Exhibit 99.1
FOR IMMEDIATE RELEASE
First Commonwealth Announces Third Quarter 2018 Earnings; Declares Quarterly Dividend and Announces $25 Million Share Repurchase Program
Indiana, PA, October 23, 2018 - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2018.
Third Quarter 2018 Highlights
Earnings
| • | Third quarter net income was $25.1 million, or $0.25 diluted earnings per share, as compared to $21.3 million, or $0.22 diluted earnings per share in the third quarter of 2017 and $32.1 million, or $0.32 diluted earnings per share in the second quarter of 2018. |
| ◦ | Core net income (adjusted only for acquisition expenses) was $25.2 million, or $0.25 diluted earnings per share, an increase of $0.03 from the third quarter of 2017. |
| • | Total revenue decreased $6.4 million, or 7.1% from the prior quarter. |
| ◦ | Net interest income (FTE) increased $0.1 million from the prior quarter, despite the recognition of $1.5 million in unusual items in the prior quarter. |
| ◦ | Noninterest income decreased $6.6 million from the prior quarter primarily due to $5.3 million in net security gains recognized during the second quarter of 2018 as the result of the successful auction call and open market sale of the company’s remaining pooled trust preferred securities, a $1.2 million gain on the sale of a restructured commercial credit recognized in the second quarter, and a $0.6 million decrease in bank owned life insurance income due to higher death claim benefits recorded during the previous quarter. |
| • | Total noninterest expense increased $0.4 million, or 0.8% from the previous quarter. |
| • | Provision for credit losses totaled $3.0 million, an increase of $1.8 million as compared to the prior quarter. |
Margin
| • | 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%, down from 40% in the previous quarter. |
| ◦ | Average deposits grew by $78.2 million, or 5.4% (annualized) as compared to the prior quarter, or 2.2% (annualized) excluding deposits acquired with the acquisition of Foundation Bank. |
| • | Loan yields increased one basis point from the previous quarter; however, loan yields adjusted for the recognition of previously unrecognized interest income in the second quarter improved by 10 basis points during the quarter. |
| ◦ | End of period loans grew $23.9 million, or 1.7% (annualized) as compared to the prior quarter. |
| • | The net interest margin was 3.67% in the third quarter of 2018, as compared to 3.61% in the third quarter of 2017 and 3.78% in the prior quarter. |
| ◦ | During the second quarter of 2018, the company recognized a total of $1.5 million of previously unrecognized interest from the successful resolution of assets that had previously been impaired. This resulted in a benefit of nine basis points to the net interest margin during the second quarter of 2018. |
| ◦ | Also during the second quarter of 2018, the company issued $100 million in subordinated debt. Approximately half of the proceeds were reinvested in securities and the remaining portion was used to pay down short term borrowings, the net effect of which was a 3 basis point negative impact on the net interest margin in the second quarter and a 6 basis point negative impact in the third quarter. |
| ◦ | In addition, the net interest margin decreased by one basis point from the previous quarter due to reduced purchase accounting accretion. |
Profitability
| • | Return on average assets improved 16 basis points to 1.30% as compared to the third quarter of 2017, and was 1.44% for the nine months ended September 30, 2018. |
| ◦ | Core return on average assets (excluding only merger-related expenses) was 1.46% for the nine months ending September 30, 2018, as compared to 1.08% in the prior year period. |
| • | The annualized return on average tangible common equity for the third quarter of 2018 was 15.01%, and was 16.88% for the nine months ended September 30, 2018. |
| ◦ | Core return on average tangible common equity (excluding only merger-related expenses) was 17.14% for the nine months ending September 30, 2018, as compared to 13.42% in the prior year period. |
| • | The core efficiency ratio was 57.82% in the third quarter of 2018, as compared to 55.23% and 57.96% in the second quarter of 2018 and third quarter of 2017, respectively. |
“We continue to position ourselves for long-term success and I am pleased with the outcome this quarter,” stated T. Michael Price, President and Chief Executive Officer. “Although somewhat muted by large pay downs, our new loan production this quarter was running at its highest level in several years and our locally sourced core deposit base continues to prove to be a stable source of low-cost funding. We also remained disciplined in managing our operating expenses while investing in our new geographies and business lines, including our digital delivery platform.” Price continued, “And as a community bank, we are also committed to our communities. I am proud of the many ways our employees display this commitment, day in and day out, by helping to improve the lives of our neighbors and their businesses.”
