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First Commonwealth Announces Third Quarter 2020 Earnings; Declares Quarterly Dividend

First Commonwealth Financial Corporation
·35 min read

INDIANA, Pa., Oct. 27, 2020 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2020.

Financial Summary

(dollars in thousands,

For the Three Months Ended

For the Nine Months Ended

except per share data)

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Reported Results

Net income

$19,186

$23,851

$26,644

$47,764

$78,513

Diluted earnings per share

$0.20

$0.24

$0.27

$0.49

$0.80

Return on average assets

0.81%

1.06%

1.31%

0.71%

1.32%

Return on average equity

7.01%

8.95%

10.22%

5.92%

10.39%

Operating Results (non-GAAP)(1)

Core net income

$23,806

$23,851

$29,597

$52,384

$81,493

Core diluted earnings per share

$0.24

$0.24

$0.30

$0.53

$0.83

Core pre-tax pre-provision net revenue

$41,112

$36,101

$39,895

$114,336

$112,271

Provision expense

$11,212

$6,859

$2,708

$49,038

$9,638

Net charge-offs

$4,346

$4,493

$3,734

$12,368

$7,367

Reserve build/(release)(2)

$6,866

$2,366

-$1,026

$36,670

$2,271

Core return on average assets (ROAA)

1.01%

1.06%

1.46%

0.78%

1.37%

Core pre-tax pre-provision ROAA

1.74%

1.61%

1.97%

1.71%

1.88%

Return on average tangible common equity

10.29%

13.13%

14.62%

8.80%

14.90%

Core return on average tangible common equity

12.68%

13.13%

16.20%

9.61%

15.45%

Core efficiency ratio

54.45%

57.20%

55.73%

56.58%

56.87%

Net interest margin (FTE)

3.11%

3.29%

3.76%

3.34%

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 represents the amount by which the provision for credit losses exceeds net charge-offs, while reserve release represents the amount by which net charge-offs exceed the provision for credit losses.

Third Quarter 2020 Highlights

Financial results

  • Net income of $19.2 million and diluted earnings per share of $0.20, a decrease of $0.04 per share from the previous quarter
    -- Core net income of $23.8 million and diluted earnings per share of $0.24, unchanged from the previous quarter

  • Provision for loan losses of $11.2 million increased $4.4 million from the previous quarter

  • Core pre-tax pre-provision net revenue (PPNR)(1) was $41.1 million, an increase of $5.0 million from the previous quarter and an increase of $1.2 million from the third quarter of 2019
    -- Core PPNR ROAA was 1.74%, an increase of 13 basis points from the previous quarter

  • Quarterly and year-to-date positive operating leverage
    -- Core revenue increased $4.6 million, or 5.1% from the previous quarter and $6.4 million, or 2.4% from the first nine months of the previous year
    -- Core noninterest expense increased $39 thousand, or 0.1% from the previous quarter and $2.9 million, or 1.9% from the first nine months of the previous year

  • Net interest income of $66.7 million was essentially flat from the previous quarter, decreasing by $0.3 million due to an 18 basis point decline in the net interest margin, most of which was offset by a $338.5 million increase in average interest-earning assets

  • Noninterest income of $26.8 million increased $5.0 million from the previous quarter driven by record mortgage volume and strong SBA gain on sale revenue

  • Noninterest expense of $58.2 million increased $5.4 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
    -- Core expenses were well controlled and essentially flat from the previous quarter
    -- The core efficiency ratio improved to 54.5% as compared to 57.2% in the previous quarter

  • Total period-end loans (excluding PPP loans) increased $32.6 million, or 2.0% annualized, from the previous quarter driven by improved real estate secured consumer and indirect auto demand

  • Average deposits increased $320.1 million (or 17.1% annualized) from the previous quarter due in part to deposit growth associated with PPP loan funds, and period-end deposits decreased $78.3 million (or 4.0% annualized)

Asset quality

  • As of October 23, 2020, loans with modified terms classified under Section 4013 of the CARES Act (Deferrals) totaled $12.0 million, or 0.19% of total portfolio loans (excluding PPP)

  • Nonaccrual loans of $42.7 million decreased $5.9 million from the previous quarter

  • Net charge-offs on loans totaled $4.3 million, a decrease of $0.1 million from the previous quarter

