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First Commonwealth Reports Fourth Quarter and Record Full Year 2018 Earnings; Increases Quarterly Dividend 11.1%

INDIANA, Pa., Jan. 29, 2019 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (FCF) today announced financial results for the fourth quarter and full year 2018.

Full Year 2018 Highlights

Franchise Growth

  • The company successfully completed its acquisition of Foundation Bank located in the Cincinnati, Ohio metropolitan area on May 1, 2018, which included $184 million in loans and $141 million in deposits at close.
  • Total loans grew $364 million, or 6.7% compared to the prior year including $180 million, or 3.3% in organic loan growth (excluding loans acquired from Foundation Bank).
  • Average deposits grew $441 million, or 8.2% compared to the prior year including $346 million, or 6.5% in organic deposit growth (excluding deposits acquired from Foundation Bank).
  • On May 21, 2018, the company’s banking subsidiary, First Commonwealth Bank, issued $100 million in subordinated debt notes resulting in net proceeds of approximately $98 million.  These notes qualify as Tier II capital for regulatory capital purposes and further strengthen the Bank’s capital ratios.
  • The Company repurchased 1.8 million shares, or 1.8% of common shares outstanding.
  • Tangible book value per share grew 10.1% year-over-year.

Earnings

  • For the year ended December 31, 2018, net income was $107.5 million (or $1.08 diluted earnings per share).  Core net income (non-GAAP), which excludes acquisition expenses, was $108.8 million, or $1.10 diluted earnings per share, all of which are record levels for First Commonwealth.
    -- Core earnings per share (non-GAAP) increased $0.28, or 34.1% from the previous year.
  • Total revenue (excluding net security gains) (non-GAAP) grew $26.4 million, or 8.6% from the prior year.
    -- Net interest income (on a fully tax-equivalent (FTE) basis) (non-GAAP) increased $21.2 million, or 9.1%, from the prior year.
    -- Noninterest income (excluding net security gains) (non-GAAP) grew $5.2 million, or 7.0%, from the prior year.
  • Total noninterest expense decreased $4.7 million, or 2.4% from the prior year.
    -- Noninterest expense (excluding acquisition expenses) (non-GAAP) increased $3.8 million, or 2.0%, from the prior year.
  • The return on average equity (ROE) for the year ended December 31, 2018 was 11.41%.  The core return on average tangible common equity (ROTCE) (non-GAAP) for the period was 16.87%, an increase of 349 basis points from the previous year.

Profitability

  • The net interest margin improved 14 basis points to 3.71% compared to the prior year.
  • The efficiency ratio improved 307 basis points to 57.15% compared to the prior year.
  • The return on average assets (ROA) for the year ended December 31, 2018 was 1.42%.  The Core ROA (non-GAAP) improved 35 basis points to 1.44% compared to the prior year.

Fourth Quarter 2018 Highlights

Franchise Growth

  • Total loans grew $115 million, or 8.1% (annualized) compared to the prior quarter.

Earnings

  • For the quarter ended December 31, 2018, net income was $27.0 million (or $0.27 diluted earnings per share), resulting in an ROA of 1.39% and an ROE of 11.06%.  Core net income (non-GAAP) was essentially the same as the company’s reported GAAP earnings.
  • Total revenue (excluding security gains) grew $5.1 million, or 6.2%, from the prior year quarter and $2.0 million, or 9.4% (annualized), from the third quarter of 2018.
    -- Net interest income (FTE) increased $1.2 million, or 7.5% (annualized), from the prior quarter.
    -- Noninterest income (excluding security gains) grew $0.8 million, or 15.6% (annualized), from the prior quarter.
  • Total noninterest expense decreased $1.9 million, or 3.6%, from the prior year quarter and increased $0.5 million from the third quarter of 2018.
    -- Noninterest expense (excluding acquisition expenses) decreased $2.1 million from the prior year quarter.
  • Provision for credit losses totaled $1.5 million, a decrease of $0.8 million and $1.5 million from the year ago and previous quarter, respectively, as all major asset quality metrics improved.

Profitability

  • The net interest margin expanded three basis points to 3.70% compared to the prior quarter and increased nine basis points from the prior year quarter as positive replacement yields on loans offset deposit rate increases.
    -- Deposit betas on non-maturity deposits remained well controlled at 20%.
  • The Core return on average assets (non-GAAP) was 1.39%.