Financial Summary
| (dollars in thousands, | For the Three Months Ended | For the Nine Months Ended | ||||||||||||
| except per share data) | September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||
| Reported Results | ||||||||||||||
| Net income | $25,149 | $32,081 | $21,283 | $80,500 | $51,184 | |||||||||
| Diluted earnings per share | $0.25 | $0.32 | $0.22 | $0.81 | $0.54 | |||||||||
| Return on average assets | 1.30 | % | 1.71 | % | 1.14 | % | 1.44 | % | 0.96 | % | ||||
| Return on average equity | 10.28 | % | 13.74 | % | 9.50 | % | 11.53 | % | 8.15 | % | ||||
Operating Results (non-GAAP)(1) | ||||||||||||||
| Core net income | $25,168 | $33,087 | $21,238 | $81,791 | $57,952 | |||||||||
| Core diluted earnings per share | $0.25 | $0.33 | $0.22 | $0.82 | $0.61 | |||||||||
| Core return on average assets | 1.30 | % | 1.76 | % | 1.14 | % | 1.46 | % | 1.08 | % | ||||
| Return on average tangible common equity | 15.01 | % | 20.08 | % | 14.04 | % | 16.88 | % | 11.89 | % | ||||
| Core return on average tangible common equity | 15.02 | % | 20.70 | % | 14.01 | % | 17.14 | % | 13.42 | % | ||||
| Core efficiency ratio | 57.82 | % | 55.23 | % | 57.96 | % | 57.05 | % | 59.49 | % | ||||
| Net interest margin (FTE) | 3.67 | % | 3.78 | % | 3.61 | % | 3.71 | % | 3.55 | % | ||||
(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 third quarter of 2018 was $25.1 million, as compared to $32.1 million in the previous quarter and $21.3 million for the third quarter of 2017.
Excluding merger-related expenses, core net income for the third quarter of 2018 was $25.2 million, as compared to $33.1 million in the previous quarter and $21.2 million for the third quarter of 2017, representing a $7.9 million decrease and $3.9 million increase, respectively. Core net income in the second quarter of 2018 included net security gains of $5.3 million. The company did not recognize any security gains in the third quarter of 2018.
Net income for the first nine months of 2018 was $80.5 million, as compared to $51.2 million for the same period in 2017. Excluding merger-related expenses of $1.3 million after tax, core net income for the first nine months of 2018 was $81.8 million.
Net Interest Income and Net Interest Margin
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%, down from 40% in the previous quarter.
The increased cost of interest-bearing deposits was partially offset by $16.9 million growth in average noninterest-bearing deposits. Loan yields increased one basis point from the previous quarter; however, loan yields, as adjusted for the recognition of previously unrecognized interest income in the second quarter from the successful resolution of assets that had been previously impaired, improved by 10 basis points during the quarter.
During the third quarter of 2018, net interest income (FTE) was $64.3 million, an increase of $0.1 million from the previous quarter. The increase in net interest income was the result of a $132 million increase in average interest-earning assets due, in part, to the acquisition of Foundation Bank on May 1, 2018, and the aforementioned increase in loan yields, largely offset by $1.5 million in interest income recognized in the prior quarter as the result of the sale of one commercial credit and the sale of the company’s remaining pooled trust preferred securities.
The net interest margin for the third quarter of 2018 was 3.67%, a decrease of 11 basis points from the previous quarter and an increase of six basis points from the third quarter of 2017. The recognition of $1.5 million in interest in the prior quarter related to the sale of one commercial loan and the sale of the trust preferred portfolio accounted for approximately nine basis points of this decline.
The net effect of the subordinated debt on the net interest margin was a three basis point negative impact on the net interest margin in the second quarter and six basis points in the third quarter. Purchase accounting accretion’s impact on the net interest margin totaled five basis points in the third quarter as compared to six basis points in the second quarter of 2018.
Average short-term borrowings decreased $32.0 million from the previous quarter and $260.3 million from the third quarter of 2017. Average short-term borrowings represented 8.6% of total funds during the third quarter of 2018 as compared to 12.9% during the prior year quarter.
Average deposits grew $78.2 million from the previous quarter, primarily driven by a $54.2 million increase in retail time deposits and a $16.9 million increase in noninterest bearing deposits.
Credit Quality
The provision for credit losses totaled $3.0 million for the quarter ended September 30, 2018, an increase of $1.8 million from the prior and same quarter last year. The increase from the prior quarter is primarily due to two
commercial real estate credits totaling $5.0 million which were downgraded to nonperforming status during the quarter.
At September 30, 2018, nonperforming loans were $39.8 million, a decrease of $6.0 million from June 30, 2018. The decrease from the previous quarter was primarily related to a $4.3 million pay down from one commercial and industrial (C&I) borrower and the charge-off and subsequent sale of a $3.8 million C&I credit, partially offset by the aforementioned downgrade of two commercial real estate credits to nonperforming status. Nonperforming loans as a percentage of total loans were 0.70%, 0.81% and 0.72% for the periods ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively.
During the third quarter of 2018, net charge-offs were $3.5 million, or 0.25% of average loans outstanding, as compared to $3.6 million in the prior quarter and $1.1 million in the third quarter of 2017. Net charge-offs in the third quarter of 2018 included a $2.2 million charge-off on the aforementioned C&I credit.
For the originated loan portfolio at September 30, 2018, the allowance for credit losses to total originated loans was 0.98%, compared to 1.01% at June 30, 2018 and 0.97% at September 30, 2017.
Noninterest Income and Noninterest Expense
Noninterest income (excluding net security gains) totaled $19.8 million for the third quarter of 2018 as compared to $21.0 million for the second quarter of 2018 and $19.7 million for the third quarter of 2017. The decrease from the prior quarter was primarily due to a $1.2 million gain on the sale of a restructured commercial credit in the second quarter of 2018. Additionally, bank owned life insurance income decreased $0.6 million from the previous quarter due to higher death claim benefits recorded during the previous quarter.
