Exhibit 99 - First Commonwealth Financial Corporation Press Release dated October 20, 2005
*** NEWS RELEASE ***
TO: | All Area News Agencies |
| For More Information Contact: |
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FROM: | First Commonwealth |
| John Dolan, Executive Vice President and |
| Financial Corporation |
| Chief Financial Officer |
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| First Commonwealth Financial Corporation |
DATE: | October 20, 2005 |
| (724) 349-7220 |
First Commonwealth Reports 2005 Third Quarter Financial Results
Deposit and Loan Growth Continues
INDIANA, PENNSYLVANIA - October 20, 2005 - First Commonwealth Financial Corporation (NYSE: FCF) reported financial results for the third quarter ended September 30, 2005.
Third-Quarter Results
The Corporation reported third quarter 2005 net income of $13.0 million, or $0.19 per diluted share, compared to a net loss of $2.8 million, or $(0.04) per diluted share, in the same period last year. The third-quarter results included a restructuring charge of $2.7 million ($1.8 million after tax, or $0.03 per diluted share) related to the previously disclosed restructuring of the Corporation's organizational structure and related personnel changes. The $2.7 million included $0.7 million in expenses related to the execution of a management contract, which was previously disclosed. The Corporation expects to record additional restructuring charges during the fourth quarter of 2005. The amount of the additional restructuring charges has not yet been quantified. The reorganization is expected to result in prospective annual pretax cost savings of approximately $2.8 million. Last year's third quarter results included a non-recurring charge of $29.5 million ($19.2 million after tax, or $0.28 per diluted share) representing a penalty for the prepayment of Federal Home Loan Bank (FHLB) long-term borrowings. The third quarter of 2005 included the operations of three new branch offices (including the Corporation's newest branch opened in July at Pittsburgh Mills, western Pennsylvania's newest and largest commercial retail real estate development project) that were not included in the third quarter of last year. Third-quarter return on average equity was 9.62% and return on average assets was 0.83% compared with (2.13%) and (0.18%), respectively in the corresponding period last year.
During the third quarter, in addition to the reorganization, the company also announced numerous management changes, including the appointment of Gerard M. Thomchick as President and Chief Executive Officer of First Commonwealth Bank.
Year-to-Date Results
Net income for the nine months ended September 30, 2005 was $46.1 million, or $0.66 per diluted share, compared with $22.1 million, or $0.34 per diluted share, in the corresponding period last year. Included in the nine month results are the previously mentioned restructuring charge this year and last year's prepayment penalty. Return on average equity for the nine-month period was 11.53% and return on average assets was 0.99% compared with 6.14% and 0.52%, respectively for the same period last year.
Net Interest Income
Net interest income for the third quarter of 2005 decreased $3.1 million, or 6.6%, to $43.0 million from $46.1 million in last year's third quarter. Third-quarter net interest margin (net interest income as a percentage of average earning assets on a fully tax-equivalent basis) declined 16 basis points to 3.22%, compared with 3.38% in the corresponding period last year. The decline in net interest margin was due primarily to funding costs increasing at a faster rate than yields on earning assets. Average earning assets for the third quarter were comparable to the same period last year.
Year-to-date, net interest margin increased three basis points to 3.30% compared with 3.27% in last year's nine month period. Yields on earnings assets (on a fully tax-equivalent basis) for the nine month period increased 34 basis points to 5.64%, while cost of funds increased 33 basis points to 2.61%.
As of September 30, 2005, net loans and deposits increased 2.8% and 5.6%, respectively, from the balances at year end 2004.
Other Income
Total other income for the third quarter of 2005 declined 2.1% to $11.6 million from $11.8 million in the same period last year due primarily to the decrease in income related to the previously disclosed sale of the Corporation's merchant services business, partially offset by increases in deposit service charges and card related interchange income.
Year-to-date total other income increased 10.0% to $40.1 million from $36.5 million in the same period last year. The increase was due primarily to gains from the previously disclosed sale of branch offices and merchant processing operation, higher deposit service charges and card related interchange income, partially offset by lower net securities gains and the previously mentioned decline in merchant processing income.