“Our results in the fourth quarter were a strong finish to a very successful year for our organization,” stated T. Michael Price, President and Chief Executive Officer. “In 2018, we expanded our footprint into Cincinnati with the acquisition and integration of Foundation Bank, the buildout of our SBA team moved us to a number 2 ranking in our western Pennsylvania market from number 18 a year ago, and we produced record earnings of $107.5 million.  And we continue to make strategic investments in talent and technology to fulfill the needs of the businesses in our communities and help our customers improve their financial lives.  We have positive momentum heading into 2019 and are well-positioned to generate consistent and sustainable long-term performance.”

Financial Summary

(dollars in thousands, For the Three Months Ended   For the Twelve Months Ended
except per share data) December 31,   September 30,   December 31,   December 31,   December 31,
   2018
   2018
   2017
   2018
   2017
Reported Results                  
Net income $ 26,998   $ 25,149   $ 3,981   $ 107,498   $ 55,165
Diluted earnings per share $ 0.27   $ 0.25   $ 0.04   $ 1.08   $ 0.58
Return on average assets   1.39%     1.30%     0.21%     1.42%     0.77%
Return on average equity   11.06%     10.28%     1.75%     11.41%     6.45%
                   
Operating Results (non-GAAP)(1)                  
Core net income $ 27,000   $ 25,168   $ 20,561   $ 108,791   $ 78,512
Core diluted earnings per share $ 0.27   $ 0.25   $ 0.21   $ 1.10   $ 0.82
Core return on average assets   1.39%     1.30%     1.11%     1.44%     1.09%
Return on average tangible common equity   16.09%     15.01%     2.84%     16.67%     9.50%
Core return on average tangible common equity   16.09%     15.02%     13.29%     16.87%     13.38%
Core efficiency ratio   57.45%     57.82%     62.24%     57.15%     60.22%
Net interest margin (FTE)   3.70%     3.67%     3.61%     3.71%     3.57%
                             


(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. See supplemental information included with the release for "non-GAAP Financial Measures and Key Performance Indicators" and additional information.
   

Earnings

Net income for the fourth quarter of 2018 was $27.0 million, as compared to $4.0 million for the fourth quarter of 2017.  The prior year quarter’s results were impacted by a previously disclosed valuation adjustment to the company’s deferred tax asset following the passage of the Tax Cuts and Jobs Act, which resulted in a non-cash charge of $16.7 million.

Net income for the year ended December 31, 2018 was $107.5 million, as compared to $55.2 million for the same period in 2017, an increase of $52.3 million.  The results for the prior year were impacted by the aforementioned non-cash charge of $16.7 million as well as merger-related expenses of $10.2 million (pretax) in 2017 as compared to merger-related expenses of $1.6 million in 2018.  Excluding these expenses, core net income (non-GAAP) for the year ended December 31, 2018 was $108.8 million, an increase of $30.3 million, or 38.6%, from the previous year.

Net Interest Margin and Net Interest Income

The net interest margin for the fourth quarter of 2018 was 3.70%, an increase of three basis points from the previous quarter and an increase of nine basis points from the fourth quarter of 2017.

The total cost of interest-bearing demand and savings deposits increased five basis points from the previous quarter, compared to a 25 basis point increase in the Federal Funds Target Rate in the quarter.  This equates to an effective deposit beta of 20%, which is unchanged from the previous quarter.  The increased cost of interest-bearing deposits was partially offset by $9.0 million of growth in average noninterest-bearing deposits.

Loan yields increased 15 basis points from the previous quarter due to the repricing of variable and adjustable rate loans and higher replacement yields on new loans.

For the quarter ended December 31, 2018, total average earning assets grew $74 million and $367 million, respectively, from the prior quarter and prior year period.

The increase in the net interest margin from the prior year quarter was primarily due to a 44 basis point increase in the yield on loans, which was partially offset by higher short-term borrowing costs following the Federal Reserve’s decisions to raise short-term interest rates.

The net interest margin for the year ended December 31, 2018 was 3.71%, an increase of 14 basis points from the previous year.

The increase from the prior year was due primarily to a 40 basis point increase in the yield on interest earning assets partially offset by a 26 basis point increase in funding costs.  These increases were primarily due to improved yields on variable and adjustable loan portfolios following the Federal Reserve’s decision to increase short-term rates 200 basis points since December 2016, along with the funding costs increasing less than asset yields.