The company did not recognize any net security gains during the third quarter, as compared to $5.3 million during the second quarter of 2018 and $0.1 million during the third quarter of 2017. The decrease from the previous quarter was the result of the successful auction call and open market sale of the company’s remaining pooled trust preferred securities during the prior quarter.
Noninterest expense (excluding merger-related expenses) totaled $49.5 million in the third quarter of 2018, as compared to $47.9 million for the second quarter of 2018 and $47.4 million for the third quarter of 2017. The increase from the previous quarter was primarily driven by a $1.1 million increase in mortgage banking and related
hedging expense, partially offset by a $0.4 million decrease in FDIC insurance expense as a result of a decrease in the Bank’s assessment rate.
The increase from the prior year quarter was primarily due to a $0.3 million increase in the aforementioned mortgage banking expense and higher salaries, occupancy, data processing and advertising expenses resulting from the company’s aforementioned acquisition of Foundation Bank in the second quarter of 2018 and continued expansion efforts. The increase from the third quarter of 2017 was partially offset by a $0.5 million decrease in FDIC insurance expense.
Full time equivalent staff was 1,417 at September 30, 2018, as compared to 1,438 at June 30, 2018 and 1,366 at September 30, 2017. The increase from the prior year period is the result of the addition of employees from the aforementioned acquisition and the company’s ongoing expansion in its mortgage, commercial banking, wealth management, and SBA businesses.
Dividends and Capital
First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.09 per share, which is payable on November 16, 2018 to shareholders of record as of November 2, 2018. This dividend represents a 2.5% projected annual yield utilizing the October 22, 2018 closing market price of $14.40.
The company also announced today that its Board of Directors has authorized a new $25 million share repurchase program of the company's common stock. Under this program, management is authorized to repurchase shares through Rule 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or otherwise in a manner that is intended to comply with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934. First Commonwealth may suspend or discontinue the program at any time.
First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2018 were 15.1%, 12.6%, 10.5%, and 11.4%, respectively. First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.
Conference Call
First Commonwealth will host a quarterly conference call to discuss its financial results for the third quarter 2018 on Wednesday, October 24, 2018 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 # 10124779. A link to the webcast replay will also be accessible on the company’s web page for 30 days.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation (NYSE:FCF), headquartered in Indiana, Pennsylvania, is a financial services company with 140 banking offices in 22 counties throughout western and central Pennsylvania and Ohio, as well as Corporate Banking Centers in Pittsburgh, Pennsylvania and Cleveland and Columbus, Ohio. The company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson 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) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (7) changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (8) political instability; (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) First Commonwealth’s ability to attract and retain qualified employees; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) the reliability of First Commonwealth’s vendors, internal control systems or information systems; (16) the ability to increase market share and control expenses; (17) impairment of First Commonwealth’s goodwill or other intangible assets; (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 soundness of other financial institutions; (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
Kristine N. Levan
Vice President / Marketing and Communications Manager
Phone: 724-463-4777
E-mail: KLevan@fcbanking.com
Investor Relations
Ryan M. Thomas