  • Reserve build(2) totaled $36.7 million or 0.58% of total portfolio loans (excluding PPP) on a year-to-date basis, bringing reserves to total loans (adjusted for PPP) to 1.38%, and reserves to total originated loans (adjusted for PPP) to 1.44%

  • The Company continues to defer its adoption of CECL in accordance with relief provided under the U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act

Strong liquidity and capital positions

  • Total available liquidity of $3.9 billion

  • Bank-level Tier 1 Capital ratio of 11.4%, which represents $234.8 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

Operational Update

  • In response to the current operating environment and evolving customer preferences, the Company has implemented a profitability initiative termed “Project Thrive” with the goal of growing its business, maintaining adequate capital, protecting against further NIM compression and reducing operating expenses. In keeping with Project Thrive, a targeted 20% reduction in retail locations will occur prior to December 31, 2020.

  • Implemented the Banno Digital Platform, replacing both our online banking and mobile banking, and completed the conversion of our commercial customers to our new Treasury Management system
    -- These implementations represent a major investment in driving ongoing digital delivery and enhancing service

  • All community office drive-ups are open and our lobbies are available by appointment

“I am encouraged by our results for the third quarter of 2020. Our performance highlights the investments we have made in our fee businesses, geographic expansion and a more balanced approach to commercial and consumer lending,” stated T. Michael Price, President and Chief Executive Officer, “While we saw a meaningful improvement in our fee income and consumer lending, the shift in earning asset mix resulting from the additional liquidity continues to pressure our net interest margin. Additionally, our operating efficiency continues to improve as reflected in the core efficiency ratio of 54.5% for the third quarter. This marks the first time our efficiency ratio has been below 55% for a quarter since well before the last financial crisis."

Price continued, “Although we did see improvement in our asset quality metrics, our reserve build of $6.9 million reflects ongoing uncertainty in the hospitality and retail sectors. Despite the myriad of challenges facing our industry, we continue to be a source of strength for our customers and communities and we remain focused on delivering sustainable, long-term performance for our shareholders.”

Earnings

Net income for the third quarter of 2020 was $19.2 million, or $0.20 per share, compared to $23.9 million, or $0.24 per share for the second quarter of 2020, and $26.6 million, or $0.27 per share in the third quarter of 2019.

Net income for the first nine months of 2020 was $47.8 million, as compared to $78.5 million for the same period in 2019.

Net Interest Income and Net Interest Margin

Net interest income (FTE) decreased $0.3 million from the previous quarter due to lower replacement yields on new loans, driven by the impact of the lower interest rate environment.

The net interest margin for the third quarter of 2020 was 3.11%, a decrease of 18 basis points from the previous quarter and a decrease of 65 basis points from the third quarter of 2019. The decrease from the previous quarter was due primarily to a 25 basis point decrease in the yield on interest-earning assets, partially offset by a 10 basis point decrease in the cost of interest bearing liabilities.

Total average interest-earning assets increased $338.5 million from the previous quarter primarily due to a $30.8 million increase in average traditional loans along with $166.7 million in average PPP loans and a $141.0 million increase in average securities and interest bearing bank deposits due to excess liquidity on the balance sheet.

Total average deposits grew $320.1 million in the third quarter of 2020 as compared to the previous quarter. Period-end deposits decreased $78.3 million in the third quarter of 2020 as compared to the previous quarter. The decrease from the previous quarter was driven by a $73.1 million decrease in time deposits, partially offset by a $13.5 million increase in noninterest-bearing demand deposits.

Asset Quality

On March 27, 2020, the CARES Act was signed into law, which provides banking organizations with optional, temporary relief from adoption of Accounting Standards Update No. 2016-13, “Financial Instruments—Credit Losses,” Topic 326, “Measurement of Credit Losses on Financial Instruments” (“CECL”). Due to extraordinary economic conditions and the uncertainty of economic forecasts and resulting volatility of these forecasts, the Company elected to defer its adoption of CECL and has, therefore, calculated reserves for loan losses under the incurred loss method.

Provision expense in the third quarter totaled $11.2 million. Reserves for loan losses totaled $88.3 million in the third quarter of 2020, an increase of $6.9 million from the previous quarter. The increase from the previous quarter was primarily due to an increase of $4.7 million in qualitative reserves (due in part to the risk posed by the bank’s hospitality and retail portfolios) and an increase of $0.9 million in normal qualitative reserves due to internal credit metrics. These qualitative reserves are intended to reflect not only the risks of continued weak economic conditions on our loan portfolio, but also loss estimates identified in several loan portfolios deemed to be at risk from the COVID-19 pandemic.

