Exhibit 99.1
*** NEWS RELEASE ***
TO: | All Area News Agencies | For More Information Contact: | ||||
FROM: | First Commonwealth Financial Corporation | Edward J. Lipkus III, Executive Vice President and Chief Financial Officer First Commonwealth Financial Corporation (724) 349-7220 | ||||
DATE: | October 23, 2008 |
First Commonwealth Announces Third Quarter 2008 Financial Results
Core Net Income Increases 24.3%;
Growth in Loans and Net Interest Income/Margin Expansion Continues
Indiana, PA., October 23, 2008 - First Commonwealth Financial Corporation (NYSE: FCF), the holding company for First Commonwealth Bank, announced today financial results for the third quarter of 2008.
Third Quarter Results
First Commonwealth reported third quarter 2008 core net income, or net income excluding securities gains and losses and other-than-temporary impairment charges, of $15.2 million or $0.21 per diluted share, a 24.3% increase as compared to the same period in 2007. When compared to the second quarter of 2008, core net income increased $2.0 million or 14.9%.
GAAP net income for the third quarter 2008 was $10.2 million or $0.14 per diluted share compared to $12.2 million or $0.17 per diluted share in the same period last year and $12.9 million or $0.18 per diluted share for the second quarter of 2008.
Third quarter 2008 net income was impacted by non-cash charges of $8.6 million, $5.6 million after tax, or $0.08 per share, for other-than-temporary impairment charges. The charges included $7.7 million, $5.0 million after tax, for one trust preferred collateralized debt obligation and $947 thousand, $615 thousand after tax, for equity securities issued by two Pennsylvania-based financial institutions. Partially offsetting these charges were gains of $910 thousand, $592 thousand after tax, from the sale of equity securities.
Third quarter 2008 return on average equity and average assets was 7.38% and 0.65%, respectively, compared to 8.59% and 0.85% for the prior year period and 9.03% and 0.84% for the second quarter of 2008.
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Developments during the third quarter included:
• | Total loans increased 14.3% and commercial loans increased 29.0% year over year. |
• | Net interest income increased 19.4% year over year. |
• | Net interest margin, on a tax equivalent basis, improved 22 basis points year over year. |
• | First Commonwealth Bank opened a new community banking office (McCandless Township), which was the second de novo office opened in the Pittsburgh market during 2008. |
• | Credit quality improved over second quarter. |
“Our core operating results were solid across all lines of business despite challenging conditions, and I am pleased with the loan growth as well as the improvement in credit quality over the second quarter,” said John J. Dolan, President and CEO. “We remain a well-capitalized institution with significant liquidity and we are making loans in the communities we serve at a time when credit markets have seized up and the balance sheets of many of our larger competitors are shrinking.”
Net Interest Income and Margin
Net interest income increased $1.0 million, or 2.1% from the second quarter of 2008, representing five consecutive quarters of growth. Additionally, net interest income increased $7.8 million, or 19.4% compared to the third quarter of 2007. This improvement is primarily due to increased levels of interest earning assets, particularly in commercial loans. Total loans increased $524.5 million, or 14.3% year over year and increased $71.2 million, or 1.7% compared to the prior quarter. Investment securities decreased $74.6 million, or 4.9% year over year and decreased $123.9 million, or 7.8% compared to the prior quarter.
The net interest margin on a tax equivalent basis for the third quarter 2008 increased 22 basis points to 3.58% compared with 3.36% in the corresponding period last year and increased four basis points from the second quarter of 2008. In the second quarter, net loan prepayment fees of $1.6 million contributed 12 basis points to the net interest margin. The increase in our net interest margin for both periods can be attributed to increased loan volume and declines in the cost of interest-bearing liabilities exceeding the decrease in yields on total interest-earning assets. The decrease in the cost of interest-bearing liabilities can be attributed to lower interest rates as well as a change in the mix of our deposits. In the third quarter of 2008 compared to the same period last year, average noninterest-bearing demand deposits increased $36.4 million, or 7.0%, average interest-bearing demand deposits increased $25.1 million, or 4.2%, and average savings deposits increased $68.2 million, or 6.2%. Average higher costing time deposits decreased $182.6 million or 8.6%.
Average interest-earning assets were $505.7 million, or 9.8%, higher in the third quarter of 2008 compared to the third quarter of 2007 driven by an increase in average loans of $496.0 million. Average interest-earning assets remained stable from the second quarter of 2008 as the average loans increased $101.0 million but was offset by the $108.8 million decrease in average
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investment securities. Average borrowings increased $592.1 million in the third quarter of 2008 compared to the same period in 2007 and increased $57.4 million compared to the second quarter of 2008 primarily to fund the loan growth.