Other Expenses
Other expenses for the third quarter of 2005 declined to $36.3 million from $64.1 million in the corresponding period last year. The third quarter included the previously mentioned $2.7 million restructuring charge this year and $29.5 million charge for the penalty on prepayment of FHLB borrowings last year. Higher third-quarter salaries and employee benefit costs were offset by
lower other operating expenses related in part to the sale of the Corporation's merchant processing operations.
Year-to-date, other expenses declined to $106.8 million, or 17.4%, from $129.3 million in the same period last year. This year's nine month period included the previously mentioned restructuring charge and last year's period included the FHLB prepayment penalty and merger and integration costs. During the first nine months of 2005, the Corporation experienced increases in salaries and employee benefit costs, occupancy expense, Pennsylvania shares taxes, and intangible amortization costs.
Credit Quality and Provision for Credit Losses
As of September 30, 2005, total nonperforming loans (including loans past due 90 days but still accruing) increased to $25.8 million compared with $24.7 million at September 30, 2004. Loans past due 90 days but still accruing increased $1.8 million to $14.6 million, but were partially offset by a $0.7 million decrease in nonaccrual loans to $11.0 million. Nonperforming loans as a percentage of total loans were 0.71% at September 30, 2005 compared with 0.70% at September 30, 2004. The Corporation believes that the allowance for credit losses is adequate at the present time.
Third-quarter 2005 provision for credit losses increased to $2.9 million from $2.7 million in the same period last year. Net charge offs increased for the quarter to $2.7 million compared with $2.2 million in the third quarter last year.
Year-to-date provision for credit losses increased to $7.6 million from $7.3 million in the same period last year. Net charge offs for the period increased to $7.1 million from $6.5 million in the corresponding period last year.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation is a $6.2 billion bank holding company headquartered in Indiana, Pennsylvania. It operates in 16 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, 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
Statements contained in this press release that are not historical facts are forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Corporation's filings with the Securities and Exchange Commission.
FIRST COMMONWEALTH FINANCIAL CORPORATION |
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CONSOLIDATED SELECTED FINANCIAL DATA |
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(Dollar Amounts in Thousands, except per share data) |
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| For the Quarter Ended | For the 9 Months | ||
| September 30, | Ended September 30, | ||
| 2005 | 2004 | 2005 | 2004 |
Interest income | $79,248 | $74,940 | $232,425 | $202,410 |
Interest expense | 36,214 | 28,881 | 100,819 | 81,109 |
Net interest income | 43,034 | 46,059 | 131,606 | 121,301 |
Provision for credit losses | 2,850 | 2,675 | 7,594 | 7,295 |
Net interest income after provision for credit losses | 40,184 | 43,384 | 124,012 | 114,006 |
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Net securities gains | 34 | 51 | 519 | 4,046 |
Trust income | 1,417 | 1,413 | 4,198 | 4,123 |
Service charges on deposits | 4,226 | 4,059 | 11,775 | 11,019 |
Gain on sale of branch | 0 | 0 | 3,090 | 0 |
Gain on sale of merchant services business | 0 | 0 | 1,991 | 0 |
Insurance commissions | 1,089 | 1,046 | 2,832 | 2,715 |
Income from bank owned life insurance | 1,359 | 1,333 | 4,035 | 3,847 |
Merchant discount income | 353 | 988 | 2,074 | 2,723 |
Card related interchange income | 1,265 | 986 | 3,568 | 2,496 |
Other income | 1,817 | 1,927 | 6,067 | 5,514 |
Total other income | 11,560 | 11,803 | 40,149 | 36,483 |
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Salaries and employee benefits | 18,320 | 17,303 | 54,482 | 51,147 |
Net occupancy expense | 2,671 | 2,540 | 8,378 | 6,894 |
Furniture and equipment expense | 2,844 | 3,064 | 8,473 | 8,290 |
Data processing expense | 818 | 1,079 | 2,738 | 2,805 |
Pennsylvania shares tax expense | 1,236 | 1,140 | 3,739 | 3,414 |
Intangible amortization | 565 | 565 | 1,696 | 877 |
Merger and integration charges | 0 | (39) | 0 | 2,125 |
Restructuring charges | 2,704 | 0 | 2,704 | 0 |
Debt prepayment fees | 0 | 29,495 | 0 | 29,495 |
Other operating expense | 7,145 | 8,906 | 24,558 | 24,267 |
Total other expenses | 36,303 | 64,053 | 106,768 | 129,314 |
Income (loss) before income taxes | 15,441 | (8,866) | 57,393 | 21,175 |
Applicable income taxes (benefit) | 2,445 | (6,071) | 11,340 | (913) |
Net income (loss) | $12,996 | ($2,795) | $46,053 | $22,088 |
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Average shares outstanding | 69,242,056 | 69,077,293 | 69,239,005 | 64,784,404 |
Average shares outstanding assuming dilution | 69,787,884 | 69,701,327 | 69,834,460 | 65,328,753 |