At September 30, 2020, nonperforming loans totaled $49.7 million, a decrease of $6.3 million from the previous quarter. The decrease in nonperforming loans was primarily due to the partial resolution of a $5.5 million C&I credit placed into nonaccrual during the previous quarter.

Nonperforming loans as a percentage of total loans (excluding PPP) were 0.78%, 0.88% and 0.58% for the periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

For the originated loan portfolio at September 30, 2020, the general allowance for credit losses to total originated loans (excluding PPP) was 1.31% compared to 1.23% at June 30, 2020 and 0.87% at September 30, 2019.

During the third quarter of 2020, net charge-offs were $4.3 million, compared to $4.5 million in the prior quarter and $3.7 million in the third quarter of 2019. Net charge-offs were 0.27%, 0.28% and 0.25% of average loans (excluding PPP, annualized) for the periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $26.8 million for the third quarter of 2020, as compared to $21.8 million for the second quarter of 2020 and $22.2 million for the third quarter of 2019 (excluding net securities gains). There were no material securities gains during the current or comparable quarters.

The $5.0 million increase from the previous quarter was primarily due to a $2.2 million increase in gain on sale of mortgage loans, a $0.9 million increase in gain on sale of SBA loans, a $0.7 million increase in deposit service charges and a $0.6 million increase in card related interchange income driven by increased transaction volume on customer accounts.

Noninterest expense totaled $58.2 million for the third quarter of 2020, as compared to $52.8 million for the second quarter of 2020 and $54.9 million for the third quarter of 2019. The $5.4 million increase from the previous quarter was primarily the result of $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.

The core efficiency ratio was 54.45% during the third quarter of 2020 as compared to 57.20% in the previous quarter and 55.73% in the third quarter of 2019.

Full time equivalent staff was 1,399 as September 30, 2020, 1,465 at June 30, 2020, and 1,511 at September 30, 2019. The decrease from the prior quarter 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 November 20, 2020 to shareholders of record as of November 6, 2020. This dividend represents a 4.9% projected annual yield utilizing the October 26, 2020 closing market price of $9.01.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2020 were 14.4%, 11.8%, 8.9%, and 10.7%, respectively. First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its financial results for the third quarter 2020 on Wednesday, October 28, 2020 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 #10148727. 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 147 community banking offices in 28 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 Dayton 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 Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

SUMMARY RESULTS OF OPERATIONS

Net interest income (FTE) (1)

$

66,742

$

67,045

$

68,875

$

201,908

$

202,398

Provision for credit losses

11,212

6,859

2,708

49,038

9,638

Noninterest income

26,769

21,812

22,179

67,854

62,957

Noninterest expense

58,247

52,756

54,897

161,274

156,856

Net income

19,186

23,851

26,644

47,764

78,513

Core net income (5)

23,806

23,851

29,597

52,384

81,493

Earnings per common share (diluted)

$

0.20

$

0.24

$

0.27

$

0.49

$

0.80

Core earnings per common share (diluted) (6)

$

0.24

$

0.24

$

0.30

$

0.53

$

0.83

KEY FINANCIAL RATIOS

Return on average assets

0.81

%

1.06

%

1.31

%

0.71

%

1.32

%

Core return on average assets (7)

1.01

%

1.06

%

1.46

%

0.78

%

1.37

%

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

1.49

%

1.61

%

1.78

%

1.62

%

1.82

%

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

1.74

%

1.61

%

1.97

%

1.71

%

1.88

%

Return on average shareholders' equity

7.01

%

8.95

%

10.22

%

5.92

%

10.39

%

Return on average tangible common equity (8)

10.29

%

13.13

%

14.62

%

8.80

%

14.90

%

Core return on average tangible common equity (9)

12.68

%

13.13

%

16.20

%

9.61

%

15.45

%

Core efficiency ratio (2)(10)

54.45

%

57.20

%

55.73

%

56.58

%

56.87

%

Net interest margin (FTE) (1)

3.11

%

3.29

%

3.76

%

3.34

%

3.75

%

Book value per common share

$

11.07

$

10.96

$

10.57

Tangible book value per common share (11)