For the year ended December 31, 2018, total average earning assets grew $319 million, or 4.9% from the prior year.  Average loans grew by 5.8%, while average deposits grew by 8.2%.

Credit Quality

At December 31, 2018, nonperforming loans were $32.0 million, a decrease of $7.8 million from September 30, 2018 and a decrease of $10.2 million from December 31, 2017.  Nonperforming loans as a percentage of total loans were 0.55%, 0.70% and 0.78% for the periods ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

Subsequent to December 31, 2018, a $6.0 million nonperforming loan was paid off in full, resulting in the release of $1.7 million of excess reserves in the fourth quarter of 2018.

The provision for credit losses totaled $12.5 million for the year ended December 31, 2018, an increase of $7.4 million as compared to the prior year.  The increase from the prior year is primarily the result of one commercial real estate relationship which was resolved during the year and the recognition of $3.1 million of recoveries on two commercial relationships during the prior year.

For the year ended December 31, 2018, net charge-offs were $13.1 million, or 0.23% of average loans, compared to $7.0 million in the prior year period, an increase of $6.1 million.  The increase from the prior year is primarily the result of the aforementioned commercial real estate relationship, which deteriorated and was resolved during the year, as well as recoveries for two large commercial credits totaling $3.1 million in the prior year.

During the fourth quarter of 2018, net charge-offs were $4.5 million, or 0.31% of average loans (annualized), compared to $3.5 million in the prior quarter and $2.1 million in the fourth quarter of 2017.  Net charge-offs in the fourth quarter were the result of the successful resolution of several problem credits during the quarter.

For the originated loan portfolio at December 31, 2018, the general allowance for credit losses to total originated loans was 0.87%, compared to 0.89% at September 30, 2018 and 0.90% at December 31, 2017.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $20.5 million for the fourth quarter of 2018 as compared to $19.8 million for the third quarter of 2018 and $20.4 million for the fourth quarter of 2017.  Gain on sale of other loans and assets increased $1.1 million and $1.2 million from the prior quarter and the year ago quarter, respectively, due to a $0.6 million gain on the sale of a nonperforming loan and a $0.4 million insurance recovery during the fourth quarter of 2018, as well as the company’s recent emphasis on Small Business Administration (SBA) qualified lending.  This was partially offset by a decrease of $0.4 million and $0.5 million from the prior quarter and year ago quarter, respectively, in gain on sale of mortgage loans.  Trust fee income decreased $0.3 million from the prior quarter due to seasonally higher tax advisory services in the third quarter.

There were no security gains during the fourth and third quarters of 2018; however, the company recognized a $4.3 million gain during the fourth quarter of 2017 following the successful auction call of a single pooled trust preferred security.

Noninterest expense (excluding merger-related expenses) totaled $50.0 million for the fourth quarter of 2018, as compared to $49.5 million for the third quarter of 2018 and $52.1 million for the fourth quarter of 2017.  The $0.5 million increase from the previous quarter was primarily the result of a $1.0 million increase in salaries and benefits (due to a $1.3 million increase in hospitalization costs) and a $0.5 million increase in other professional fees.  This was partially offset by a $0.4 million decrease in advertising and promotion, a $0.3 million decrease in appraisal fees, and a $0.3 million decrease in unfunded commitment reserves on construction loans.

The $2.1 million decrease from the prior year quarter was primarily due to $2.5 million of expense for a bonus paid to all employees following the passage of the Tax Cuts and Jobs Act in the fourth quarter of 2017.

Full time equivalent staff was 1,426 at December 31, 2018 as compared to 1,417 at September 30, 2018 and 1,372 at December 31, 2017.  The increase from the prior year is the result of the addition of employees from acquisitions and the continued expansion of the mortgage, SBA and commercial banking businesses.

