2,652,778

2,630,733

2,454,627

Total Portfolio Loans

6,761,183

6,949,716

6,189,148

Loans held for sale

33,436

37,998

15,989

Total Loans

$

6,794,619

$

6,987,714

$

6,205,137

December 31,

September 30,

December 31,

2020

2020

2019

ASSET QUALITY DETAIL

Nonperforming Loans:

Loans on nonaccrual basis

$

30,801

$

38,139

$

18,638

Loans held for sale on a nonaccrual basis

13

Troubled debt restructured loans on nonaccrual basis

14,740

4,511

6,037

Troubled debt restructured loans on accrual basis

8,512

7,078

7,542

Total Nonperforming Loans

$

54,066

$

49,728

$

32,217

Other real estate owned ("OREO")

1,215

1,079

2,228

Repossessions ("Repos")

613

685

628

Total Nonperforming Assets

$

55,894

$

51,492

$

35,073

Loans past due in excess of 90 days and still accruing

1,523

1,249

2,073

Classified loans

76,179

80,190

52,031

Criticized loans

302,813

188,957

100,607

Nonperforming assets as a percentage of total loans, plus OREO and Repos (4)

0.83

%

0.74

%

0.57

%

Allowance for credit losses

$

101,309

$

88,307

$

51,637




FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

For the Three Months Ended

For the Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Net Charge-offs (Recoveries):

Commercial, financial, agricultural and other

$

1,027

$

3,338

$

1,115

$

6,004

$

3,067

Real estate construction

(26

)

(158

)

Commercial real estate

2,364

(110

)

298

4,627

1,819

Residential real estate

5

117

300

626

727

Loans to individuals

1,429

1,001

1,580

5,962

5,205

Net Charge-offs

$

4,825

$

4,346

$

3,293

$

17,193

$

10,660

Net charge-offs as a percentage of average loans outstanding (annualized) (4)

0.28

%

0.25

%

0.21

%

0.26

%

0.18

%

Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4)

0.30

%

0.27

%

0.21

%

0.27

%

0.18

%

Provision for credit losses as a percentage of net charge-offs

159.17

%

257.98

%

148.65

%

329.89

%

136.33

%

Provision for credit losses

$

7,680

$

11,212

$

4,895

$

56,718

$

14,533


DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES

(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the federal income tax statutory rate of 21%.

(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 Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Net Income

$

25,683

$

19,186

$

26,820

$

73,447

$

105,333

Intangible amortization

897

939

980

3,689

3,344

Tax benefit of amortization of intangibles

(188

)

(197

)

(206

)

(775

)

(702

)

Net Income, adjusted for tax affected amortization of intangibles

$

26,392

$

19,928

$

27,594

$

76,361

$

107,975

Average Tangible Equity:

Total shareholders' equity

$

1,078,135

$

1,088,101

$

1,050,593

$

1,077,308

$

1,020,401

Less: intangible assets

317,178

317,702

320,077

318,155

296,645

Tangible Equity

760,957

770,399

730,516

759,153

723,756

Less: preferred stock

Tangible Common Equity

$

760,957

$

770,399

$

730,516

$

759,153

$

723,756

(8) Return on Average Tangible Common Equity

13.80

%

10.29

%

14.99

%

10.06

%

14.92

%




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 Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Core Net Income:

Total Net Income

$

25,683

$

19,186

$

26,820

$

73,447

$

105,333

Merger & acquisition related expenses

(236

)

3,536

Tax benefit of merger & acquisition related expenses

50

(743

)

COVID-19

307

125

874

Tax benefit of COVID 19 related

(64

)

(26

)

(184

)

Early retirement related

118

3,304

3,422

Tax benefit of early retirement related expenses

(25

)

(694

)

(719

)

Branch consolidation related

128

2,544

2,672

Tax benefit of bank consolidation related expenses

(27

)

(534

)

(561

)

(5) Core net income

$

26,120

$

23,905

$

26,634

$

78,951

$

108,126

Average Shares Outstanding Assuming Dilution

96,344,398

98,160,143

98,508,219

97,758,965

98,588,164

(6) Core Earnings per common share (diluted)

$

0.27

$

0.24

$

0.27

$

0.81

$

1.10

Intangible amortization

897

939

980

3,689

3,344

Tax benefit of amortization of intangibles

(188

)