7.79

7.72

7.31

Market value per common share

7.74

8.28

13.47

Cash dividends declared per common share

0.11

0.11

0.10

0.33

0.30

ASSET QUALITY RATIOS

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

0.71

%

0.81

%

0.58

%

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

0.78

%

0.88

%

0.58

%

Nonperforming assets as a percent of total assets (3)

0.55

%

0.62

%

0.46

%

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

0.59

%

0.66

%

0.46

%

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

0.25

%

0.27

%

0.25

%

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

0.27

%

0.28

%

0.25

%

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

177.58

%

145.37

%

141.64

%

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

1.27

%

1.18

%

0.82

%

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

1.38

%

1.28

%

0.82

%

Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases

1.31

%

1.22

%

0.91

%

Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases, excluding PPP loans

1.44

%

1.34

%

0.92

%

CAPITAL RATIOS

Shareholders' equity as a percent of total assets

11.5

%

11.5

%

12.7

%

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

8.4

%

8.4

%

9.2

%

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

9.0

%

8.9

%

9.2

%

Leverage Ratio

8.9

%

9.3

%

10.1

%

Risk Based Capital - Tier I

11.8

%

11.8

%

11.8

%

Risk Based Capital - Total

14.4

%

14.4

%

14.1

%

Common Equity - Tier I

10.7

%

10.7

%

10.7

%


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

INCOME STATEMENT

Interest income

$

73,593

$

74,981

$

82,575

$

227,903

$

244,226

Interest expense

7,224

8,295

14,130

27,124

43,169

Net Interest Income

66,369

66,686

68,445

200,779

201,057

Taxable equivalent adjustment (1)

373

359

430

1,129

1,341

Net Interest Income (FTE)

66,742

67,045

68,875

201,908

202,398

Provision for credit losses

11,212

6,859

2,708

49,038

9,638

Net Interest Income after Provision for Credit Losses (FTE)

55,530

60,186

66,167

152,870

192,760

Net securities gains

20

8

9

47

15

Trust income

2,554

2,109

2,325

6,774

6,221

Service charges on deposit accounts

4,035

3,286

4,954

12,066

13,792

Insurance and retail brokerage commissions

2,156

1,831

1,912

5,982

5,887

Income from bank owned life insurance

1,547

1,800

1,540

4,963

4,408

Gain on sale of mortgage loans

6,437

4,243

2,599

13,226

6,101

Gain on sale of other loans and assets

1,871

581

970

3,151

3,831

Card-related interchange income

6,441

5,886

5,629

17,589

15,800

Derivative mark-to-market

(160

)

(221

)

(45

)

(2,122

)

(88

)

Swap fee income

41

609

421

864

1,634

Other income

1,827

1,680

1,865

5,314

5,356

Total Noninterest Income

26,769

21,812

22,179

67,854

62,957

Salaries and employee benefits

28,823

28,773

28,674

87,573

83,205

Net occupancy

4,609

4,397

4,521

13,979

13,878

Furniture and equipment

4,033

3,657

3,904

11,468

11,396

Data processing

2,741

2,596

2,825

7,804

7,988

Pennsylvania shares tax

1,254

1,254

1,189

3,246

3,365

Advertising and promotion

1,115

1,535

1,140

3,800

3,611

Intangible amortization

939

919

865

2,792

2,364

Collection and repossession

260

341

649

1,165

1,656

Other professional fees and services

937

920

969

2,755

2,755

FDIC insurance

876

733

35

1,637

1,164

Litigation and operational losses

329

319

308

1,038

1,264

Loss on sale or write-down of assets

63

140

152

416

1,398

Merger and acquisition

3,738

3,772

COVID-19

125

419

567

567

Voluntary early retirement

3,304

3,304

Branch consolidation

2,544

2,544

Other operating expenses

6,295

6,753

5,928

17,186

19,040

Total Noninterest Expense

58,247

52,756

54,897

161,274

156,856

Income before Income Taxes

24,052

29,242

33,449

59,450

98,861

Taxable equivalent adjustment (1)

373

359

430

1,129

1,341

Income tax provision

4,493

5,032

6,375

10,557

19,007

Net Income

$

19,186

$

23,851

$

26,644

$

47,764

$

78,513

Shares Outstanding at End of Period

96,924,781

98,132,697

98,319,081

96,924,781

98,319,081

Average Shares Outstanding Assuming Dilution

98,160,143

98,146,854

98,547,898

98,224,506

98,615,787


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

September 30,

June 30,

September 30,

2020

2020

2019

BALANCE SHEET (Period End)

