Exhibit 99 - First Commonwealth Financial Corporation Press Release dated January 20, 2005
*** NEWS RELEASE ***
TO: | All Area News Agencies | For More Information Contact: |
| | |
FROM: | First Commonwealth | John Dolan, Executive Vice President and |
| Financial Corporation | Chief Financial Officer |
| | First Commonwealth Financial Corporation |
DATE: | January 20, 2005 | (724) 349-7220 |
FIRST COMMONWEALTH ANNOUNCES FOURTH QUARTER RESULTS
Earnings per Share Increases 14% over Fourth Quarter of 2003
Asset Quality Continues to Improve
INDIANA, PA - First Commonwealth Financial Corporation (NYSE:FCF) reported net income of $16.6 million for the fourth quarter of 2004 which translates into $0.24 basic and diluted earnings per share for the quarter. This is compared to net income of $12.7 million, and basic and diluted earnings per share of $0.21 for the fourth quarter of 2003. Fourth quarter 2004 earnings per share reflect an increase of 14.29% over the same quarter of 2003. Return on equity was 12.31% and return on assets was 1.06% for the fourth quarter of 2004 compared to 12.07% and 1.03%, respectively for the related 2003 period.
Net income for the year ended December 31, 2004 was $38.7 million or $0.59 basic and $0.58 diluted earnings per share compared to $53.3 million net income and $0.90 basic and diluted earnings per share for the year ended December 31, 2003. Return on equity was 7.82% and return on assets was 0.66% for the full year of 2004 compared to 12.95% and 1.12%, respectively for the year 2003.
The full year 2004 results included a previously disclosed charge of $29.5 million ($19.2 million after tax) representing a penalty for the prepayment of $440 million of Federal Home Loan Bank, or FHLB, long-term borrowings. The refinancing expanded the maturity distribution of the company's FHLB advances in an effort to minimize the impact of maturities on any one year. It also improved net interest margin through lower interest cost on the FHLB advances. The prepayment penalty, on an after-tax basis, reduced the company's earnings per share for the year 2004 by $0.29. Results for the year 2003 also included a $3.0 million (pre-tax) gain on the sale of two branches. This gain on an after-tax basis added $2.0 million, or $0.03 per share to the 2003 results.
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The 2004 fourth quarter and full year amounts incorporate results of two acquisitions: Pittsburgh Financial Corp., acquired on December 5, 2003, as well as GA Financial, Inc. acquired on May 24, 2004. The operations of both acquisitions are included from the date of acquisition.
Net Interest Income
Net interest income for the fourth quarter of 2004 was $9.8 million more than that of the related period of 2003. Net interest income, on a fully tax-equivalent basis, as a percentage of average earning assets ("net interest margin") was 3.39% for the fourth quarter 2004, representing an increase of five basis points (0.05%) from the related quarter of 2003. Net interest margin was 3.30% in the full year 2004, compared to 3.47% in 2003 reflecting a reduction of 17 basis points (0.17%). With the repositioning of borrowings after the FHLB prepayment, low interest rates are expected to have a slightly favorable impact on the prospective net interest margin.
Other income
Net securities gains were $31 thousand in the fourth quarter of 2004 compared to $230 thousand in the 2003 quarter while net securities gains were $4.1 million in the year 2004 compared to $5.9 million in the 2003 period. Gains were primarily from the sale of equity securities. The improvement in service charges on deposits and the inclusion of fee income from the recently acquired banks were the primary causes of the increases in other noninterest income.
Other Expense
Other expenses increased $6.7 million during the 2004 quarter when compared to the fourth quarter of 2003. Total other expenses, including the above mentioned $29.5 million prepayment penalty, increased $51.9 million for the year 2004 when compared to the 2003 year. The inclusion of Pittsburgh Financial Corp. and GA Financial, Inc. results were the primary causes of the remaining increased noninterest expense. Additionally the company incurred $2.1 million of merger and integration expenses in the twelve-month period of 2004. The most significant other noninterest expense item that increased was salaries and employee benefit cost. The 2003 year also included the benefit of a $610 thousand partial recovery of a litigation settlement.
Credit Quality and Provision for Credit Losses
Nonaccrual loan levels declined on higher average loan balances at December 31, 2004 when compared to the previous year. Total nonaccrual loans and those past due 90 days but still accruing are 0.73% of total loans at year-end 2004, compared to 0.82% at December 31, 2003. In addition, the amount of the allowance for credit losses required to be allocated for watch list credits was reduced in the fourth quarter, thereby requiring a reduced provision for loan losses for the quarter. Management believes that the allowance for credit losses is adequate at this time.