(197

)

(206

)

(775

)

(702

)

Core Net Income, adjusted for tax affected amortization of intangibles

$

26,829

$

24,647

$

27,408

$

81,865

$

110,768

(9) Core Return on Average Tangible Common Equity

14.03

%

12.73

%

14.89

%

10.78

%

15.30

%

For the Three Months Ended

For the Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Core Return on Average Assets:

Total Net Income

$

25,683

$

19,186

$

26,820

$

73,447

$

105,333

Total Average Assets

9,121,303

9,389,965

8,201,015

8,974,580

8,030,052

Return on Average Assets

1.12

%

0.81

%

1.30

%

0.82

%

1.31

%

Core Net Income (5)

$

26,120

$

23,905

$

26,634

$

78,951

$

108,126

Total Average Assets

9,121,303

9,389,965

8,201,015

8,974,580

8,030,052

(7) Core Return on Average Assets

1.14

%

1.01

%

1.29

%

0.88

%

1.35

%



FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

For the Three Months Ended

For the Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Core Efficiency Ratio:

Total Noninterest Expense

$

54,552

$

58,247

$

53,109

$

215,826

$

209,965

Adjustments to Noninterest Expense:

Unfunded commitment reserve

471

(240

)

(1,181

)

(475

)

Intangible amortization

897

939

980

3,689

3,344

Merger and acquisition related

(236

)

3,536

COVID-19

307

125

874

Early retirement related

118

3,304

3,422

Branch consolidation related

128

2,544

2,672

Noninterest Expense - Core

$

53,102

$

50,864

$

52,605

$

206,350

$

203,560

Net interest income, fully tax equivalent

$

67,825

$

66,742

$

69,212

$

269,733

$

271,610

Total noninterest income

26,622

26,769

22,528

94,476

85,485

Net securities gains

(23

)

(20

)

(7

)

(70

)

(22

)

Total Revenue

$

94,424

$

93,491

$

91,733

$

364,139

$

357,073

Adjustments to Revenue:

Derivative mark-to-market

(399

)

(160

)

(181

)

(2,521

)

(269

)

Total Revenue - Core

$

94,823

$

93,651

$

91,914

$

366,660

$

357,342

(10) Core Efficiency Ratio

56.00

%

54.31

%

57.23

%

56.28

%

56.97

%

December 31,

September 30,

December 31,

2020

2020

2019

Tangible Equity:

Total shareholders' equity

$

1,068,617

$

1,072,831

$

1,055,665

Less: intangible assets

316,820

317,423

319,694

Tangible Equity

751,797

755,408

735,971

Less: preferred stock

Tangible Common Equity

$

751,797

$

755,408

$

735,971

Tangible Assets:

Total assets

$

9,068,104

$

9,289,366

$

8,308,773

Less: intangible assets

316,820

317,423

319,694

Tangible Assets

$

8,751,284

$

8,971,943

$

7,989,079

Less: PPP loans

478,854

573,468

Tangible Assets

$

8,272,430

$

8,398,475

$

7,989,079

(12) Tangible Common Equity as a percentage of Tangible Assets

8.59

%

8.42

%

9.21

%

(12) Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans

9.09

%

8.99

%

9.21

%

Shares Outstanding at End of Period

96,130,751

96,924,781

98,311,840

(11) Tangible Book Value Per Common Share

$

7.82

$

7.79

$

7.49

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.



FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

For the Three Months Ended

For the Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

Pre-tax pre-provision income:

Net interest income (FTE)

$

67,825

$

66,742

$

69,212

$

269,733

$

271,610

Noninterest income

26,622

26,769

22,528

94,476

85,485

Noninterest expense

54,552

58,247

53,109

215,826

209,965

Pre-tax pre-provision income

$

39,895

$

35,264

$

38,631

$

148,383

$

147,130

Merger and acquisition related expenses

$

0

$

0

($

236

)

$

0

$

3,536

COVID-19

307

125

0

874

0

Voluntary early retirement

118

3,304

0

3,422

0

Branch consolidation

128

2,544

0

2,672

0

Core pre-tax pre-provision income

$

40,448

$

41,237

$

38,395

$

155,351

$

150,666

Net charge-offs

$

4,825

$

4,346

$

3,293

$

17,193

$

10,660