Non-Interest Income
Core non-interest income, or non-interest income excluding net securities gains (losses), in the third quarter of 2008 increased $1.8 million, or 14.6%, from the same period last year and $443 thousand, or 3.3%, from the second quarter of 2008. The increase in the year to year comparison was primarily due to higher insurance commissions, increased card related interchange income and greater letter of credit fees. Higher sales, additional producers and an enhanced calling program resulted in increased insurance commissions. Card related interchange income increased primarily due to growth in usage of debit cards and larger dollar transactions. The increase in core non-interest income for the third quarter of 2008 compared to the second quarter of 2008 can be attributed to higher letter of credit fees. GAAP non-interest income for the third quarter of 2008 decreased $5.9 million, or 48.6%, from the third quarter of 2007 and decreased $6.8 million, or 52.1%, from the second quarter of 2008.
During the third quarter of 2008, the company recorded other-than-temporary impairment charges of $7.7 million on a trust preferred collateralized debt obligation and $947 thousand on equity securities issued by two Pennsylvania-based financial institutions. These were partially offset by the $910 thousand in net securities gains recorded in the third quarter of 2008. In the second quarter of 2008, $541 thousand in other-than-temporary impairment charges were recorded on equity securities issued by two other local financial institutions.
Non-Interest Expense
Non-interest expense for the third quarter of 2008 increased $2.5 million, or 6.9%, compared to the third quarter of 2007 and remained relatively stable from the second quarter of 2008. This increase can be largely attributed to the rise in incentive compensation expense related to the growth in loans, insurance sales and core net income, as well as annual merit increases.
Income Tax
The provision for income taxes decreased $225 thousand for the third quarter of 2008 compared to the same period in 2007. First Commonwealth’s effective tax rate was 10.0% in both the third quarter of 2008 and 2007 and 18.1% in the second quarter of 2008. Nontaxable income and tax credits had a greater impact on the effective tax rate during both the third quarter of 2008 and 2007 due to lower pretax income in those periods compared to the second quarter of 2008.
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Credit Quality and Provision for Credit Losses
Credit quality has remained stable despite worsening economic conditions. Total nonperforming loans and the ratio of nonperforming loans as a percentage of total loans have declined in the third quarter of 2008 from both the comparable period last year and from the second quarter of 2008. First Commonwealth is not a participant or underwriter in the sub-prime mortgage loan or sub-prime collateralized debt marketplace and therefore does not have any direct exposure to risks associated with these activities. All mortgage backed securities in First Commonwealth’s portfolio are AAA-rated and backed by U.S. Government agencies.
For the quarter ending September 30, 2008, non-accrual loans decreased $1.2 million from the second quarter of 2008 due primarily to the successful settlement of the Equipment Finance, LLC loan portfolio. Non-accrual loans decreased slightly from the comparable period last year. Non-accrual loans at September 30, 2008 include a $31.2 million commercial credit relationship that has been monitored since the second quarter of 2006 and was placed on non-accrual during the second quarter of 2007. This credit is collateralized by real estate and equipment and a reserve has been allocated, primarily during 2006, to cover the expected losses. The payment of principal and interest on this credit has been deferred pursuant to a loan forbearance agreement that was extended to December 31, 2008. Management continues to monitor the borrower closely and is presently evaluating options with respect to the collection or resolution of this credit.
Loans past due in excess of 90 days and still accruing at September 30, 2008 were flat compared to September 30, 2007 and decreased $491 thousand from June 30, 2008. The provision for credit losses for the third quarter of 2008 increased $1.6 million compared to the third quarter of 2007 and decreased $1.4 million from the second quarter of 2008. The increase from the third quarter of 2007 was primarily attributable to growth in the portfolio as well as an additional provision for a $5.0 million construction loan collateralized with real estate that was placed on non-accrual during the second quarter of 2008.
Management believes that the allowance for credit losses is at a level deemed sufficient to absorb losses inherent in the loan portfolio at September 30, 2008.
Trust Preferred Collateralized Debt Obligations
First Commonwealth’s portfolio of trust preferred collateralized debt obligations and subordinated notes consists of 15 pooled issues and 21 single-issue securities. The single issues are primarily from money center and large regional banks. The pooled instruments consist of securities issued by 376 banks and other financial institutions. Two of our pooled securities are senior tranches and the remainder are mezzanine tranches. The senior and mezzanine tranches of trust preferred collateralized debt obligations generally are protected from defaults by over-collateralization and cash flow default protection provided by subordinated tranches, with senior tranches having the greatest protection and mezzanine tranches subordinated to the senior tranches. At the time of initial issue, the tranches subordinated to our senior and mezzanine tranches ranged in size from approximately 7.3% to 35.4% of the total principal amount of the respective securities and no single issuer comprised more than 5% of the principal of the total principal of the pool.