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Per Share Data: |
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Basic earnings per share | $0.19 | ($0.04) | $0.67 | $0.34 |
Diluted earnings per share | $0.19 | ($0.04) | $0.66 | $0.34 |
Cash dividends per share | $0.165 | $0.160 | $0.495 | $0.480 |
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FIRST COMMONWEALTH FINANCIAL CORPORATION |
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CONSOLIDATED SELECTED FINANCIAL DATA |
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(Dollar Amounts in Thousands, except per share data) |
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| September 30, | December 31, |
| 2005 | 2004 |
Assets |
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Cash and due from banks on demand | $90,139 | $79,591 |
Interest-bearing bank deposits | 87 | 2,403 |
Securities available for sale, at market | 1,990,929 | 2,162,313 |
Securities held to maturity, at amortized cost |
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(Market value $93,344 in 2005 and $81,886 in 2004) | 90,639 | 78,164 |
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Loans: |
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Portfolio loans | 3,611,535 | 3,512,774 |
Loans held for sale | 1,744 | 2,311 |
Unearned income | (142) | (252) |
Allowance for credit losses | (41,537) | (41,063) |
Net loans | 3,571,600 | 3,473,770 |
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Premises and equipment | 62,185 | 56,965 |
Other real estate owned | 1,520 | 1,814 |
Goodwill | 122,702 | 123,607 |
Amortizing intangibles, net | 15,817 | 17,513 |
Other assets | 215,423 | 202,338 |
Total assets | $6,161,041 | $6,198,478 |
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Liabilities |
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Deposits (all domestic): |
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Noninterest-bearing | $500,834 | $480,843 |
Interest-bearing | 3,558,849 | 3,363,632 |
Total deposits | 4,059,683 | 3,844,475 |
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Short-term borrowings | 738,233 | 946,474 |
Other liabilities | 37,390 | 35,977 |
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Subordinated debentures | 108,250 | 108,250 |
Other long-term debt | 696,580 | 731,324 |
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Total long-term debt | 804,830 | 839,574 |
Total liabilities | 5,640,136 | 5,666,500 |
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Shareholders' Equity |
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Common stock $1 par value per share | 71,978 | 71,978 |
Additional paid-in capital | 174,015 | 175,453 |
Retained earnings | 318,751 | 307,363 |
Accumulated other comprehensive income (loss) | (10,195) | 10,002 |
Treasury stock | (22,116) | (26,643) |
Unearned ESOP shares | (11,528) | (6,175) |
Total shareholders' equity | 520,905 | 531,978 |
Total liabilities and shareholders' equity | $6,161,041 | $6,198,478 |
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Shares issued | 71,978,568 | 71,978,568 |
Shares outstanding | 70,227,342 | 69,868,908 |
Treasury shares | 1,751,226 | 2,109,660 |
Book value per share | $7.42 | $7.61 |
Market value per share | $13.33 | $15.39 |
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FIRST COMMONWEALTH FINANCIAL CORPORATION |
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CONSOLIDATED SELECTED FINANCIAL DATA |
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(Dollar Amounts in Thousands) |
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Quarter To Date Average Balance Sheets and |
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Net Interest Analysis At September 30, |
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| 2005 |
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| 2004 |
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| Average Balance | Income/Expense | Yield or Rate (a) |
| Average Balance | Income/Expense | Yield or Rate (a) |
Assets |
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Interest-earning assets: |
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Time deposits with banks | $706 | $8 | 4.70% |
| $6,822 | $8 | 0.46% |
Tax free investment securities | 284,993 | 3,244 | 6.95% |
| 267,378 | 3,048 | 6.98% |
Taxable investment securities | 1,830,229 | 19,057 | 4.13% |
| 2,020,448 | 20,410 | 4.02% |
Federal funds sold | 1,456 | 12 | 3.41% |
| 421 | 2 | 1.34% |
Loans, net of unearned income (b)(c) | 3,633,852 | 56,927 | 6.42% |
| 3,508,856 | 51,472 | 6.02% |
Total interest-earning assets | 5,751,236 | 79,248 | 5.72% |
| 5,803,925 | 74,940 | 5.36% |
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Noninterest-earning assets: |
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Cash | 82,298 |
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| 79,522 |
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Allowance for credit losses | (42,036) |
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| (43,239) |
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Other assets | 429,738 |