The provision for credit losses decreased $1.6 million in the fourth quarter of 2004 when compared to the 2003 related quarter reflecting the improved quality of primary watch list credits in the fourth quarter 2004. The provision for credit losses decreased $4.7 million for the full year of 2004 when compared to 2003, reflecting the trend in the improvement of nonperforming loans, net charge-offs, and lower levels of allowance allocated to larger classified credits. The fourth quarter of 2004 reflected a decrease of $1.4 million in net charge-offs when compared to the 2003 quarter and net charge-offs for the year of 2004 were $3.6 million less than that of 2003.
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About First Commonwealth
First Commonwealth Financial Corporation is a $6.2 billion bank holding company headquartered in Indiana, PA. It operates in 17 counties in western and central Pennsylvania through First Commonwealth Bank, a Pennsylvania chartered bank. Financial services and insurance products are also provided through First Commonwealth Insurance Agency, First Commonwealth Trust Company and First Commonwealth Financial Advisors, Inc. The company also operates First Commonwealth Systems Corporation, a data processing subsidiary, First Commonwealth Professional Resources, Inc., a support services subsidiary, FraMal Holdings Corporation, an investment services company, and jointly owns Commonwealth Trust Credit Life Insurance Company, a credit life reinsurance company.
Forward-Looking Statements
This press release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks and uncertainties. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intended," and "potential." Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: the timing and magnitude of changes in interest rates; changes in accounting principles, policies or guidelines; changes in regional, national and global economic conditions; changes in regulatory requirements, and significant changes in the securities markets. Consequently, all forward-looking statements made in this press release are qualified by these cautionary statements, and the cautionary language in First Commonwealth's most recent Annual Report on Form 10-K and other documents filed with the Securities and Exchange Commission.
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FIRST COMMONWEALTH FINANCIAL CORPORATION | | | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | | | |
(Dollar Amounts in Thousands, except per share data) | | | | |
| | | | |
| For the Quarter | For the 12 Months |
| Ended December 31, | Ended December 31, |
| 2004 | 2003 | 2004 | 2003 |
Interest income | $75,615 | $60,665 | $278,025 | $243,773 |
Interest expense | 29,581 | 24,409 | 110,690 | 100,241 |
Net interest income | 46,034 | 36,256 | 167,335 | 143,532 |
Provision for credit losses | 775 | 2,350 | 8,070 | 12,770 |
Net interest income after provision for credit losses | 45,259 | 33,906 | 159,265 | 130,762 |
| | | | |
Securities gains | 31 | 230 | 4,077 | 5,851 |
Trust income | 1,131 | 1,331 | 5,254 | 5,142 |
Service charges on deposits | 3,956 | 3,462 | 14,975 | 13,013 |
Gain on sale of branches | 0 | 0 | 0 | 3,041 |
Insurance commissions | 672 | 750 | 3,387 | 3,305 |
Income from bank owned life insurance | 1,310 | 1,108 | 5,157 | 4,342 |
Merchant discount income | 915 | 891 | 3,638 | 3,557 |
Card related interchange income | 1,083 | 604 | 3,579 | 2,537 |
Other income | 2,068 | 1,942 | 7,582 | 7,656 |
Total other income | 11,166 | 10,318 | 47,649 | 48,444 |
| | | | |
Salaries and employee benefits | 17,769 | 15,500 | 68,916 | 61,144 |
Net occupancy expense | 2,762 | 1,688 | 9,656 | 7,456 |
Furniture and equipment expense | 3,398 | 2,478 | 11,688 | 10,096 |
Data processing expense | 1,003 | 684 | 3,808 | 2,520 |
Pennsylvania shares tax expense | 1,118 | 1,085 | 4,532 | 4,301 |
Intangible amortization | 566 | 27 | 1,443 | 43 |
Litigation settlement (recovery) | 0 | 0 | 0 | (610) |
Merger and integration charges | 0 | 0 | 2,125 | 0 |
Debt prepayment fees | 0 | 0 | 29,495 | 0 |
Other operating expense | 8,625 | 7,034 | 32,892 | 27,705 |
Total other expenses | 35,241 | 28,496 | 164,555 | 112,655 |
Income (loss) before income taxes | 21,184 | 15,728 | 42,359 | 66,551 |
Applicable income taxes (benefit) | 4,620 | 2,994 | 3,707 | 13,251 |