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As of September 30, 2008, our single issue securities had a book value of $24.0 million and an estimated fair value of $19.1 million, while the book value of the pooled securities totaled $98.7 million with an estimated fair value of $56.3 million. In the third quarter of 2008, a $7.7 million other-than-temporary impairment charge was recorded on a $13.0 million investment in one trust preferred collateralized debt obligation. This obligation, which includes 20 issuers, one of which is in default and two of which have deferred interest payments, is expected to experience a principal shortfall at maturity. Based on management’s analysis as of September 30, 2008, all of the single issues and the remainder of the trust preferred collateralized debt obligations are expected to return 100% of their principal and interest.
Year-to-Date Results
First Commonwealth recorded core net income year to date September 30, 2008 of $39.2 million, or $0.54 per diluted share. Return on average equity and average assets was 9.22% and 0.85%. Core net income year to date September 30, 2008 increased 14.9% from the comparable period in 2007.
For the nine months ended September 30, 2008, GAAP net income was $34.2 million, or $0.47 per diluted share, compared to the $34.6 million, or $0.47 per diluted share, reported for the same period of 2007. Year to date results for 2008 were unfavorably impacted by other-than-temporary impairment charges of $5.9 million after tax, or $0.08 per share, as described above. Return on average equity and average assets for the nine months ended September 30, 2008 was 8.05% and 0.74%, respectively, compared to 8.08% and 0.80% for the first nine months of 2007.
Net interest income for the nine months ended September 30, 2008 was 12.1% higher than the comparable period last year, reflecting growth in average loans of 8.6%. The net interest margin for the first nine months of 2008 increased to 3.47% from 3.35% for the same period in 2007 as the cost of interest-bearing liabilities declined faster than the yield on total interest-earning assets. Net loan prepayment fees of $1.6 million recorded in 2008 had a positive effect on the net interest margin of four basis points.
The provision for credit losses increased $4.8 million for the year to date ending September 30, 2008 compared to the same period last year primarily from the $524 million increase in loans as well as the addition of the aforementioned $5.0 million commercial construction loan to non-accrual.
Core non-interest income for the nine months ending September 30, 2008 increased $5.2 million, or 14.8%, from the same period last year due to a $712 thousand increase in service charges on deposit accounts, $1.4 million rise in insurance commissions, $880 thousand increase in card related interchange income, $1.3 million rise in letter of credit fees and the $1.0 million increase in other income. Service charges on deposit accounts increased as a result of increased activity and growth in accounts. The increase in insurance commissions was the result of higher sales driven by additional producers and an enhanced calling program. The increase in card related interchange income was due to more usage in debit cards. Other income increased due to higher interest rate swap fees.
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Non-interest expense year-to-date September 30, 2008 increased $5.6 million, or 5.0%, from the comparable period in 2007 due to the $4.6 million increase in salaries and employee benefits and the $1.0 million increase in net occupancy expense. Salaries and employee benefits increased primarily as a result of higher incentive compensation expense related to the loan growth, greater insurance sales and higher core net income, as well as annual merit increases. The increase in net occupancy expense was the result of higher rental expense, utilities and building repairs and maintenance.
The provision for income taxes for the nine months ended September 30, 2008 increased $1.5 million, to $5.4 million, from the same period last year due to the $1.1 million rise in income before income taxes and a decrease in tax-free income and tax credits. First Commonwealth’s effective tax rate was 13.6% for the first nine months of 2008 compared to 10.0% for the same period in 2007.
Use of Non-GAAP Financial Measure
This release includes core net income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure that is calculated by excluding securities gains and losses and other-than-temporary impairment charges from GAAP net income. Management believes that core net income is useful to the investment community in analyzing financial results and trends of First Commonwealth. This information facilitates comparisons with prior periods and reflects the principal basis on which our management internally monitors financial performance. The table in the financial section reconciles GAAP financial measures to non-GAAP financial measures for the periods presented.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation is a $6.2 billion bank holding company headquartered in Indiana, Pennsylvania. It operates 113 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 Insurance Agency and First Commonwealth Financial Advisors, Inc.
Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the adequacy of First Commonwealth’s allowance for credit losses, expectations of continued growth and the impact of recent organizational changes and strategic initiatives on future results. 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
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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:
• | adverse changes in the economy or business conditions, either nationally or in First Commonwealth’s market areas, which could increase credit-related losses and expenses and/or limit growth; |
• | further declines in market value of investment securities that are considered to be other-than-temporary, which would negatively impact our earnings and capital levels; |
• | increases in defaults by borrowers and other delinquencies, which could result in an increased provision for credit losses on loans and related expenses; |
• | fluctuations in interest rates and market prices, which could reduce net interest margin and asset valuations and increase expenses; |
• | changes in legislative or regulatory requirements applicable to First Commonwealth and its subsidiaries, which could increase costs, limit certain operations and adversely affect results of operations; |
• | the inability to successfully execute First Commonwealth’s strategic growth initiatives, which could limit future revenue and earnings growth; and |
• | other 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. |
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FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
(dollars in thousands, except share data)
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||||||
September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 | September 30, 2007 | September 30, 2008 | September 30, 2007 | ||||||||||||||||||
Interest Income | ||||||||||||||||||||||||
Interest and fees on loans | $ | 62,285 | $ | 62,614 | $ | 62,067 | $ | 63,488 | $ | 63,737 | $ | 186,966 | $ | 190,463 | ||||||||||
Interest and dividends on investments: | ||||||||||||||||||||||||
Taxable interest | 15,013 | 15,578 | 15,531 | 14,967 | 14,259 | 46,122 | 45,293 | |||||||||||||||||
Interest exempt from Federal income taxes | 3,176 | 3,347 | 3,595 | 3,510 | 3,424 | 10,118 | 10,222 | |||||||||||||||||
Dividends | 663 | 678 | 609 | 752 | 753 | 1,950 | 2,206 | |||||||||||||||||
Interest on Federal funds sold | 0 | 2 | 0 | 74 | 57 | 2 | 83 | |||||||||||||||||
Interest on bank deposits | 2 | 2 | 5 | 8 | 8 | 9 | 29 | |||||||||||||||||
Total interest income | 81,139 | 82,221 | 81,807 | 82,799 | 82,238 | 245,167 | 248,296 | |||||||||||||||||
Interest Expense | ||||||||||||||||||||||||
Interest on deposits | 23,069 | 25,370 | 31,033 | 34,527 | 33,786 | 79,472 | 98,243 | |||||||||||||||||
Interest on short-term borrowings | 4,634 | 4,251 | 3,705 | 1,819 | 1,977 | 12,590 | 9,623 | |||||||||||||||||
Interest on subordinated debentures | 1,870 | 1,878 | 1,911 | 2,156 | 2,130 | 5,659 | 6,370 | |||||||||||||||||
Interest on other long-term debt | 3,639 | 3,791 | 4,074 | 4,139 | 4,211 | 11,504 | 12,836 | |||||||||||||||||
Total interest on long-term debt | 5,509 | 5,669 | 5,985 | 6,295 | 6,341 | 17,163 | 19,206 | |||||||||||||||||
Total interest expense | 33,212 | 35,290 | 40,723 | 42,641 | 42,104 | 109,225 | 127,072 | |||||||||||||||||
Net Interest Income | 47,927 | 46,931 | 41,084 | 40,158 | 40,134 | 135,942 | 121,224 | |||||||||||||||||
Provision for credit losses | 3,913 | 5,361 | 3,179 | 2,352 | 2,296 | 12,453 | 7,690 | |||||||||||||||||
Net Interest Income afterprovision for credit losses | 44,014 | 41,570 | 37,905 | 37,806 | 37,838 | 123,489 | 113,534 | |||||||||||||||||
Non-Interest Income | ||||||||||||||||||||||||
Net securities (losses) gains | (7,709 | ) | (451 | ) | 501 | 403 | 16 | (7,659 | ) | 771 | ||||||||||||||
Trust income | 1,444 | 1,538 | 1,532 | 1,428 | 1,517 | 4,514 | 4,453 | |||||||||||||||||
Service charges on deposit accounts | 4,792 | 4,786 | 4,425 | 4,690 | 4,609 | 14,003 | 13,291 | |||||||||||||||||
