Exhibit 99 - First Commonwealth Financial Corporation Press Release dated April 20, 2006
*** 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: | April 20, 2006 | (724) 349-7220 |
First Commonwealth Announces First Quarter 2006 Financial Results
Continues Branch Construction and Renovations in Pittsburgh Region;
Expands Home Mortgage Service Offerings through Joint Venture
INDIANA, PENNSYLVANIA - April 20, 2006 - First Commonwealth Financial Corporation (NYSE: FCF) reported net income of $12.9 million for the first quarter of 2006 compared to net income of $15.2 million for the first quarter of 2005. Basic and diluted earnings per share were $0.19 for the first quarter of 2006 compared to $0.22 for the comparable period of 2005. Return on equity was 9.95% and return on assets was 0.88% for the first quarter of 2006 compared to 11.48% and 1.00%, respectively for the 2005 period. The decline in net income was primarily the result of the decrease in net interest income.
During the first quarter of 2006, First Commonwealth (the Company) made the following fundamental improvements that are expected to help strengthen its future financial performance and market position:
| Continued its branch expansion plans into higher growth markets as it began construction on two new branch offices in Pittsburgh-area market as well as completing two significant renovations on existing branches. |
| |
| Entered into a joint venture with Wells Fargo Ventures, LLC to form First Commonwealth Home Mortgage, LLC, that will offer a full array of home financing products and will provide our clients with multi-state lending capabilities. |
Net Interest Income
Net interest income for the first quarter of 2006 decreased $3.5 million, or 7.8%, to $41.4 million from $44.9 million in the first quarter of 2005. First quarter net interest margin (net interest
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income as a percentage of average earning assets on a fully tax-equivalent basis) declined 10 basis points to 3.31%, compared with 3.41% 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. The first quarter yield on earning assets (on a fully tax-equivalent basis) increased 55 basis points to 6.13% from 5.58% in the same period last year, while the cost of funds increased 74 basis points to 3.15% from 2.41% in last year's first quarter.
Due to the relatively flat yield curve the Company has limited the amount reinvested in investment securities that have matured or have been paid down resulting in a decrease of 4.0% or $227.8 million in average interest earning assets. Average total loans and average total deposits increased 3.1% and 2.8%, respectively, in the first three months of 2006 when compared to first quarter of 2005. On another positive note, the net interest margin increased 11 basis points in the first quarter of 2006 compared to the 3.20% net interest margin reported in the fourth quarter of 2005, due to the previously disclosed balance sheet changes occurring in the fourth quarter of 2005.
Other Income
Total other income for the first quarter of 2006 declined 10.0% to $10.3 million from $11.4 million in the same period last year as a result of the decrease in security gains coupled with the absence of income from merchant services business which was sold in the second quarter of 2005.
Service charges on deposits increased 9.3% due to the new fee schedules and the Company's continued success with its High Performance Checking product.
Other Expenses
Total other expenses for the first quarter of 2006 increased only 0.6% to $35.6 million from $35.4 million in the corresponding period last year. Salaries and employee benefits rose $1.1 million or 5.8% primarily from the $0.7 million rise in employee benefits. Unemployment compensation insurance grew which was related to the organizational restructuring and related personnel changes. Salaries, adjusted for $0.4 million in severance charges, for the first quarter of 2006 were slightly less than the amount reported in the comparable period last year. Unemployment compensation rates have been affected by the large number of employees terminated during 2004 and 2005, as part of the Company's organizational restructuring, realignment initiatives and cost containment efforts.
First quarter 2006 net occupancy expense increased $0.4 million or 13.7% from $3.0 million in the first quarter of 2005 to $3.4 million. The increase was primarily the result of an adjustment to building rental expense due to an ongoing monitoring of leases.