Assets

Cash and due from banks

$

97,060

$

108,970

$

112,241

Interest-bearing bank deposits

283,037

348,763

16,408

Securities available for sale, at fair value

921,202

914,412

823,944

Securities held to maturity, at amortized cost

268,638

297,986

357,890

Loans held for sale

37,998

30,409

20,288

Loans

6,949,716

6,922,075

6,099,561

Allowance for credit losses

(88,307

)

(81,441

)

(50,035

)

Net loans

6,861,409

6,840,634

6,049,526

Goodwill and other intangibles

317,423

318,072

320,505

Other assets

502,599

505,409

451,225

Total Assets

$

9,289,366

$

9,364,655

$

8,152,027

Liabilities and Shareholders' Equity

Noninterest-bearing demand deposits

$

2,301,821

$

2,288,299

$

1,657,507

Interest-bearing demand deposits

315,806

327,691

263,312

Savings deposits

4,425,119

4,431,919

3,867,034

Time deposits

661,161

734,292

890,143

Total interest-bearing deposits

5,402,086

5,493,902

5,020,489

Total deposits

7,703,907

7,782,201

6,677,996

Short-term borrowings

122,356

108,484

83,735

Long-term borrowings

233,490

233,723

234,404

Total borrowings

355,846

342,207

318,139

Other liabilities

156,782

164,542

116,862

Shareholders' equity

1,072,831

1,075,705

1,039,030

Total Liabilities and Shareholders' Equity

$

9,289,366

$

9,364,655

$

8,152,027


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)

For the Three Months Ended

For the Nine Months Ended

September 30,

Yield/

June 30,

Yield/

September 30,

Yield/

September 30,

Yield/

September 30,

Yield/

2020

Rate

2020

Rate

2019

Rate

2020

Rate

2019

Rate

NET INTEREST MARGIN

Assets

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

$

6,402,968

3.97

%

$

6,372,145

4.14

%

$

6,042,822

4.93

%

$

6,343,862

4.25

%

$

5,935,427

4.95

%

PPP Loans

572,434

2.67

%

405,738

2.73

%

%

326,957

2.69

%

%

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

1,553,252

1.59

%

1,412,275

1.99

%

1,226,270

2.58

%

1,407,609

1.98

%

1,273,594

2.73

%

Total Interest-Earning Assets (FTE) (1)

8,528,654

3.45

%

8,190,158

3.70

%

7,269,092

4.53

%

8,078,428

3.79

%

7,209,021

4.55

%

Noninterest-earning assets

861,311

853,396

780,960

846,887

763,417

Total Assets

$

9,389,965

$

9,043,554

$

8,050,052

$

8,925,315

$

7,972,438

Liabilities and Shareholders' Equity

Interest-bearing demand and savings deposits

$

4,818,576

0.20

%

$

4,568,202

0.24

%

$

3,933,091

0.61

%

$

4,535,072

0.30

%

$

3,796,768

0.58

%

Time deposits

696,227

1.28

%

776,892

1.51

%

863,714

1.75

%

766,106

1.49

%

866,746

1.68

%

Short-term borrowings

124,670

0.11

%

112,063

0.17

%

323,041

1.99

%

146,270

0.61

%

489,562

2.21

%

Long-term borrowings

233,588

4.37

%

233,819

4.41

%

234,497

4.51

%

233,818

4.40

%

210,353

4.96

%

Total Interest-Bearing Liabilities

5,873,061

0.49

%

5,690,976

0.59

%

5,354,343

1.05

%

5,681,266

0.64

%

5,363,429

1.08

%

Noninterest-bearing deposits

2,281,200

2,130,775

1,560,478

2,030,364

1,507,826

Other liabilities

147,603

150,254

101,328

136,655

90,956

Shareholders' equity

1,088,101

1,071,549

1,033,903

1,077,030

1,010,227

Total Noninterest-Bearing Funding Sources

3,516,904

3,352,578

2,695,709

3,244,049

2,609,009

Total Liabilities and Shareholders' Equity

$

9,389,965

$

9,043,554

$

8,050,052

$

8,925,315

$

7,972,438

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

3.11

%

3.29

%

3.76

%

3.34

%

3.75

%


FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

September 30,

June 30,

September 30,

2020

2020

2019

Loan Portfolio Detail

Commercial Loan Portfolio:

Commercial, financial, agricultural and other

$

1,163,268

$

1,202,212

$

1,210,936

Paycheck Protection Program

573,468

570,887

Commercial real estate

2,215,311

2,224,710

2,124,240

Real estate construction

366,936

339,603

334,533

Total Commercial

4,318,983

4,337,412

3,669,709

Consumer Loan Portfolio:

Closed-end mortgages

1,154,366

1,140,101

1,081,170

Home equity lines of credit

589,654

583,187

585,050

Real estate construction

86,053

76,726

85,748

Total Real Estate - Consumer

1,830,073

1,800,014

1,751,968

Auto loans

692,475

671,202

553,617

Direct installment

40,081

43,629

46,704

Personal lines of credit

62,155

63,600

70,441

Student loans

5,949

6,218

7,122

Total Other Consumer

800,660

784,649

677,884

Total Consumer Portfolio

2,630,733

2,584,663

2,429,852

Total Portfolio Loans

6,949,716

6,922,075

6,099,561

Loans held for sale

37,998

30,409

20,288

Total Loans

$

6,987,714

$

6,952,484

$

6,119,849

September 30,

June 30,

September 30,

2020

2020

2019

ASSET QUALITY DETAIL

Nonperforming Loans:

Loans on nonaccrual basis

$

38,139

$

44,968

$

16,227

Troubled debt restructured loans on nonaccrual basis

4,511

3,600

11,074

Troubled debt restructured loans on accrual basis

7,078

7,455

8,024

Total Nonperforming Loans

$

49,728

$

56,023

$

35,325

Other real estate owned ("OREO")

1,079

1,634

1,622

Repossessions ("Repos")

685

537

486

Total Nonperforming Assets

$

51,492

$

58,194

$

37,433

Loans past due in excess of 90 days and still accruing

1,249

1,421

2,054

Classified loans

80,190

76,917

50,719

Criticized loans

188,957

125,432

128,691

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

0.74

%

0.84

%

0.61

%

Allowance for credit losses

$

88,307

$

81,441

$

50,035


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Net Charge-offs (Recoveries):

Commercial, financial, agricultural and other

$

3,338

$

1,234

$

729

$

4,977

$

1,952

Real estate construction

(26

)

(74

)

(26

)

(158

)

Commercial real estate

(110

)

2,151

1,301

2,263

1,521

Residential real estate

117

2

366

621

427

Loans to individuals

1,001

1,132

1,412

4,533

3,625

Net Charge-offs

$

4,346

$

4,493

$

3,734

$

12,368

$

7,367

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

0.25

%

0.27

%

0.25

%

0.25

%

0.17

%

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

0.27

%

0.28

%

0.25

%

0.26

%

0.17

%

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

257.98

%

152.66

%

72.52

%

396.49

%

130.83

%

Provision for credit losses

$

11,212

$

6,859

$

2,708

$

49,038

$

9,638


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 Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Net Income

$

19,186

$

23,851

$

26,644

$

47,764

$

78,513

Intangible amortization

939

919

865

2,792

2,364

Tax benefit of amortization of intangibles

(197

)

(193

)

(182

)

(586

)

(496

)

Net Income, adjusted for tax affected amortization of intangibles

19,928

24,577

27,327

49,970

80,381

Average Tangible Equity:

Total shareholders' equity

$

1,088,101

$

1,071,549

$

1,033,903

$

1,077,030

$

1,010,227

Less: intangible assets

317,702

318,486

292,529

318,483

288,749

Tangible Equity

770,399

753,063

741,374

758,547

721,478

Less: preferred stock

Tangible Common Equity

$

770,399

$

753,063

$

741,374

$

758,547

$

721,478

(8)Return on Average Tangible Common Equity

10.29

%

13.13

%

14.62

%

8.80

%

14.90

%


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Core Net Income:

Total Net Income

$

19,186

$

23,851

$

26,644

$

47,764

$

78,513

Merger & acquisition related expenses

3,738

3,772

Tax benefit of merger & acquisition related expenses

(785

)

(792

)

Early retirement related

3,304

3,304

Tax benefit of early retirement related expenses

(694

)

(694

)

Branch consolidation related

2,544

2,544

Tax benefit of bank consolidation related expenses

(534

)

(534

)