Dividends and Capital

First Commonwealth Financial Corporation declared a quarterly common stock dividend of $0.10 per share, which is payable on February 22, 2019 to shareholders of record as of February 8, 2019.  This dividend represents an 11.1% increase over the previous quarter and a 3.0% projected annual yield utilizing the January 28, 2019 closing market price of $13.42.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2018 were 14.7%, 12.3%, 10.3% and 11.1%, respectively.  First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its financial results for the quarter and year ended December 31, 2018 on Wednesday, January 30, 2019 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 #10127627.  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 (FCF), headquartered in Indiana, Pennsylvania, is a financial services company with 137 community banking offices in 22 counties throughout western and central Pennsylvania and central and northeastern Ohio, as well as a Corporate Banking Center in northeast Ohio and mortgage offices in Stow and Dublin, Ohio.  First Commonwealth provides a full range of commercial banking, consumer banking, mortgage, wealth management and insurance products and services through its subsidiaries First Commonwealth Bank and First Commonwealth Insurance Agency.  For more information about First Commonwealth or to open an account today, please visit www.fcbanking.com.

Forward-Looking Statements

This release contains forward-looking statements about First Commonwealth’s future plans, strategies and financial performance.  These statements can be identified by the fact that they do not relate strictly to historical or current facts and often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."  Such statements are based on assumptions and involve risks and uncertainties, many of which are beyond First Commonwealth’s control.  Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national and international economic conditions and the impact they may have on First Commonwealth and its customers; (2) volatility and disruption in national and international financial markets; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (4) inflation, interest rate, commodity price, securities market and monetary fluctuations; (5) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance); (6) the soundness of other financial institutions; (7)  political instability; (8) impairment of First Commonwealth’s goodwill or other intangible assets; (9) acts of God or of war or terrorism; (10) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (11) changes in consumer spending, borrowings and savings habits; (12) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) First Commonwealth’s ability to attract and retain qualified employees; (16) changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (17) the ability to increase market share and control expenses; (18) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (19) the reliability of First Commonwealth’s vendors, internal control systems or information systems; (20) the costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals; and (21) other risks and uncertainties described in the reports that First Commonwealth files with the Securities and Exchange Commission, including its most recent Annual Report on Form 10‐K. Forward-looking statements speak only as of the date on which they are made. First Commonwealth undertakes no obligation to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

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 Twelve Months Ended
  December 31,   September 30,   December 31,   December 31,   December 31,
  2018   2018   2017   2018   2017
SUMMARY RESULTS OF OPERATIONS                  
Net interest income (FTE) (1) $ 65,514     $ 64,311     $ 60,624     $ 254,196     $ 233,005  
Provision for credit losses 1,499     2,961     2,253     12,531     5,087  
Noninterest income 20,529     19,757     24,705     88,637     80,331  
Noninterest expense 50,024     49,530     51,909     195,556     200,298  
Net income 26,998     25,149     3,981     107,498     55,165  
Core net income (5) 27,000     25,168     20,561     108,791     78,512  
                   
Earnings per common share (diluted) $ 0.27     $ 0.25     $ 0.04     $ 1.08     $ 0.58  
Core earnings per common share (diluted) (6) $ 0.27     $ 0.25     $ 0.21     $ 1.10     $ 0.82  
                   
KEY FINANCIAL RATIOS                  
                   
Return on average assets 1.39 %   1.30 %   0.21 %   1.42 %   0.77 %
Core return on average assets (7) 1.39 %   1.30 %   1.11 %   1.44 %   1.09 %
Return on average shareholders' equity 11.06 %   10.28 %   1.75 %   11.41 %   6.45 %
Return on average tangible common equity (8) 16.09 %   15.01 %   2.84 %   16.67 %   9.50 %
Core return on average tangible common equity (9) 16.09 %   15.02 %   13.29 %   16.87 %   13.38 %
Core efficiency ratio (2)(10) 57.45 %   57.82 %   62.24 %   57.15 %   60.22 %
Net interest margin (FTE) (1) 3.70 %   3.67 %   3.61 %   3.71 %   3.57 %
                   
Book value per common share $ 9.90     $ 9.69     $ 9.11          
Tangible book value per common share (11) 6.98     6.82     6.34          
Market value per common share 12.08     16.14     14.32          
Cash dividends declared per common share 0.09     0.09     0.08     $ 0.35     $ 0.32  
                   
ASSET QUALITY RATIOS                  
Nonperforming loans as a percent of end-of-period loans (3) 0.55 %   0.70 %   0.78 %        
Nonperforming assets as a percent of total assets (3) 0.46 %   0.57 %   0.62 %        
Net charge-offs as a percent of average loans (annualized) (4) 0.31 %   0.25 %   0.16 %        
Allowance for credit losses as a percent of nonperforming loans (4) 149.14 %   127.35 %   114.34 %        
Allowance for credit losses as a percent of end-of-period loans (4) 0.83 %   0.90 %   0.89 %        
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases 0.90 %   0.98 %   0.96 %        
                   