Credit Quality and Provision for Credit Losses
As of March 31, 2006, total nonperforming loans (including loans past due 90 days but still accruing) increased to $29.1 million from the $28.2 million at March 31, 2005. Past due loans declined $2.5 million, but were offset by a $3.4 million increase in nonaccrual loans. The
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change in nonaccrual loans resulted primarily from one commercial credit relationship. The remaining recorded balance of that relationship is believed to be well secured, and includes a partial government agency guarantee. Nonperforming loans as a percent of total loans increased only one basis point from 0.79% at March 31, 2005, to 0.80% at March 31, 2006.
First quarter 2006 provision for credit losses decreased to $0.9 million from $1.7 million in the same period last year. The analysis of the Adequacy for the Allowance of Loan Loss as of March 31, 2006, showed continuing improvement in the credit quality of classified loans on the primary watch list. The Company believes that the allowance for credit losses is adequate at the present time.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation is a $5.9 billion bank holding company headquartered in Indiana, Pennsylvania. It operates 100 retail branch offices in 15 counties in western and central Pennsylvania through First Commonwealth Bank, a Pennsylvania chartered bank and trust company. Financial services and insurance products are also provided through First Commonwealth Financial Advisors, Inc., and First Commonwealth Insurance Agency.
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe First Commonwealth's future plans, strategies and expectations and are based on assumptions and involve risks and uncertainties, many of which are beyond the control of First Commonwealth and which may cause actual results, performance or achievements to differ materially from the results, performance or achievements contemplated by the forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They 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." Forward-looking statements speak only as of the date they are made. Such risks and uncertainties include, among other things:
| Risks and uncertainties described in First Commonwealth's reports filed with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. |
| Adverse changes in the economy or business conditions, either nationally or in First Commonwealth's market areas, could increase credit-related losses and expenses and/or limit growth. |
| Increases in defaults by borrowers and other delinquencies could result in increases in First Commonwealth's provision for losses on loans and related expenses. |
| Fluctuations in interest rates and market prices could reduce net interest margin and asset valuations and increase expenses. |
| Changes in legislative or regulatory requirements applicable to First Commonwealth and its subsidiaries could increase costs, limit certain operations and adversely affect results of operations. |
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FIRST COMMONWEALTH FINANCIAL CORPORATION | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | |
(Dollar Amounts in Thousands, except per share data) | | |
| | |
| For the Quarter Ended |
| March 31, |
| 2006 | 2005 |
Interest income | $79,781 | $75,637 |
Interest expense | 38,334 | 30,705 |
Net interest income | 41,447 | 44,932 |
Provision for credit losses | 908 | 1,744 |
Net interest income after provision for credit losses | 40,539 | 43,188 |
| | |
Net securities gains | 63 | 485 |
Trust income | 1,394 | 1,325 |
Service charges on deposits | 3,869 | 3,540 |
Insurance commissions | 719 | 840 |
Income from bank owned life insurance | 1,375 | 1,321 |