Vice President / Finance and Investor Relations
Phone: 724-463-1690
E-mail: RThomas1@fcbanking.com
###
| FIRST COMMONWEALTH FINANCIAL CORPORATION | |||||||||||||||||||
| CONSOLIDATED FINANCIAL DATA | |||||||||||||||||||
| Unaudited | |||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| SUMMARY RESULTS OF OPERATIONS | |||||||||||||||||||
Net interest income (FTE) (1) | $ | 64,311 | $ | 64,192 | $ | 60,667 | $ | 188,682 | $ | 172,381 | |||||||||
| Provision for credit losses | 2,961 | 1,168 | 1,214 | 11,032 | 2,834 | ||||||||||||||
| Noninterest income | 19,757 | 26,308 | 19,790 | 68,108 | 55,626 | ||||||||||||||
| Noninterest expense | 49,530 | 49,129 | 47,361 | 145,532 | 148,389 | ||||||||||||||
| Net income | 25,149 | 32,081 | 21,283 | 80,500 | 51,184 | ||||||||||||||
Core net income (5) | 25,168 | 33,087 | 21,238 | 81,791 | 57,952 | ||||||||||||||
| Earnings per common share (diluted) | $ | 0.25 | $ | 0.32 | $ | 0.22 | $ | 0.81 | $ | 0.54 | |||||||||
Core earnings per common share (diluted) (6) | $ | 0.25 | $ | 0.33 | $ | 0.22 | $ | 0.82 | $ | 0.61 | |||||||||
| KEY FINANCIAL RATIOS | |||||||||||||||||||
| Return on average assets | 1.30 | % | 1.71 | % | 1.14 | % | 1.44 | % | 0.96 | % | |||||||||
Core return on average assets (7) | 1.30 | % | 1.76 | % | 1.14 | % | 1.46 | % | 1.08 | % | |||||||||
| Return on average shareholders' equity | 10.28 | % | 13.74 | % | 9.50 | % | 11.53 | % | 8.15 | % | |||||||||
Return on average tangible common equity (8) | 15.01 | % | 20.08 | % | 14.04 | % | 16.88 | % | 11.89 | % | |||||||||
Core return on average tangible common equity (9) | 15.02 | % | 20.70 | % | 14.01 | % | 17.14 | % | 13.42 | % | |||||||||
Core efficiency ratio (2)(10) | 57.82 | % | 55.23 | % | 57.96 | % | 57.05 | % | 59.49 | % | |||||||||
Net interest margin (FTE) (1) | 3.67 | % | 3.78 | % | 3.61 | % | 3.71 | % | 3.55 | % | |||||||||
| Book value per common share | $ | 9.69 | $ | 9.57 | $ | 9.17 | |||||||||||||
Tangible book value per common share (11) | 6.82 | 6.69 | 6.39 | ||||||||||||||||
| Market value per common share | 16.14 | 15.51 | 14.13 | ||||||||||||||||
| Cash dividends declared per common share | 0.09 | 0.09 | 0.08 | $ | 0.26 | $ | 0.24 | ||||||||||||
| ASSET QUALITY RATIOS | |||||||||||||||||||
Nonperforming loans as a percent of end-of-period loans (3) | 0.70 | % | 0.81 | % | 0.72 | % | |||||||||||||
Nonperforming assets as a percent of total assets (3) | 0.57 | % | 0.65 | % | 0.61 | % | |||||||||||||
Net charge-offs as a percent of average loans (annualized) (4) | 0.25 | % | 0.26 | % | 0.08 | % | |||||||||||||
Allowance for credit losses as a percent of nonperforming loans (4) | 127.35 | % | 111.89 | % | 124.16 | % | |||||||||||||
Allowance for credit losses as a percent of end-of-period loans (4) | 0.90 | % | 0.91 | % | 0.90 | % | |||||||||||||
| Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases | 0.98 | % | 1.01 | % | 0.97 | % | |||||||||||||
| CAPITAL RATIOS | |||||||||||||||||||
| Shareholders' equity as a percent of total assets | 12.7 | % | 12.6 | % | 12.1 | % | |||||||||||||
Tangible common equity as a percent of tangible assets (12) | 9.3 | % | 9.1 | % | 8.8 | % | |||||||||||||
| Leverage Ratio | 10.5 | % | 10.4 | % | 9.7 | % | |||||||||||||
| Risk Based Capital - Tier I | 12.6 | % | 12.3 | % | 11.5 | % | |||||||||||||
| Risk Based Capital - Total | 15.1 | % | 14.8 | % | 12.3 | % | |||||||||||||
| Common Equity - Tier I | 11.4 | % | 11.2 | % | 10.3 | % | |||||||||||||
| FIRST COMMONWEALTH FINANCIAL CORPORATION | ||||||||||||||||
| CONSOLIDATED FINANCIAL DATA | ||||||||||||||||
| Unaudited | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| INCOME STATEMENT | ||||||||||||||||
| Interest income | $ | 74,873 | $ | 72,940 | $ | 65,411 | $ | 214,312 | $ | 184,710 | ||||||
| Interest expense | 11,060 | 9,265 | 5,848 | 27,139 | 15,500 | |||||||||||
| Net Interest Income | 63,813 | 63,675 | 59,563 | 187,173 | 169,210 | |||||||||||
Taxable equivalent adjustment (1) | 498 | 517 | 1,104 | 1,509 | 3,171 | |||||||||||
| Net Interest Income (FTE) | 64,311 | 64,192 | 60,667 | 188,682 | 172,381 | |||||||||||
| Provision for credit losses | 2,961 | 1,168 | 1,214 | 11,032 | 2,834 | |||||||||||
| Net Interest Income after Provision for Credit Losses (FTE) | 61,350 | 63,024 | 59,453 | 177,650 | 169,547 | |||||||||||