CAPITAL RATIOS                  
Shareholders' equity as a percent of total assets 12.5 %   12.7 %   12.2 %        
Tangible common equity as a percent of tangible assets (12) 9.1 %   9.3 %   8.8 %        
Leverage Ratio 10.3 %   10.5 %   9.7 %        
Risk Based Capital - Tier I 12.3 %   12.6 %   11.5 %        
Risk Based Capital - Total 14.7 %   15.1 %   12.3 %        
Common Equity - Tier I 11.1 %   11.4 %   10.3 %        
                         


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands, except per share data) 
  For the Three Months Ended   For the Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2018 2018 2017   2018 2017
INCOME STATEMENT            
  Interest income $ 77,945   $ 74,873   $ 65,840     $ 292,257   $ 250,550  
  Interest expense 12,896   11,060   6,270     40,035   21,770  
Net Interest Income 65,049   63,813   59,570     252,222   228,780  
  Taxable equivalent adjustment (1) 465   498   1,054     1,974   4,225  
Net Interest Income  (FTE) 65,514   64,311   60,624     254,196   233,005  
  Provision for credit losses 1,499   2,961   2,253     12,531   5,087  
Net Interest Income after Provision for Credit Losses (FTE) 64,015   61,350   58,371     241,665   227,918  
             
  Net securities gains     4,345     8,102   5,040  
  Trust income 1,887   2,206   1,823     7,901   7,098  
  Service charges on deposit accounts 4,757   4,589   4,721     18,175   18,579  
  Insurance and retail brokerage commissions 1,866   1,872   2,155     7,426   8,807  
  Income from bank owned life insurance 1,445   1,579   1,486     6,686   5,699  
  Gain on sale of mortgage loans 1,169   1,542   1,656     5,436   5,366  
  Gain on sale of other loans and assets 1,725   643   486     5,273   1,753  
  Card-related interchange income 5,258   5,044   4,907     20,187   18,780  
Derivative mark-to-market (2 )   (424 )   787   (473 )
Swap fee income 759   528   1,547     1,874   2,005  
  Other income 1,665   1,754   2,003     6,790   7,677  
Total Noninterest Income 20,529   19,757   24,705     88,637   80,331  
             
  Salaries and employee benefits 27,535   26,553   28,781     105,115   103,714  
  Net occupancy 4,287   4,341   4,051     17,219   15,648  
  Furniture and equipment 3,636   3,424   3,755     14,247   13,508  
  Data processing 2,706   2,853   2,431     10,470   9,090  
  Pennsylvania shares tax 1,477   1,248   1,139     4,875   4,209  
  Advertising and promotion 771   1,200   1,051     3,956   3,786  
  Intangible amortization 787   817   819     3,217   3,081  
  Collection and repossession 702   630   563     2,762   1,905  
  Other professional fees and services 1,473   962   1,406     4,473   4,761  
  FDIC insurance 417   217   744     2,007   3,210  
  Litigation and operational losses 351   435   943     1,162   2,050  
  Loss on sale or write-down of assets 205   181   348     1,080   1,834  
  Merger and acquisition related 3   24   (199 )   1,637   10,213  
  Other operating expenses 5,674   6,645   6,077     23,336   23,289  
Total Noninterest Expense 50,024   49,530   51,909     195,556   200,298  
             
Income before Income Taxes 34,520   31,577   31,167     134,746   107,951  
  Taxable equivalent adjustment (1) 465   498   1,054     1,974   4,225  
  Income tax provision 7,057   5,930   26,132     25,274   48,561  
Net Income $ 26,998   $ 25,149   $ 3,981     $ 107,498   $ 55,165  
             
Shares Outstanding at End of Period   98,518,668     100,361,434     97,456,478       98,518,668     97,456,478  
Average Shares Outstanding Assuming Dilution   99,358,759     100,490,812     97,507,465       99,223,513     95,331,037  
             


FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands) 
           
  December 31,   September 30,   December 31,
  2018   2018   2017
BALANCE SHEET (Period End)          
Assets          
  Cash and due from banks $ 95,934     $ 93,162     $ 98,624  
  Interest-bearing bank deposits 3,013     3,022     8,668  
  Securities available for sale, at fair value 941,373     914,085     761,195  
  Securities held to maturity, at amortized cost 393,855     389,621     422,096  
  Loans held for sale 11,881     8,287     14,850  
           