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| 430,004 |
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Total noninterest-earning assets | 470,000 |
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| 466,287 |
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Total Assets | $6,221,236 |
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| $6,270,212 |
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Liabilities and Shareholders' Equity |
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Interest-bearing liabilities: |
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Interest-bearing demand deposits (d) | $571,916 | $1,456 | 1.01% |
| $569,966 | $620 | 0.43% |
Savings deposits (d) | 1,334,392 | 5,164 | 1.54% |
| 1,256,362 | 3,265 | 1.03% |
Time deposits | 1,656,868 | 14,265 | 3.42% |
| 1,572,795 | 11,536 | 2.92% |
Short-term borrowings | 768,281 | 6,437 | 3.32% |
| 936,304 | 3,639 | 1.55% |
Long-term debt | 831,864 | 8,892 | 4.24% |
| 914,805 | 9,821 | 4.27% |
Total interest-bearing liabilities | 5,163,321 | 36,214 | 2.78% |
| 5,250,232 | 28,881 | 2.19% |
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Noninterest-bearing liabilities and capital: |
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Noninterest-bearing demand deposits (d) | 497,754 |
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| 476,171 |
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Other liabilities | 24,201 |
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| 21,636 |
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Shareholders' equity | 535,960 |
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| 522,173 |
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Total noninterest-bearing funding sources | 1,057,915 |
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| 1,019,980 |
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Total Liabilities and Shareholders' Equity | $6,221,236 |
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| $6,270,212 |
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Net Interest Income and Net Yield on Interest-Earning Assets |
| $43,034 | 3.22% |
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| $46,059 | 3.38% |
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(a) Yields on interest-earning assets have been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. | |||||||
(b) Income on nonaccrual loans is accounted for on the cash basis, and the loan balances are included in interest-earning assets. | |||||||
(c) Loan income includes net loan fees. |
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(d) Average balances do not include reallocations from noninterest-bearing demand deposits and interest-bearing demand deposits into savings deposits which were made forregulatory purposes. | |||||||
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FIRST COMMONWEALTH FINANCIAL CORPORATION |
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CONSOLIDATED SELECTED FINANCIAL DATA |
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(Dollar Amounts in Thousands) |
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Year To Date Average Balance Sheets and |
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Net Interest Analysis At September 30, |
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| 2005 |
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| 2004 |
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| Average Balance | Income/Expense | Yield or Rate (a) |
| Average Balance | Income/Expense | Yield or Rate (a) |
Assets |
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Interest-earning assets: |
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Time deposits with banks | $804 | $22 | 3.67% |
| $5,299 | $23 | 0.59% |
Tax free investment securities | 277,829 | 9,426 | 6.98% |
| 244,936 | 8,421 | 7.07% |
Taxable investment securities | 1,875,527 | 58,625 | 4.18% |
| 1,918,570 | 57,025 | 3.97% |
Federal funds sold | 5,964 | 136 | 3.05% |
| 498 | 4 | 1.03% |
Loans, net of unearned income (b)(c) | 3,590,481 | 164,216 | 6.31% |
| 3,159,920 | 136,937 | 5.98% |
Total interest-earning assets | 5,750,605 | 232,425 | 5.64% |
| 5,329,223 | 202,410 | 5.30% |
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Noninterest-earning assets: |
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Cash | 80,807 |
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| 72,941 |
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Allowance for credit losses | (41,826) |
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| (40,440) |
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Other assets | 428,829 |
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| 343,876 |
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Total noninterest-earning assets | 467,810 |
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| 376,377 |
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Total Assets | $6,218,415 |
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| $5,705,600 |
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Liabilities and Shareholders' Equity |