Merchant discount income | 0 | 839 |
Card related interchange income | 1,298 | 1,087 |
Other income | 1,578 | 2,003 |
Total other income | 10,296 | 11,440 |
| | |
Salaries and employee benefits | 19,357 | 18,298 |
Net occupancy expense | 3,402 | 2,992 |
Furniture and equipment expense | 2,767 | 2,870 |
Data processing expense | 795 | 939 |
Pennsylvania shares tax expense | 1,350 | 1,266 |
Intangible amortization | 565 | 565 |
Other operating expense | 7,357 | 8,463 |
Total other expenses | 35,593 | 35,393 |
Income before income taxes | 15,242 | 19,235 |
Applicable income taxes | 2,304 | 4,016 |
Net income | $12,938 | $15,219 |
| | |
Average shares outstanding | 69,469,709 | 69,346,722 |
Average shares outstanding assuming dilution | 69,918,151 | 70,024,400 |
| | |
Per Share Data: | | |
Basic earnings per share | $0.19 | $0.22 |
Diluted earnings per share | $0.19 | $0.22 |
Cash dividends per share | $0.170 | $0.165 |
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FIRST COMMONWEALTH FINANCIAL CORPORATION | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | |
(Dollar Amounts in Thousands, except per share data) | | |
| | |
| March 31, | December 31, |
| 2006 | 2005 |
Assets | | |
Cash and due from banks on demand | $84,627 | $84,555 |
Interest-bearing bank deposits | 391 | 473 |
Federal funds sold | 0 | 1,575 |
Securities available for sale, at market | 1,737,899 | 1,851,986 |
Securities held to maturity, at amortized cost | | |
(Market value $86,986 in 2006 and $89,804 in 2005) | 85,673 | 87,757 |
| | |
Loans held for sale | 553 | 1,276 |
| | |
Loans: | | |
Portfolio loans | 3,651,632 | 3,623,102 |
Unearned income | (98) | (119) |
Allowance for credit losses | (38,017) | (39,492) |
Net loans | 3,613,517 | 3,583,491 |
| | |
Premises and equipment | 61,230 | 60,860 |
Other real estate owned | 1,499 | 1,655 |
Goodwill | 122,702 | 122,702 |
Amortizing intangibles, net | 14,686 | 15,251 |
Other assets | 221,733 | 214,739 |
Total assets | $5,944,510 | $6,026,320 |
| | |
Liabilities | | |
Deposits (all domestic): | | |
Noninterest-bearing | $499,161 | $491,644 |
Interest-bearing | 3,496,577 | 3,504,908 |
Total deposits | 3,995,738 | 3,996,552 |
| | |
Short-term borrowings | 601,426 | 665,665 |
Other liabilities | 37,952 | 43,314 |
| | |
Subordinated debentures | 108,250 | 108,250 |
Other long-term debt | 685,395 | 691,494 |
| | |
Total long-term debt | 793,645 | 799,744 |
Total liabilities | 5,428,761 | 5,505,275 |
| | |
Shareholders' Equity | | |
Common stock $1 par value per share | 71,978 | 71,978 |
Additional paid-in capital | 173,369 | 173,967 |
Retained earnings | 319,523 | 318,569 |
Accumulated other comprehensive income (loss) | (17,349) | (9,655) |
Treasury stock | (18,672) | (20,214) |
Unearned ESOP shares | (13,100) | (13,600) |
Total shareholders' equity | 515,749 | 521,045 |
Total liabilities and shareholders' equity | $5,944,510 | $6,026,320 |
| | |
Shares issued | 71,978,568 | 71,978,568 |
Shares outstanding | 70,500,069 | 70,377,916 |
Treasury shares | 1,478,499 | 1,600,652 |
Book value per share | $7.32 | $7.40 |
Market value per share | $14.66 | $12.93 |
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FIRST COMMONWEALTH FINANCIAL CORPORATION | | | | | | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | | | | | | |
(Dollar Amounts in Thousands) | | | | | | | |
| | | | | | | |
Quarter To Date Average Balance Sheets and | | | | | | | |
Net Interest Analysis At March 31, | | | | | | | |
| | 2006 | | | | 2005 | |
| Average
Balance | Income/
Expense | Yield or
Rate (a) | | Average
Balance | Income/
Expense | Yield or
Rate (a) |
Assets | | | | | | | |
Interest-earning assets: | | | | | | | |