  Loans 5,774,139     5,662,782     5,407,376  
  Allowance for credit losses (47,764 )   (50,746 )   (48,298 )
  Net loans 5,726,375     5,612,036     5,359,078  
           
  Goodwill and other intangibles 287,240     288,028     270,360  
  Other assets 368,584     378,104     373,668  
Total Assets $ 7,828,255     $ 7,686,345     $ 7,308,539  
           
Liabilities and Shareholders' Equity          
  Noninterest-bearing demand deposits $ 1,466,213     $ 1,451,284     $ 1,416,771  
           
  Interest-bearing demand deposits 180,209     181,504     187,281  
  Savings deposits 3,401,354     3,453,461     3,361,840  
  Time deposits 850,216     808,894     614,813  
  Total interest-bearing deposits 4,431,779     4,443,859     4,163,934  
           
  Total deposits 5,897,992     5,895,143     5,580,705  
           
  Short-term borrowings 721,823     587,806     707,466  
  Long-term borrowings 185,056     185,266     87,918  
  Total borrowings 906,879     773,072     795,384  
           
  Other liabilities 47,995     45,199     44,323  
  Shareholders' equity 975,389     972,931     888,127  
Total Liabilities and Shareholders' Equity $ 7,828,255     $ 7,686,345     $ 7,308,539  


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
  For the Three Months Ended   For the Twelve Months Ended
  December 31, Yield/ September 30, Yield/ December 31, Yield/   December 31, Yield/ December 31, Yield/
  2018 Rate 2018 Rate 2017 Rate   2018 Rate 2017 Rate
NET INTEREST MARGIN                  
                       
Assets                      
Loans (FTE)(1)(3) $ 5,704,468   4.81 % $ 5,657,390   4.66 % $ 5,433,384   4.29 %   $ 5,582,651   4.64 % $ 5,278,511   4.20 %
Securities and interest bearing bank deposits (FTE) (1) 1,316,488   2.79 % 1,289,178   2.73 % 1,220,469   2.63 %   1,267,471   2.79 % 1,252,739   2.63 %
Total Interest-Earning Assets (FTE) (1) 7,020,956   4.43 % 6,946,568   4.30 % 6,653,853   3.99 %   6,850,122   4.30 % 6,531,250   3.90 %
Noninterest-earning assets 712,047     715,461     710,946       705,234     679,212    
Total Assets $ 7,733,003     $ 7,662,029     $ 7,364,799       $ 7,555,356     $ 7,210,462    
                       
Liabilities and Shareholders' Equity                      
Interest-bearing demand and savings deposits $ 3,601,354   0.45 % $ 3,657,439   0.40 % $ 3,521,485   0.20 %   $ 3,620,766   0.37 % $ 3,429,445   0.17 %
Time deposits 842,123   1.40 % 786,912   1.18 % 596,051   0.73 %   749,408   1.13 % 578,158   0.65 %
Short-term borrowings 633,363   2.10 % 569,666   1.81 % 807,831   1.19 %   618,957   1.74 % 867,391   1.01 %
Long-term borrowings 185,144   5.29 % 185,401   5.24 % 88,019   4.24 %   147,915   5.13 % 86,391   4.12 %
Total Interest-Bearing Liabilities 5,261,984   0.97 % 5,199,418   0.84 % 5,013,386   0.50 %   5,137,046   0.78 % 4,961,385   0.44 %
Noninterest-bearing deposits 1,456,983     1,447,948     1,411,902       1,434,233     1,356,125    
Other liabilities 45,445     44,261     39,011       41,740     37,818    
Shareholders' equity 968,591     970,402     900,500       942,337     855,134    
Total Noninterest-Bearing Funding Sources 2,471,019     2,462,611     2,351,413       2,418,310     2,249,077    
Total Liabilities and Shareholders' Equity $ 7,733,003     $ 7,662,029     $ 7,364,799       $ 7,555,356     $ 7,210,462    
                       
Net Interest Margin (FTE) (annualized)(1)   3.70 %   3.67 %   3.61 %     3.71 %   3.57 %
                                 