Insurance commissions | 1,390 | 1,394 | 1,277 | 909 | 1,064 | 4,061 | 2,651 | |||||||||||||||||
Income from bank owned life insurance | 1,435 | 1,446 | 1,487 | 1,557 | 1,534 | 4,368 | 4,544 | |||||||||||||||||
Card related interchange income | 1,950 | 1,950 | 1,753 | 1,791 | 1,654 | 5,653 | 4,773 | |||||||||||||||||
Letter of credit fees | 982 | 337 | 230 | 207 | 149 | 1,549 | 260 | |||||||||||||||||
Other income | 1,990 | 2,089 | 2,251 | 1,845 | 1,670 | 6,330 | 5,297 | |||||||||||||||||
Total non-interest income | 6,274 | 13,089 | 13,456 | 12,830 | 12,213 | 32,819 | 36,040 | |||||||||||||||||
Non-Interest Expense | ||||||||||||||||||||||||
Salaries and employee benefits | 21,091 | 20,428 | 20,330 | 18,859 | 18,401 | 61,849 | 57,273 | |||||||||||||||||
Net occupancy expense | 3,613 | 3,728 | 3,907 | 3,484 | 3,475 | 11,248 | 10,226 | |||||||||||||||||
Furniture and equipment expense | 2,995 | 3,058 | 3,078 | 3,126 | 3,243 | 9,131 | 8,874 | |||||||||||||||||
Advertising expense | 550 | 401 | 628 | 957 | 475 | 1,579 | 1,910 | |||||||||||||||||
Data processing expense | 1,075 | 996 | 1,051 | 987 | 942 | 3,122 | 2,821 | |||||||||||||||||
Pennsylvania shares tax expense | 1,342 | 1,339 | 1,271 | 1,446 | 1,439 | 3,952 | 4,323 | |||||||||||||||||
Intangible amortization | 802 | 832 | 831 | 831 | 857 | 2,465 | 2,597 | |||||||||||||||||
Other expenses | 7,529 | 8,103 | 7,760 | 7,185 | 7,648 | 23,392 | 23,108 | |||||||||||||||||
Total non-interest expense | 38,997 | 38,885 | 38,856 | 36,875 | 36,480 | 116,738 | 111,132 | |||||||||||||||||
Income before income taxes | 11,291 | 15,774 | 12,505 | 13,761 | 13,571 | 39,570 | 38,442 | |||||||||||||||||
Provision for income taxes | 1,127 | 2,861 | 1,384 | 2,113 | 1,352 | 5,372 | 3,840 | |||||||||||||||||
Net Income | $ | 10,164 | $ | 12,913 | $ | 11,121 | $ | 11,648 | $ | 12,219 | $ | 34,198 | $ | 34,602 | ||||||||||
Average Shares Outstanding | 72,715,709 | 72,624,053 | 72,452,875 | 72,391,577 | 72,589,329 | 72,597,977 | 72,959,307 | |||||||||||||||||
Average Shares Outstanding Assuming Dilution | 72,817,216 | 72,734,711 | 72,559,668 | 72,513,962 | 72,705,753 | 72,704,279 | 73,128,040 | |||||||||||||||||
Per Share Data: | ||||||||||||||||||||||||
Basic Earnings Per Share | $ | 0.14 | $ | 0.18 | $ | 0.15 | $ | 0.16 | $ | 0.17 | $ | 0.47 | $ | 0.47 | ||||||||||
Diluted Earnings Per Share | $ | 0.14 | $ | 0.18 | $ | 0.15 | $ | 0.16 | $ | 0.17 | $ | 0.47 | $ | 0.47 | ||||||||||
Cash Dividends Declared per Common Share | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.51 | $ | 0.51 |
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
(dollars in thousands, except share data)
September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 | September 30, 2007 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 93,327 | $ | 101,860 | $ | 92,554 | $ | 100,791 | $ | 86,499 | ||||||||||
Interest-bearing bank deposits | 267 | 347 | 219 | 1,719 | 1,060 | |||||||||||||||
Securities available for sale, at market value | 1,402,528 | 1,524,106 | 1,623,788 | 1,574,217 | 1,460,909 | |||||||||||||||
Securities held to maturity, at amortized cost, (Market value $55,775 at September 30, 2008 and $72,928 at December 31, 2007) | 56,839 | 59,200 | 65,935 | 71,497 | 73,024 | |||||||||||||||
Loans: | ||||||||||||||||||||
Portfolio loans, net of unearned income | 4,184,600 | 4,113,423 | 3,893,183 | 3,697,819 | 3,660,123 | |||||||||||||||
Allowance for credit losses | (45,482 | ) | (44,505 | ) | (41,613 | ) | (42,396 | ) | (43,210 | ) | ||||||||||
Net loans | 4,139,118 | 4,068,918 | 3,851,570 | 3,655,423 | 3,616,913 | |||||||||||||||
Premises and equipment, net | 71,141 | 69,890 | 69,191 | 69,487 | 70,133 | |||||||||||||||
Other real estate owned | 3,718 | 3,271 | 3,280 | 2,172 | 1,803 | |||||||||||||||
Goodwill | 159,956 | 159,956 | 159,956 | 159,956 | 159,956 | |||||||||||||||
Amortizing intangibles, net | 10,976 | 11,778 | 12,609 | 13,441 | 14,272 | |||||||||||||||