Time deposits with banks | $1,041 | $14 | 5.31% | | $964 | $7 | 3.08% |
Tax free investment securities | 280,673 | 3,219 | 7.16% | | 270,945 | 3,053 | 7.03% |
Taxable investment securities | 1,574,530 | 18,188 | 4.68% | | 1,923,907 | 19,982 | 4.21% |
Federal funds sold | 4,162 | 46 | 4.53% | | 659 | 4 | 2.46% |
Loans, net of unearned income (b)(c)(d) | 3,650,953 | 58,314 | 6.68% | | 3,542,655 | 52,591 | 6.21% |
Total interest-earning assets | 5,511,359 | 79,781 | 6.13% | | 5,739,130 | 75,637 | 5.58% |
| | | | | | | |
Noninterest-earning assets: | | | | | | | |
Cash | 77,807 | | | | 78,997 | | |
Allowance for credit losses | (40,282) | | | | (42,024) | | |
Other assets | 426,722 | | | | 422,736 | | |
Total noninterest-earning assets | 464,247 | | | | 459,709 | | |
Total Assets | $5,975,606 | | | | $6,198,839 | | |
| | | | | | | |
Liabilities and Shareholders' Equity | | | | | | | |
Interest-bearing liabilities: | | | | | | | |
Interest-bearing demand deposits (e) | $558,100 | $1,913 | 1.39% | | $562,152 | $949 | 0.68% |
Savings deposits (e) | 1,179,984 | 4,982 | 1.71% | | 1,261,576 | 3,647 | 1.17% |
Time deposits | 1,773,440 | 16,489 | 3.77% | | 1,580,456 | 11,906 | 3.06% |
Short-term borrowings | 630,035 | 6,364 | 4.10% | | 916,021 | 5,558 | 2.46% |
Long-term debt | 796,961 | 8,586 | 4.37% | | 838,378 | 8,645 | 4.18% |
Total interest-bearing liabilities | 4,938,520 | 38,334 | 3.15% | | 5,158,583 | 30,705 | 2.41% |
| | | | | | | |
Noninterest-bearing liabilities and capital: | | | | | | | |
Noninterest-bearing demand deposits (e) | 480,733 | | | | 478,653 | | |
Other liabilities | 28,770 | | | | 24,158 | | |
Shareholders' equity | 527,583 | | | | 537,445 | | |
Total noninterest-bearing funding sources | 1,037,086 | | | | 1,040,256 | | |
Total Liabilities and Shareholders' Equity | $5,975,606 | | | | $6,198,839 | | |
| | | | | | | |
Net Interest Income and Net Yield on Interest-Earning Assets | | $41,447 | 3.31% | | | $44,932 | 3.41% |
| | | | | | | |
(a) Yields on interest-earning assets have been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. |
(b) Average balance includes loans held for sale. |
(c) Income on nonaccrual loans is accounted for on the cash basis, and the loan balances are included in interest-earning assets. |
(d) Loan income includes net loan fees. |
(e) 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 | | |
CONSOLIDATED SELECTED FINANCIAL DATA | | |
(Dollar Amounts in Thousands) | | |
| | |
Asset Quality Data At March 31, | | |
| 2006 | 2005 |
Loans on nonaccrual basis | $14,599 | $11,200 |
Past due loans | 14,305 | 16,846 |
Renegotiated loans | 170 | 182 |
Total nonperforming loans | $29,074 | $28,228 |
Loans outstanding at end of period (a) | $3,652,087 | $3,554,441 |
Average loans outstanding(year-to-date) (a) | $3,650,953 | $3,542,655 |
Allowance for credit losses | $38,017 | $40,794 |
Nonperforming loans as percent of total loans | 0.80% | 0.79% |
Net charge-offs(year-to-date) | $2,383 | $2,013 |
Net charge-offs as percent of average loans (annualized) | 0.26% | 0.23% |
Allowance for credit losses as percent of average loans | | |
outstanding | 1.04% | 1.15% |
Allowance for credit losses as percent of nonperforming | | |
loans | 130.76% | 144.52% |
Other real estate owned | $1,499 | $1,463 |
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(a) Includes loans held for sale | | |
| | |
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Profitability Ratios | | |
| For the Quarter Ended |
| March 31, |
| 2006 | 2005 |
Return on average assets | 0.88% | 1.00% |
Return on average equity | 9.95% | 11.48% |
Efficiency ratio (FTE) (a) | 64.35% | 59.35% |
Fully tax equivalent adjustment | $3,570 | $3,267 |
| | |
(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." |