FIRST COMMONWEALTH FINANCIAL CORPORATION  
CONSOLIDATED FINANCIAL DATA      
Unaudited      
(dollars in thousands)      
  December 31, September 30, December 31,
  2018 2018 2017
Loan Portfolio Detail      
Commercial Loan Portfolio:      
Commercial, financial, agricultural and other $ 1,138,473   $ 1,116,204   $ 1,163,383  
Commercial real estate 2,123,544   2,136,431   2,019,096  
Real estate construction 358,978   298,395   248,868  
Total Commercial 3,620,995   3,551,030   3,431,347  
       
Consumer Loan Portfolio:      
Closed-end mortgages 1,037,124   1,008,411   897,284  
Home equity lines of credit 525,281   524,927   529,086  
Total Real Estate - Consumer 1,562,405   1,533,338   1,426,370  
       
Auto loans 481,954   476,536   454,932  
Direct installment 37,454   33,415   24,560  
Personal lines of credit 63,131   59,927   60,023  
Student loans 8,200   8,536   10,144  
Total Other Consumer 590,739   578,414   549,659  
Total Consumer Portfolio 2,153,144   2,111,752   1,976,029  
Total Portfolio Loans 5,774,139   5,662,782   5,407,376  
Loans held for sale 11,881   8,287   14,850  
Total Loans $ 5,786,020   $ 5,671,069   $ 5,422,226  
       
       
  December 31, September 30, December 31,
  2018 2018 2017
ASSET QUALITY DETAIL      
Nonperforming Loans:      
Loans on nonaccrual basis $ 11,509   $ 17,921   $ 19,455  
Troubled debt restructured loans on nonaccrual basis 11,761   13,876   11,222  
Troubled debt restructured loans on accrual basis 8,757   8,052   11,563  
  Total Nonperforming Loans $ 32,027   $ 39,849   $ 42,240  
Other real estate owned ("OREO") 3,935   3,874   2,765  
Repossessions ("Repos") 266   135   292  
  Total Nonperforming Assets $ 36,228   $ 43,858   $ 45,297  
Loans past due in excess of 90 days and still accruing 1,582   1,647   1,854  
Classified loans 40,241   50,079   73,017  
Criticized loans 127,235   141,591   124,417  
       
Nonperforming assets as a percentage of total loans, plus OREO and Repos 0.63 % 0.77 % 0.83 %
Allowance for credit losses $ 47,764   $ 50,746   $ 48,298  
       


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
  For the Three Months Ended   For the Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2018 2018 2017   2018 2017
Net Charge-offs (Recoveries):            
  Commercial, financial, agricultural and other $ 1,672   $ 2,516   $ 777     $ 4,506   $ 2,733  
  Real estate construction (42 ) (92 )     (141 ) (470 )
  Commercial real estate 1,489   (36 ) 177     3,777   62  
  Residential real estate 243   226   240     952   916  
  Loans to individuals 1,119   915   937     3,971   3,733  
Net Charge-offs $ 4,481   $ 3,529   $ 2,131     $ 13,065   $ 6,974  
             
Net charge-offs as a percentage of average loans outstanding (annualized) (4) 0.31 % 0.25 % 0.16 %   0.23 % 0.13 %
Provision for credit losses as a percentage of net charge-offs 33.45 % 83.90 % 105.73 %   95.91 % 72.94 %
Provision for credit losses $ 1,499   $ 2,961   $ 2,253     $ 12,531   $ 5,087  


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% for 2018 and 35% for 2017.
(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 Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2018 2018 2017   2018 2017
             
Net Income $ 26,998   $ 25,149   $ 3,981     $ 107,498   $ 55,165  
Intangible amortization 787   817   819     3,217   3,081  
Tax benefit of amortization of intangibles (165 ) (172 ) (287 )   (676 ) (1,078 )
Net Income, adjusted for tax affected amortization of intangibles 27,620   25,794   4,513     110,039   57,168  
             
Average Tangible Equity:            
  Total shareholders' equity $ 968,591   $ 970,402   $ 900,500     $ 942,337   $ 855,134  
  Less: intangible assets 287,610   288,570   270,906     282,281   253,533  
  Tangible Equity 680,981   681,832   629,594     660,056   601,601  
  Less: preferred stock            
  Tangible Common Equity $ 680,981   $ 681,832   $ 629,594     $ 660,056   $ 601,601  
             