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Interest-bearing liabilities: |
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Interest-bearing demand deposits (d) | $564,832 | $3,554 | 0.84% |
| $533,762 | $1,442 | 0.36% |
Savings deposits (d) | 1,312,897 | 13,703 | 1.40% |
| 1,093,040 | 7,966 | 0.97% |
Time deposits | 1,615,324 | 39,209 | 3.25% |
| 1,495,284 | 33,474 | 2.99% |
Short-term borrowings | 834,712 | 17,862 | 2.86% |
| 750,761 | 7,264 | 1.29% |
Long-term debt | 843,265 | 26,491 | 4.20% |
| 874,397 | 30,963 | 4.73% |
Total interest-bearing liabilities | 5,171,030 | 100,819 | 2.61% |
| 4,747,244 | 81,109 | 2.28% |
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Noninterest-bearing liabilities and capital: |
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Noninterest-bearing demand deposits (d) | 488,113 |
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| 443,456 |
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Other liabilities | 25,406 |
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| 34,501 |
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Shareholders' equity | 533,866 |
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| 480,399 |
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Total noninterest-bearing funding sources | 1,047,385 |
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| 958,356 |
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Total Liabilities and Shareholders' Equity | $6,218,415 |
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| $5,705,600 |
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Net Interest Income and Net Yield on Interest-Earning Assets |
| $131,606 | 3.30% |
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| $121,301 | 3.27% |
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(a) Yields on interest-earning assets have been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. | |||||||
(b) Income on nonaccrual loans is accounted for on the cash basis, and the loan balances are included in interest-earning assets. |
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(c) Loan income includes net loan fees. |
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(d) Average balances do not include reallocations from noninterest-bearing demand deposits and interest-bearing demand deposits into savings deposits which were made for regulatory purposes. | |||||||
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FIRST COMMONWEALTH FINANCIAL CORPORATION |
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CONSOLIDATED SELECTED FINANCIAL DATA |
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(Dollar Amounts in Thousands) |
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Asset Quality Data At September 30, |
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| 2005 | 2004 |
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Loans on nonaccrual basis | $11,039 | $11,784 |
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Past due loans | 14,608 | 12,779 |
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Renegotiated loans | 176 | 185 |
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Total nonperforming loans | $25,823 | $24,748 |
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Loans outstanding at end of period | $3,613,137 | $3,533,509 |
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Average loans outstanding(year-to-date) | $3,590,481 | $3,159,920 |
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Allowance for credit losses | $41,537 | $43,162 |
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Nonperforming loans as percent of total loans | 0.71% | 0.70% |
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Net charge-offs(year-to-date) | $7,120 | $6,501 |
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Net charge-offs as percent of average loans (annualized) | 0.27% | 0.27% |
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Allowance for credit losses as percent of average loans |
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outstanding | 1.16% | 1.37% |
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Allowance for credit losses as percent of nonperforming |
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loans | 160.85% | 174.41% |
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Other real estate owned | $1,520 | $2,295 |
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Profitability Ratios |
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| For the Quarter Ended | For the 9 Months | ||
| September 30, | Ended September 30, | ||
| 2005 | 2004 | 2005 | 2004 |
Return on average assets | 0.83% | -0.18% | 0.99% | 0.52% |
Return on average equity | 9.62% | -2.13% | 11.53% | 6.14% |
Efficiency ratio (FTE) (a) | 62.35% | 104.86% | 58.64% | 77.47% |
Fully tax equivalent adjustment | $3,634 | $3,222 | $10,305 | $9,134 |
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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." | ||||
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