Other assets | 265,920 | 252,086 | 239,877 | 234,915 | 237,527 | |||||||||||||||
Total assets | $ | 6,203,790 | $ | 6,251,412 | $ | 6,118,979 | $ | 5,883,618 | $ | 5,722,096 | ||||||||||
Liabilities | ||||||||||||||||||||
Deposits (all domestic): | ||||||||||||||||||||
Noninterest-bearing | $ | 564,443 | $ | 568,158 | $ | 542,331 | $ | 523,203 | $ | 522,810 | ||||||||||
Interest-bearing | 3,696,687 | 3,744,311 | 3,778,337 | 3,824,016 | 3,811,133 | |||||||||||||||
Total deposits | 4,261,130 | 4,312,469 | 4,320,668 | 4,347,219 | 4,333,943 | |||||||||||||||
Short-term borrowings | 875,424 | 834,226 | 642,869 | 354,201 | 237,734 | |||||||||||||||
Other liabilities | 43,385 | 47,805 | 48,259 | 65,464 | 44,156 | |||||||||||||||
Subordinated debentures | 105,750 | 105,750 | 105,750 | 105,750 | 108,250 | |||||||||||||||
Other long-term debt | 386,288 | 404,464 | 426,955 | 442,196 | 435,781 | |||||||||||||||
Total long-term debt | 492,038 | 510,214 | 532,705 | 547,946 | 544,031 | |||||||||||||||
Total liabilities | 5,671,977 | 5,704,714 | 5,544,501 | 5,314,830 | 5,159,864 | |||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Preferred stock, $1 par value per share, 3,000,000 shares authorized, none issued | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Common stock, $1 par value per share, 200,000,000 shares authorized, 75,100,431 shares issued and 73,509,724 shares outstanding at September 30, 2008; 100,000,000 shares authorized, 75,100,431 shares issued and 73,128,612 shares outstanding at December 31, 2007 | 75,100 | 75,100 | 75,100 | 75,100 | 75,100 | |||||||||||||||
Additional paid-in capital | 205,953 | 206,245 | 206,498 | 206,889 | 207,310 | |||||||||||||||
Retained earnings | 315,404 | 317,611 | 317,058 | 319,246 | 319,472 | |||||||||||||||
Accumulated other comprehensive (loss) income, net | (38,133 | ) | (22,604 | ) | 7,215 | (147 | ) | (6,736 | ) | |||||||||||
Treasury stock (1,590,707 and 1,971,819 shares at September 30, 2008 and December 31, 2007, respectively, at cost) | (18,411 | ) | (21,054 | ) | (22,293 | ) | (22,700 | ) | (22,814 | ) | ||||||||||
Unearned ESOP shares | (8,100 | ) | (8,600 | ) | (9,100 | ) | (9,600 | ) | (10,100 | ) | ||||||||||
Total shareholders’ equity | 531,813 | 546,698 | 574,478 | 568,788 | 562,232 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,203,790 | $ | 6,251,412 | $ | 6,118,979 | $ | 5,883,618 | $ | 5,722,096 | ||||||||||
Book value per share | $ | 7.23 | $ | 7.46 | $ | 7.85 | $ | 7.78 | $ | 7.69 | ||||||||||
Market value per share | $ | 13.47 | $ | 9.33 | $ | 11.59 | $ | 10.65 | $ | 11.06 |
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Loans by Categories (dollars in thousands) | |||||||||||||||
September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 | September 30, 2007 | |||||||||||
Commercial, financial, agricultural and other | $ | 1,148,666 | $ | 1,115,536 | $ | 1,052,971 | $ | 926,904 | $ | 901,679 | |||||
Real estate - construction | 338,303 | 307,278 | 241,114 | 207,708 | 143,680 | ||||||||||
Real estate - residential | 1,227,225 | 1,235,334 | 1,230,928 | 1,237,986 | 1,268,313 | ||||||||||
Real estate - commercial | 978,287 | 988,186 | 909,613 | 861,077 | 865,389 | ||||||||||
Loans to individuals | 492,119 | 467,089 | 458,557 | 464,082 | 480,926 | ||||||||||
Leases, net of unearned income | 0 | 0 | 0 | 62 | 136 | ||||||||||
Total loans and leases, net of unearned income | $ | 4,184,600 | $ | 4,113,423 | $ | 3,893,183 | $ | 3,697,819 | $ | 3,660,123 | |||||
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Quarter To Date Average Balance Sheets and Net Interest Analysis at September 30, (dollars in thousands) | ||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||
Average Balance | Income/Expense | Yield or Rate (a) | Average Balance | Income/Expense | Yield or Rate (a) | |||||||||||||||
Assets | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Interest-bearing deposits with banks | $ | 355 | $ | 2 | 1.94 | % | $ | 526 | $ | 8 | 5.62 | % | ||||||||