| Net securities gains (losses) | — | 5,262 | 92 | 8,102 | 695 | |||||||||||
| Trust income | 2,206 | 1,880 | 2,147 | 6,014 | 5,275 | |||||||||||
| Service charges on deposit accounts | 4,589 | 4,423 | 4,803 | 13,418 | 13,858 | |||||||||||
| Insurance and retail brokerage commissions | 1,872 | 1,820 | 2,128 | 5,560 | 6,652 | |||||||||||
| Income from bank owned life insurance | 1,579 | 2,168 | 1,472 | 5,241 | 4,213 | |||||||||||
| Gain on sale of mortgage loans | 1,542 | 1,241 | 1,418 | 4,267 | 3,710 | |||||||||||
| Gain on sale of other loans and assets | 643 | 2,331 | 503 | 3,548 | 1,267 | |||||||||||
| Card-related interchange income | 5,044 | 5,143 | 4,780 | 14,929 | 13,873 | |||||||||||
| Derivative mark-to-market | — | — | (14 | ) | 789 | (49 | ) | |||||||||
| Swap fee income | 528 | 297 | 217 | 1,115 | 458 | |||||||||||
| Other income | 1,754 | 1,743 | 2,244 | 5,125 | 5,674 | |||||||||||
| Total Noninterest Income | 19,757 | 26,308 | 19,790 | 68,108 | 55,626 | |||||||||||
| Salaries and employee benefits | 26,553 | 26,154 | 26,169 | 77,580 | 74,933 | |||||||||||
| Net occupancy | 4,341 | 4,222 | 3,715 | 12,932 | 11,597 | |||||||||||
| Furniture and equipment | 3,424 | 3,647 | 3,342 | 10,611 | 9,753 | |||||||||||
| Data processing | 2,853 | 2,478 | 2,229 | 7,764 | 6,659 | |||||||||||
| Pennsylvania shares tax | 1,248 | 1,247 | 1,093 | 3,398 | 3,070 | |||||||||||
| Advertising and promotion | 1,200 | 1,176 | 941 | 3,185 | 2,735 | |||||||||||
| Intangible amortization | 817 | 829 | 844 | 2,430 | 2,262 | |||||||||||
| Collection and repossession | 630 | 607 | 402 | 2,060 | 1,342 | |||||||||||
| Other professional fees and services | 962 | 1,031 | 1,300 | 3,000 | 3,355 | |||||||||||
| FDIC insurance | 217 | 597 | 696 | 1,590 | 2,466 | |||||||||||
| Litigation and operational losses | 435 | 197 | 598 | 811 | 1,107 | |||||||||||
| Loss on sale or write-down of assets | 181 | 497 | 167 | 875 | 1,486 | |||||||||||
| Merger and acquisition related | 24 | 1,273 | (69 | ) | 1,634 | 10,412 | ||||||||||
| Other operating expenses | 6,645 | 5,174 | 5,934 | 17,662 | 17,212 | |||||||||||
| Total Noninterest Expense | 49,530 | 49,129 | 47,361 | 145,532 | 148,389 | |||||||||||
| Income before Income Taxes | 31,577 | 40,203 | 31,882 | 100,226 | 76,784 | |||||||||||
Taxable equivalent adjustment (1) | 498 | 517 | 1,104 | 1,509 | 3,171 | |||||||||||
| Income tax provision | 5,930 | 7,605 | 9,495 | 18,217 | 22,429 | |||||||||||
| Net Income | $ | 25,149 | $ | 32,081 | $ | 21,283 | $ | 80,500 | $ | 51,184 | ||||||
| Shares Outstanding at End of Period | 100,361,434 | 100,364,567 | 97,475,575 | 100,361,434 | 97,475,575 | |||||||||||
| Average Shares Outstanding Assuming Dilution | 100,490,812 | 99,504,409 | 97,457,470 | 99,197,568 | 94,578,490 | |||||||||||
| FIRST COMMONWEALTH FINANCIAL CORPORATION | |||||||||||
| CONSOLIDATED FINANCIAL DATA | |||||||||||
| Unaudited | |||||||||||
| (dollars in thousands) | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| 2018 | 2018 | 2017 | |||||||||
| BALANCE SHEET (Period End) | |||||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | 93,162 | $ | 101,744 | $ | 98,319 | |||||
| Interest-bearing bank deposits | 3,022 | 2,237 | 29,709 | ||||||||
| Securities available for sale, at fair value | 914,085 | 876,570 | 810,946 | ||||||||
| Securities held to maturity, at amortized cost | 389,621 | 403,019 | 436,081 | ||||||||
| Loans held for sale | 8,287 | 7,038 | 17,100 | ||||||||
| Loans | 5,662,782 | 5,640,106 | 5,375,847 | ||||||||
| Allowance for credit losses | (50,746 | ) | (51,314 | ) | (48,176 | ) | |||||
| Net loans | 5,612,036 | 5,588,792 | 5,327,671 | ||||||||
| Goodwill and other intangibles | 288,028 | 289,051 | 271,347 | ||||||||
| Other assets | 378,104 | 380,304 | 393,166 | ||||||||
| Total Assets | $ | 7,686,345 | $ | 7,648,755 | $ | 7,384,339 | |||||
| Liabilities and Shareholders' Equity | |||||||||||
| Noninterest-bearing demand deposits | $ | 1,451,284 | $ | 1,489,058 | $ | 1,416,814 | |||||
| Interest-bearing demand deposits | 181,504 | 126,296 | 264,731 | ||||||||
| Savings deposits | 3,453,461 | 3,516,714 | 3,290,978 | ||||||||
| Time deposits | 808,894 | 781,506 | 582,534 | ||||||||
| Total interest-bearing deposits | 4,443,859 | 4,424,516 | 4,138,243 | ||||||||