Net income (loss) | $16,564 | $12,734 | $38,652 | $53,300 |
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Average shares outstanding | 69,173,249 | 59,577,396 | 65,887,611 | 59,002,277 |
Average shares outstanding assuming dilution | 69,938,616 | 60,122,832 | 66,487,516 | 59,387,055 |
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Per Share Data: | | | | |
Basic earnings per share | $0.24 | $0.21 | $0.59 | $0.90 |
Diluted earnings per share | $0.24 | $0.21 | $0.58 | $0.90 |
Cash dividends per share | $0.165 | $0.160 | $0.645 | $0.625 |
FIRST COMMONWEALTH FINANCIAL CORPORATION | | | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | | | |
(Dollar Amounts in Thousands, except per share data) | | | | |
| | | | |
Asset Quality Data At December 31, | | | | |
| 2004 | 2003 | | |
Loans on nonaccrual basis | $10,732 | $12,459 | | |
Past due loans | 14,671 | 10,586 | | |
Renegotiated loans | 183 | 195 | | |
Total nonperforming loans | $25,586 | $23,240 | | |
Loans outstanding at end of period | $3,514,833 | $2,824,882 | | |
Average loans outstanding(year-to-date) | $3,251,645 | $2,640,935 | | |
Allowance for credit losses | $41,063 | $37,385 | | |
Nonperforming loans as percent of total loans | 0.73% | 0.82% | | |
Net charge-offs(year-to-date) | $9,375 | $12,990 | | |
Net charge-offs as percent of average loans (annualized) | 0.29% | 0.49% | | |
Allowance for credit losses as percent of average loans | | | | |
outstanding | 1.26% | 1.42% | | |
Allowance for credit losses as percent of nonperforming | | | | |
loans | 160.49% | 160.86% | | |
Other real estate owned | $1,814 | $1,866 | | |
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End of Period Data At December 31, | | | | |
| 2004 | 2003 | | |
Assets | $6,198,478 | $5,189,195 | | |
Earning assets | $5,757,713 | $4,903,674 | | |
Securities | $2,240,477 | $2,073,430 | | |
Loans,net of unearned income | $3,514,833 | $2,824,882 | | |
Total deposits | $3,844,475 | $3,288,275 | | |
Non-interest bearing deposits | $480,843 | $408,647 | | |
NOW, Moneymarket & Savings | $1,795,426 | $1,413,069 | | |
Time deposits | $1,568,206 | $1,466,559 | | |
Short-term borrowings | $946,474 | $634,127 | | |
Long-term debt | $839,574 | $793,972 | | |
Other liabilities | $35,977 | $41,875 | | |
Shareholders' equity | $531,978 | $430,946 | | |
Shares outstanding | 69,868,908 | 60,712,020 | | |
Book value per share | $7.61 | $7.10 | | |
Market value per share | $15.39 | $14.26 | | |
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FIRST COMMONWEALTH FINANCIAL CORPORATION | | | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | | | |
(Dollar Amounts in Thousands, except per share data) | | | | |
| | | | |
| | | | |
Quarter To Date Average Balances At December 31, | | | | |
| 2004 | 2003 | | |
Assets | $6,233,518 | $4,918,810 | | |
Earning assets | $5,773,300 | $4,656,482 | | |
Securities | $2,243,954 | $1,980,762 | | |
Loans,net of unearned income | $3,524,828 | $2,673,358 | | |
Deposits | $3,886,002 | $3,164,527 | | |
Shareholders' Equity | $535,374 | $418,531 | | |
| | | | |
YearTo Date Average Balances At December 31, | | | | |
| 2004 | 2003 | | |
Assets | $5,838,301 | $4,738,035 | | |
Earning assets | $5,440,849 | $4,474,553 | | |
Securities | $2,183,728 | $1,831,971 | | |
Loans,net of unearned income | $3,251,645 | $2,640,935 | | |
Deposits | $3,646,094 | $3,155,828 | | |
Shareholders' Equity | $494,217 | $411,450 | | |
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Profitability Ratios | | | | |
| For the Quarter | For the 12 Months |
| Ended December 31, | Ended December 31, |
| 2004 | 2003 | 2004 | 2003 |
Return on average assets | 1.06% | 1.03% | 0.66% | 1.12% |
Return on average equity | 12.31% | 12.07% | 7.82% | 12.95% |
Yield on earning assets (FTE) | 5.44% | 5.44% | 5.34% | 5.71% |
Total cost of funds | 2.26% | 2.37% | 2.28% | 2.55% |
Net interest margin (FTE) | 3.39% | 3.34% | 3.30% | 3.47% |
Efficiency ratio (FTE) (a) | 58.37% | 57.56% | 72.40% | 55.27% |
Fully tax equivalent adjustment | $3,171 | $2,931 | $12,305 | $11,844 |
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(a) Efficiency ratio is "total other expenses" as a percentage of total revenue. |
Total revenue consists of "net interest income, on a fully tax-equivalent basis", plus "total other income". |