Tax-free investment securities | 279,792 | 3,176 | 6.95 | % | 301,648 | 3,424 | 6.93 | % | ||||||||||||
Taxable investment securities | 1,246,144 | 15,676 | 5.01 | % | 1,210,048 | 15,012 | 4.92 | % | ||||||||||||
Federal funds sold | 48 | 0 | 1.90 | % | 4,412 | 57 | 5.20 | % | ||||||||||||
Loans, net of unearned income (b)(c) | 4,149,186 | 62,285 | 6.11 | % | 3,653,196 | 63,737 | 7.12 | % | ||||||||||||
Total interest-earning assets | 5,675,525 | 81,139 | 5.91 | % | 5,169,830 | 82,238 | 6.59 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash | 80,393 | 79,514 | ||||||||||||||||||
Allowance for credit losses | (44,621 | ) | (44,248 | ) | ||||||||||||||||
Other assets | 512,996 | 492,612 | ||||||||||||||||||
Total noninterest-earning assets | 548,768 | 527,878 | ||||||||||||||||||
Total Assets | $ | 6,224,293 | $ | 5,697,708 | ||||||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest-bearing demand deposits (d) | $ | 623,686 | $ | 1,225 | 0.78 | % | $ | 598,571 | $ | 2,705 | 1.79 | % | ||||||||
Savings deposits (d) | 1,165,568 | 4,348 | 1.48 | % | 1,097,321 | 6,459 | 2.34 | % | ||||||||||||
Time deposits | 1,938,709 | 17,496 | 3.59 | % | 2,121,318 | 24,622 | 4.61 | % | ||||||||||||
Short-term borrowings | 858,165 | 4,634 | 2.15 | % | 208,046 | 1,977 | 3.77 | % | ||||||||||||
Long-term debt | 495,170 | 5,509 | 4.43 | % | 553,158 | 6,341 | 4.55 | % | ||||||||||||
Total interest-bearing liabilities | 5,081,298 | 33,212 | 2.60 | % | 4,578,414 | 42,104 | 3.65 | % | ||||||||||||
Noninterest-bearing liabilities and capital: |
| |||||||||||||||||||
Noninterest-bearing demand | 558,373 | 521,935 | ||||||||||||||||||
Other liabilities | 36,527 | 32,763 | ||||||||||||||||||
Shareholders’ equity | 548,095 | 564,596 | ||||||||||||||||||
Total noninterest-bearing funding sources | 1,142,995 | 1,119,294 | ||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 6,224,293 | $ | 5,697,708 | ||||||||||||||||
Net Interest Income and Net Yield on Interest-Earning Assets | $ | 47,927 | 3.58 | % | $ | 40,134 | 3.36 | % | ||||||||||||
(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 loan fees. |
(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. |
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Year To Date Average Balance Sheets and Net Interest Analysis at September 30, (dollars in thousands) | ||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||
Average Balance | Income/Expense | Yield or Rate (a) | Average Balance | Income/Expense | Yield or Rate (a) | |||||||||||||||
Assets | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Interest-bearing deposits with banks | $ | 416 | $ | 9 | 2.74 | % | $ | 568 | $ | 29 | 6.68 | % | ||||||||
Tax-free investment securities | 300,125 | 10,118 | 6.93 | % | 302,037 | 10,222 | 6.96 | % | ||||||||||||
Taxable investment securities | 1,300,267 | 48,072 | 4.94 | % | 1,289,083 | 47,499 | 4.93 | % | ||||||||||||
Federal funds sold | 125 | 2 | 2.49 | % | 2,128 | 83 | 5.23 | % | ||||||||||||
Loans, net of unearned income (b)(c) | 4,011,476 | 186,966 | 6.37 | % | 3,694,124 | 190,463 | 7.10 | % | ||||||||||||
Total interest-earning assets | 5,612,409 | 245,167 | 6.07 | % | 5,287,940 | 248,296 | 6.56 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash | 76,386 | 82,229 | ||||||||||||||||||
Allowance for credit losses | (43,003 | ) | (43,882 | ) | ||||||||||||||||
Other assets | 499,632 | 490,087 | ||||||||||||||||||
Total noninterest-earning assets | 533,015 | 528,434 | ||||||||||||||||||
Total Assets | $ | 6,145,424 | $ | 5,816,374 | ||||||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Interest-bearing demand deposits (d) | $ | 602,340 | $ | 4,213 | 0.93 | % | $ | 594,752 | $ | 7,980 | 1.79 | % | ||||||||
Savings deposits (d) | 1,128,539 | 13,845 | 1.64 | % | 1,117,308 | 19,013 | 2.28 | % | ||||||||||||
Time deposits | 2,043,109 | 61,414 | 4.02 | % | 2,112,628 | 71,250 | 4.51 | % | ||||||||||||
Short-term borrowings | 709,586 | 12,590 | 2.37 | % | 302,405 | 9,623 | 4.25 | % | ||||||||||||