| Total deposits | 5,895,143 | 5,913,574 | 5,555,057 | ||||||||
| Short-term borrowings | 587,806 | 545,187 | 805,825 | ||||||||
| Long-term borrowings | 185,266 | 185,568 | 88,155 | ||||||||
| Total borrowings | 773,072 | 730,755 | 893,980 | ||||||||
| Other liabilities | 45,199 | 43,641 | 41,001 | ||||||||
| Shareholders' equity | 972,931 | 960,785 | 894,301 | ||||||||
| Total Liabilities and Shareholders' Equity | $ | 7,686,345 | $ | 7,648,755 | $ | 7,384,339 | |||||
| FIRST COMMONWEALTH FINANCIAL CORPORATION |
| CONSOLIDATED FINANCIAL DATA |
| Unaudited |
| (dollars in thousands) |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||
| September 30, | Yield/ | June 30, | Yield/ | September 30, | Yield/ | September 30, | Yield/ | September 30, | Yield/ | |||||||||||||||||
| 2018 | Rate | 2018 | Rate | 2017 | Rate | 2018 | Rate | 2017 | Rate | |||||||||||||||||
| NET INTEREST MARGIN | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
Loans (FTE)(1)(3) | $ | 5,657,390 | 4.66 | % | $ | 5,551,053 | 4.65 | % | $ | 5,398,815 | 4.28 | % | $ | 5,541,600 | 4.58 | % | $ | 5,226,320 | 4.17 | % | ||||||
Securities and interest bearing bank deposits (FTE) (1) | 1,289,178 | 2.73 | % | 1,263,956 | 2.89 | % | 1,265,416 | 2.60 | % | 1,250,952 | 2.79 | % | 1,263,614 | 2.63 | % | |||||||||||
Total Interest-Earning Assets (FTE) (1) | 6,946,568 | 4.30 | % | 6,815,009 | 4.32 | % | 6,664,231 | 3.96 | % | 6,792,552 | 4.25 | % | 6,489,934 | 3.87 | % | |||||||||||
| Noninterest-earning assets | 715,461 | 705,076 | 713,142 | 702,938 | 668,517 | |||||||||||||||||||||
| Total Assets | $ | 7,662,029 | $ | 7,520,085 | $ | 7,377,373 | $ | 7,495,490 | $ | 7,158,451 | ||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||
| Interest-bearing demand and savings deposits | $ | 3,657,439 | 0.40 | % | $ | 3,650,406 | 0.35 | % | $ | 3,576,365 | 0.18 | % | $ | 3,627,308 | 0.34 | % | $ | 3,398,428 | 0.15 | % | ||||||
| Time deposits | 786,912 | 1.18 | % | 732,677 | 1.02 | % | 562,868 | 0.64 | % | 718,164 | 1.03 | % | 572,128 | 0.62 | % | |||||||||||
| Short-term borrowings | 569,666 | 1.81 | % | 601,633 | 1.66 | % | 829,954 | 1.16 | % | 614,103 | 1.61 | % | 887,463 | 0.96 | % | |||||||||||
| Long-term borrowings | 185,401 | 5.24 | % | 131,851 | 5.12 | % | 88,256 | 4.18 | % | 135,368 | 5.05 | % | 85,843 | 4.07 | % | |||||||||||
| Total Interest-Bearing Liabilities | 5,199,418 | 0.84 | % | 5,116,567 | 0.73 | % | 5,057,443 | 0.46 | % | 5,094,943 | 0.71 | % | 4,943,862 | 0.42 | % | |||||||||||
| Noninterest-bearing deposits | 1,447,948 | 1,431,007 | 1,393,024 | 1,426,566 | 1,337,328 | |||||||||||||||||||||
| Other liabilities | 44,261 | 35,918 | 38,125 | 40,492 | 37,415 | |||||||||||||||||||||
| Shareholders' equity | 970,402 | 936,593 | 888,781 | 933,489 | 839,846 | |||||||||||||||||||||
| Total Noninterest-Bearing Funding Sources | 2,462,611 | 2,403,518 | 2,319,930 | 2,400,547 | 2,214,589 | |||||||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 7,662,029 | $ | 7,520,085 | $ | 7,377,373 | $ | 7,495,490 | $ | 7,158,451 | ||||||||||||||||
Net Interest Margin (FTE) (annualized)(1) | 3.67 | % | 3.78 | % | 3.61 | % | 3.71 | % | 3.55 | % | ||||||||||||||||
| FIRST COMMONWEALTH FINANCIAL CORPORATION | |||||||||
| CONSOLIDATED FINANCIAL DATA | |||||||||
| Unaudited | |||||||||
| (dollars in thousands) | |||||||||
| September 30, | June 30, | September 30, | |||||||
| 2018 | 2018 | 2017 | |||||||
| Loan Portfolio Detail | |||||||||
| Commercial Loan Portfolio: | |||||||||
| Commercial, financial, agricultural and other | $ | 1,116,204 | $ | 1,130,638 | $ | 1,154,225 | |||
| Commercial real estate | 2,136,431 | 2,172,615 | 1,990,264 | ||||||
| Real estate construction | 298,395 | 259,825 | 259,129 | ||||||
| Total Commercial | 3,551,030 | 3,563,078 | 3,403,618 | ||||||
| Consumer Loan Portfolio: | |||||||||
| Closed-end mortgages | 1,008,411 | 996,324 | 893,809 | ||||||
| Home equity lines of credit | 524,927 | 522,526 | 529,613 | ||||||
| Total Real Estate - Consumer | 1,533,338 | 1,518,850 | 1,423,422 | ||||||
| Auto loans | 476,536 | 459,333 | 454,320 | ||||||
| Direct installment | 33,415 | 31,915 | 24,995 | ||||||
| Personal lines of credit | 59,927 | 57,789 | 58,880 | ||||||
| Student loans | 8,536 | 9,141 | 10,612 | ||||||