(5) Core net income

$

23,806

$

23,851

$

29,597

$

52,384

$

81,493

Average Shares Outstanding Assuming Dilution

98,160,143

98,146,854

98,547,898

98,224,506

98,615,787

(6) Core Earnings per common share (diluted)

$

0.24

$

0.24

$

0.30

$

0.53

$

0.83

Intangible amortization

939

919

865

2,792

2,364

Tax benefit of amortization of intangibles

(197

)

(193

)

(182

)

(586

)

(496

)

Core Net Income, adjusted for tax
affected amortization of intangibles

$

24,548

$

24,577

$

30,280

$

54,590

$

83,361

(9) Core Return on Average Tangible Common Equity

12.68

%

13.13

%

16.20

%

9.61

%

15.45

%

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Core Return on Average Assets:

Total Net Income

$

19,186

$

23,851

$

26,644

$

47,764

$

78,513

Total Average Assets

9,389,965

9,043,554

8,050,052

8,925,315

7,972,438

Return on Average Assets

0.81

%

1.06

%

1.31

%

0.71

%

1.32

%

Core Net Income (5)

$

23,806

$

23,851

$

29,597

$

52,384

$

81,493

Total Average Assets

9,389,965

9,043,554

8,050,052

8,925,315

7,972,438

(7) Core Return on Average Assets

1.01

%

1.06

%

1.46

%

0.78

%

1.37

%


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Core Efficiency Ratio:

Total Noninterest Expense

$

58,247

$

52,756

$

54,897

$

161,274

$

156,856

Adjustments to Noninterest Expense:

Unfunded commitment reserve

471

887

(466

)

(1,181

)

(235

)

Intangible amortization

939

919

865

2,792

2,364

Merger and acquisition related

3,738

3,772

Early retirement related

3,304

3,304

Branch consolidation related

2,544

2,544

Noninterest Expense - Core

$

50,989

$

50,950

$

50,760

$

153,815

$

150,955

Net interest income, fully tax equivalent

$

66,742

$

67,045

$

68,875

$

201,908

$

202,398

Total noninterest income

26,769

21,812

22,179

67,854

62,957

Net securities gains

(20

)

(8

)

(9

)

(47

)

(15

)

Total Revenue

$

93,491

$

88,849

$

91,045

$

269,715

$

265,340

Adjustments to Revenue:

Derivative mark-to-market

(160

)

(221

)

(45

)

(2,122

)

(88

)

Total Revenue - Core

$

93,651

$

89,070

$

91,090

$

271,837

$

265,428

(10)Core Efficiency Ratio

54.45

%

57.20

%

55.73

%

56.58

%

56.87

%

September 30,

June 30,

September 30,

2020

2020

2019

Tangible Equity:

Total shareholders' equity

$

1,072,831

$

1,075,705

$

1,039,030

Less: intangible assets

317,423

318,072

320,505

Tangible Equity

755,408

757,633

718,525

Less: preferred stock

Tangible Common Equity

$

755,408

$

757,633

$

718,525

Tangible Assets:

Total assets

$

9,289,366

$

9,364,655

$

8,152,027

Less: intangible assets

317,423

318,072

320,505

Tangible Assets

$

8,971,943

$

9,046,583

$

7,831,522

Less: PPP loans

573,468

570,887

Tangible Assets

$

8,398,475

$

8,475,696

$

7,831,522

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

8.42

%

8.37

%

9.17

%

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

8.99

%

8.94

%

9.17

%

Shares Outstanding at End of Period

96,924,781

98,132,697

98,319,081

(11)Tangible Book Value Per Common Share

$

7.79

$

7.72

$

7.31

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 Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Pre-tax pre-provision income:

Net interest income (FTE)

$

66,742

$

67,045

$

68,875

$

201,908

$

202,398

Noninterest income

26,769

21,812

22,179

67,854

62,957

Noninterest expense

58,247

52,756

54,897

161,274

156,856

Pre-tax pre-provision income

$

35,264

$

36,101

$

36,157

$

108,488

$

108,499

Merger and acquisition related expenses

$

0

$

0

$

3,738

$

0

$

3,772

Voluntary early retirement

3,304

0

0

3,304

0

Branch consolidation

2,544

0

0

2,544

0

Core pre-tax pre-provision income

$

41,112

$

36,101

$

39,895

$

114,336

$

112,271

Net charge-offs

$

4,346

$

4,493

$

3,734

$

12,368

$

7,367