(8)Return on Average Tangible Common Equity 16.09 % 15.01 % 2.84 %   16.67 % 9.50 %
             


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 Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2018 2018 2017   2018 2017
             
Core Net Income:            
Total Net Income $ 26,998   $ 25,149   $ 3,981     $ 107,498   $ 55,165  
Deferred tax asset writedown     16,709       16,709  
Merger & Acquisition related expenses 3   24   (199 )   1,637   10,213  
Tax benefit of merger & acquisition related expenses (1 ) (5 ) 70     (344 ) (3,575 )
(5) Core net income 27,000   25,168   20,561     108,791   78,512  
Average Shares Outstanding Assuming Dilution   99,358,759     100,490,812     97,507,465       99,223,513     95,331,037  
(6) Core Earnings per common share (diluted) $ 0.27   $ 0.25   $ 0.21     $ 1.10   $ 0.82  
             
Intangible amortization 787   817   819     3,217   3,081  
Tax benefit of amortization of intangibles (165 ) (172 ) (287 )   (676 ) (1,078 )
Core Net Income, adjusted for tax affected amortization of intangibles $ 27,622   $ 25,813   $ 21,093     $ 111,332   $ 80,515  
             
(9) Core Return on Average Tangible Common Equity 16.09 % 15.02 % 13.29 %   16.87 % 13.38 %
             
             
  For the Three Months Ended   For the Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2018 2018 2017   2018 2017
Core Return on Average Assets:            
Total Net Income $ 26,998   $ 25,149   $ 3,981     $ 107,498   $ 55,165  
Total Average Assets 7,733,003   7,662,029   7,364,799     7,555,356   7,210,462  
Return on Average Assets 1.39 % 1.30 % 0.21 %   1.42 % 0.77 %
             
Core Net Income (5) $ 27,000   $ 25,168   $ 20,561     $ 108,791   $ 78,512  
Total Average Assets 7,733,003   7,662,029   7,364,799     7,555,356   7,210,462  
(7) Core Return on Average Assets 1.39 % 1.30 % 1.11 %   1.44 % 1.09 %
                       


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES          
             
  For the Three Months Ended   For the Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
  2018 2018 2017   2018 2017
Core Efficiency Ratio:            
Total Noninterest Expense $ 50,024   $ 49,530   $ 51,909     $ 195,556   $ 200,298  
Adjustments to Noninterest Expense:            
Unfunded commitment reserve (203 ) 82   624     (162 ) 1,075  
Intangible amortization 787   817   819     3,217   3,081  
Merger and acquisition related 3   24   (199 )   1,637   10,213  
Noninterest Expense - Core $ 49,437   $ 48,607   $ 50,665     $ 190,864   $ 185,929  
             
Net interest income, fully tax equivalent $ 65,514   $ 64,311   $ 60,624     $ 254,196   $ 233,005  
Total noninterest income 20,529   19,757   24,705     88,637   80,331  
Net securities gains     (4,345 )   (8,102 ) (5,040 )
Total Revenue $ 86,043   $ 84,068   $ 80,984     $ 334,731   $ 308,296  
             
Adjustments to Revenue:            
Derivative mark-to-market (2 )   (424 )   787   (473 )
Total Revenue - Core $ 86,045   $ 84,068   $ 81,408     $ 333,944   $ 308,769  
             
(10)Core Efficiency Ratio 57.45 % 57.82 % 62.24 %   57.15 % 60.22 %
             
             
  December 31, September 30, December 31,      
  2018 2018 2017      
Tangible Equity:            
  Total shareholders' equity $ 975,389   $ 972,931   $ 888,127        
  Less: intangible assets 287,240   288,028   270,360        
  Tangible Equity 688,149   684,903   617,767        
  Less: preferred stock            
  Tangible Common Equity $ 688,149   $ 684,903   $ 617,767        
             
Tangible Assets:            
  Total assets $ 7,828,255   $ 7,686,345   $ 7,308,539        
  Less: intangible assets 287,240   288,028   270,360        
  Tangible Assets $ 7,541,015   $ 7,398,317   $ 7,038,179        
             
(12)Tangible Common Equity as a percentage of Tangible Assets 9.13 % 9.26 % 8.78 %      
             
  Shares Outstanding at End of Period 98,518,668   100,361,434   97,456,478        
(11)Tangible Book Value Per Common Share $ 6.98   $ 6.82   $ 6.34        
             
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.