| Total Other Consumer | 578,414 | 558,178 | 548,807 | ||||||
| Total Consumer Portfolio | 2,111,752 | 2,077,028 | 1,972,229 | ||||||
| Total Portfolio Loans | 5,662,782 | 5,640,106 | 5,375,847 | ||||||
| Loans held for sale | 8,287 | 7,038 | 17,100 | ||||||
| Total Loans | $ | 5,671,069 | $ | 5,647,144 | $ | 5,392,947 | |||
| September 30, | June 30, | September 30, | |||||||
| 2018 | 2018 | 2017 | |||||||
| ASSET QUALITY DETAIL | |||||||||
| Nonperforming Loans: | |||||||||
| Loans on nonaccrual basis | $ | 17,921 | $ | 16,128 | $ | 14,943 | |||
| Troubled debt restructured loans on nonaccrual basis | 13,876 | 18,573 | 11,408 | ||||||
| Troubled debt restructured loans on accrual basis | 8,052 | 11,162 | 12,451 | ||||||
| Total Nonperforming Loans | $ | 39,849 | $ | 45,863 | $ | 38,802 | |||
| Other real estate owned ("OREO") | 3,874 | 3,757 | 5,701 | ||||||
| Repossessions ("Repos") | 135 | 298 | 200 | ||||||
| Total Nonperforming Assets | $ | 43,858 | $ | 49,918 | $ | 44,703 | |||
| Loans past due in excess of 90 days and still accruing | 1,647 | 1,725 | 1,332 | ||||||
| Classified loans | 50,079 | 60,511 | 65,948 | ||||||
| Criticized loans | 141,591 | 142,145 | 125,034 | ||||||
| Nonperforming assets as a percentage of total loans, plus OREO and Repos | 0.77 | % | 0.88 | % | 0.83 | % | |||
| Allowance for credit losses | $ | 50,746 | $ | 51,314 | $ | 48,176 | |||
| FIRST COMMONWEALTH FINANCIAL CORPORATION |
| CONSOLIDATED FINANCIAL DATA |
| Unaudited |
| (dollars in thousands) |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net Charge-offs (Recoveries): | ||||||||||||||||
| Commercial, financial, agricultural and other | $ | 2,516 | $ | 291 | $ | 315 | $ | 2,834 | $ | 1,956 | ||||||
| Real estate construction | (92 | ) | — | (373 | ) | (99 | ) | (470 | ) | |||||||
| Commercial real estate | (36 | ) | 2,225 | (25 | ) | 2,288 | (115 | ) | ||||||||
| Residential real estate | 226 | 104 | 276 | 709 | 676 | |||||||||||
| Loans to individuals | 915 | 966 | 912 | 2,852 | 2,796 | |||||||||||
| Net Charge-offs | $ | 3,529 | $ | 3,586 | $ | 1,105 | $ | 8,584 | $ | 4,843 | ||||||
Net charge-offs as a percentage of average loans outstanding (annualized) (4) | 0.25 | % | 0.26 | % | 0.08 | % | 0.21 | % | 0.12 | % | ||||||
| Provision for credit losses as a percentage of net charge-offs | 83.90 | % | 32.57 | % | 109.86 | % | 128.52 | % | 58.52 | % | ||||||
| Provision for credit losses | $ | 2,961 | $ | 1,168 | $ | 1,214 | $ | 11,032 | $ | 2,834 | ||||||
| DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the 21% federal income tax statutory rate. | ||||||||||||||||
(2) Core efficiency ratio excludes from total revenue the impact of derivative mark-to-market and excludes from "total noninterest expense" the amortization of intangibles, unfunded commitment expense and any other unusual items deemed by management to not be related to normal operations, such as merger, acquisition and severance costs. | ||||||||||||||||
(3) Includes held for sale loans. | ||||||||||||||||
(4) Excludes held for sale loans. | ||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net Income | $ | 25,149 | $ | 32,081 | $ | 21,283 | $ | 80,500 | $ | 51,184 | ||||||
| Intangible amortization | 817 | 829 | 844 | 2,430 | 2,262 | |||||||||||
| Tax benefit of amortization of intangibles | (172 | ) | (174 | ) | (295 | ) | (510 | ) | (792 | ) | ||||||
| Net Income, adjusted for tax affected amortization of intangibles | 25,794 | 32,736 | 21,832 | 82,420 | 52,654 | |||||||||||
| Average Tangible Equity: | ||||||||||||||||
| Total shareholders' equity | $ | 970,402 | $ | 936,593 | $ | 888,781 | $ | 933,489 | $ | 839,846 | ||||||
| Less: intangible assets | 288,570 | 282,734 | 271,670 | 280,485 | 247,679 | |||||||||||
| Tangible Equity | 681,832 | 653,859 | 617,111 | 653,004 | 592,167 | |||||||||||
| Less: preferred stock | — | — | — | — | — | |||||||||||
| Tangible Common Equity | $ | 681,832 | $ | 653,859 | $ | 617,111 | $ | 653,004 | $ | 592,167 | ||||||
(8)Return on Average Tangible Common Equity | 15.01 | % | 20.08 | % | 14.04 | % | 16.88 | % | 11.89 | % | ||||||
| FIRST COMMONWEALTH FINANCIAL CORPORATION |
| CONSOLIDATED FINANCIAL DATA |
| Unaudited |
| (dollars in thousands, except per share data) |
| DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Core Net Income: | ||||||||||||||||
| Total Net Income | $ | 25,149 | $ | 32,081 | $ | 21,283 | $ | 80,500 | $ | 51,184 | ||||||
| Merger & Acquisition related expenses | 24 | 1,273 | (69 | ) | 1,634 | 10,412 | ||||||||||
| Tax benefit of merger & acquisition related expenses | (5 | ) | (267 | ) | 24 | (343 | ) | (3,644 | ) | |||||||
(5) Core net income | 25,168 | 33,087 | 21,238 | 81,791 | 57,952 | |||||||||||
| Average Shares Outstanding Assuming Dilution | 100,490,812 | 99,504,409 | 97,457,470 | 99,197,568 | 94,578,490 | |||||||||||
(6) Core Earnings per common share (diluted) | $ | 0.25 | $ | 0.33 | $ | 0.22 | $ | 0.82 | $ | 0.61 | ||||||
| Intangible amortization | 817 | 829 | 844 | 2,430 | 2,262 | |||||||||||
| Tax benefit of amortization of intangibles | (172 | ) | (174 | ) | (295 | ) | (510 | ) | (792 | ) | ||||||
| Core Net Income, adjusted for tax affected amortization of intangibles | $ | 25,813 | $ | 33,742 | $ | 21,787 | $ | 83,711 | $ | 59,422 | ||||||
(9) Core Return on Average Tangible Common Equity | 15.02 | % | 20.70 | % | 14.01 | % | 17.14 | % | 13.42 | % | ||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Core Return on Average Assets: | ||||||||||||||||
| Total Net Income | $ | 25,149 | $ | 32,081 | $ | 21,283 | $ | 80,500 | $ | 51,184 | ||||||
| Total Average Assets | 7,662,029 | 7,520,085 | 7,377,373 | 7,495,490 | 7,158,451 | |||||||||||
| Return on Average Assets | 1.30 | % | 1.71 | % | 1.14 | % | 1.44 | % | 0.96 | % | ||||||
Core Net Income (5) | $ | 25,168 | $ | 33,087 | $ | 21,238 | $ | 81,791 | $ | 57,952 | ||||||
| Total Average Assets | 7,662,029 | 7,520,085 | 7,377,373 | 7,495,490 | 7,158,451 | |||||||||||
(7) Core Return on Average Assets | 1.30 | % | 1.76 | % | 1.14 | % | 1.46 | % | 1.08 | % | ||||||
| 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 Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Core Efficiency Ratio: | ||||||||||||||||
| Total Noninterest Expense | $ | 49,530 | $ | 49,129 | $ | 47,361 | $ | 145,532 | $ | 148,389 | ||||||
| Adjustments to Noninterest Expense: | ||||||||||||||||
| Unfunded commitment reserve | 82 | (46 | ) | (1 | ) | 41 | 451 | |||||||||
| Intangible amortization | 817 | 829 | 844 | 2,430 | 2,262 | |||||||||||
| Merger and acquisition related | 24 | 1,273 | (69 | ) | 1,634 | 10,412 | ||||||||||
| Noninterest Expense - Core | $ | 48,607 | $ | 47,073 | $ | 46,587 | $ | 141,427 | $ | 135,264 | ||||||
| Net interest income, fully tax equivalent | $ | 64,311 | $ | 64,192 | $ | 60,667 | $ | 188,682 | $ | 172,381 | ||||||
| Total noninterest income | 19,757 | 26,308 | 19,790 | 68,108 | 55,626 | |||||||||||
| Net securities gains | — | (5,262 | ) | (92 | ) | (8,102 | ) | (695 | ) | |||||||
| Total Revenue | $ | 84,068 | $ | 85,238 | $ | 80,365 | $ | 248,688 | $ | 227,312 | ||||||
| Adjustments to Revenue: | ||||||||||||||||
| Derivative mark-to-market | — | — | (14 | ) | 789 | (49 | ) | |||||||||
| Total Revenue - Core | $ | 84,068 | $ | 85,238 | $ | 80,379 | $ | 247,899 | $ | 227,361 | ||||||
(10)Core Efficiency Ratio | 57.82 | % | 55.23 | % | 57.96 | % | 57.05 | % | 59.49 | % | ||||||
| September 30, | June 30, | September 30, | ||||||||||||||
| 2018 | 2018 | 2017 | ||||||||||||||
| Tangible Equity: | ||||||||||||||||
| Total shareholders' equity | $ | 972,931 | $ | 960,785 | $ | 894,301 | ||||||||||
| Less: intangible assets | 288,028 | 289,051 | 271,347 | |||||||||||||
| Tangible Equity | 684,903 | 671,734 | 622,954 | |||||||||||||
| Less: preferred stock | — | — | — | |||||||||||||
| Tangible Common Equity | $ | 684,903 | $ | 671,734 | $ | 622,954 | ||||||||||
| Tangible Assets: | ||||||||||||||||
| Total assets | $ | 7,686,345 | $ | 7,648,755 | $ | 7,384,339 | ||||||||||
| Less: intangible assets | 288,028 | 289,051 | 271,347 | |||||||||||||
| Tangible Assets | $ | 7,398,317 | $ | 7,359,704 | $ | 7,112,992 | ||||||||||
(12)Tangible Common Equity as a percentage of Tangible Assets | 9.26 | % | 9.13 | % | 8.76 | % | ||||||||||
| Shares Outstanding at End of Period | 100,361,434 | 100,364,567 | 97,475,575 | |||||||||||||
(11)Tangible Book Value Per Common Share | $ | 6.82 | $ | 6.69 | $ | 6.39 | ||||||||||
| 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. | ||||||||||||||||