Long-term debt | 521,543 | 17,163 | 4.40 | % | 570,439 | 19,206 | 4.50 | % | ||||||||||||
Total interest-bearing liabilities | 5,005,117 | 109,225 | 2.91 | % | 4,697,532 | 127,072 | 3.62 | % | ||||||||||||
Noninterest-bearing liabilities and capital: |
| |||||||||||||||||||
Noninterest-bearing demand | 536,837 | 514,242 | ||||||||||||||||||
Other liabilities | 36,201 | 31,719 | ||||||||||||||||||
Shareholders’ equity | 567,269 | 572,881 | ||||||||||||||||||
Total noninterest-bearing funding sources | 1,140,307 | 1,118,842 | ||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 6,145,424 | $ | 5,816,374 | ||||||||||||||||
Net Interest Income and Net Yield on Interest-Earning Assets | $ | 135,942 | 3.47 | % | $ | 121,224 | 3.35 | % | ||||||||||||
(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 loan fees. |
(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. |
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Asset Quality Data (dollars in thousands) | ||||||||||||||||||||
September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 | September 30, 2007 | ||||||||||||||||
Loans on non-accrual basis | $ | 49,692 | $ | 50,910 | $ | 48,799 | $ | 54,119 | $ | 50,161 | ||||||||||
Troubled debt restructured loans | 135 | 139 | 143 | 147 | 150 | |||||||||||||||
Total nonperforming loans | $ | 49,827 | $ | 51,049 | $ | 48,942 | $ | 54,266 | $ | 50,311 | ||||||||||
Loans past due in excess of 90 days and still accruing | $ | 13,719 | $ | 14,210 | $ | 20,066 | $ | 12,853 | $ | 13,677 | ||||||||||
Loans outstanding at end of period | $ | 4,184,600 | $ | 4,113,423 | $ | 3,893,183 | $ | 3,697,819 | $ | 3,660,123 | ||||||||||
Average loans outstanding | $ | 4,011,476 | $ | 3,941,864 | $ | 3,835,587 | $ | 3,687,037 | $ | 3,694,124 | ||||||||||
Allowance for credit losses | $ | 45,482 | $ | 44,505 | $ | 41,613 | $ | 42,396 | $ | 43,210 | ||||||||||
Nonperforming loans as a percentage of total loans | 1.19 | % | 1.24 | % | 1.26 | % | 1.47 | % | 1.37 | % | ||||||||||
Provision for credit losses | $ | 12,453 | $ | 8,540 | $ | 3,179 | $ | 10,042 | $ | 7,690 | ||||||||||
Net credit losses | $ | 9,367 | $ | 6,431 | $ | 3,962 | $ | 10,294 | $ | 7,128 | ||||||||||
Net credit losses as a percentage of average loans outstanding (annualized) | 0.31 | % | 0.33 | % | 0.42 | % | 0.28 | % | 0.26 | % | ||||||||||
Allowance for credit losses as a percentage of average loans outstanding | 1.13 | % | 1.13 | % | 1.08 | % | 1.15 | % | 1.17 | % | ||||||||||
Allowance for credit losses as a percentage of nonperforming loans | 91.28 | % | 87.18 | % | 85.03 | % | 78.13 | % | 85.89 | % | ||||||||||
Other real estate owned | $ | 3,718 | $ | 3,271 | $ | 3,280 | $ | 2,172 | $ | 1,803 |
Profitability Ratios (dollars in thousands) | ||||||||||||||||||||||||||||
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
September 30, 2008 | June 30, 2008 | March 31, 2008 | December 31, 2007 | September 30, 2007 | September 30, 2008 | September 30, 2007 | ||||||||||||||||||||||
Return on average assets | 0.65 | % | 0.84 | % | 0.75 | % | 0.80 | % | 0.85 | % | 0.74 | % | 0.80 | % | ||||||||||||||
Return on average equity | 7.38 | % | 9.03 | % | 7.73 | % | 8.08 | % | 8.59 | % | 8.05 | % | 8.08 | % | ||||||||||||||
Net interest margin (a) | 3.58 | % | 3.54 | % | 3.28 | % | 3.32 | % | 3.36 | % | 3.47 | % | 3.35 | % | ||||||||||||||
Efficiency ratio (b) | 67.94 | % | 61.63 | % | 66.78 | % | 65.15 | % | 65.17 | % | 65.33 | % | 66.01 | % | ||||||||||||||
Fully tax equivalent adjustment | $ | 3,202 | $ | 3,078 | $ | 3,648 | $ | 3,614 | $ | 3,633 | $ | 9,928 | $ | 11,093 |
(a) | Net interest margin has been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. |
(b) | Efficiency ratio is “total non-interest expense” as a percentage of total revenue. |
Total revenue consists of “net interest income, on a fully tax-equivalent basis,” plus “total non-interest income.”
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Reconciliation of GAAP to Non-GAAP (a) (dollars in thousands, except share data) | ||||||||||||||||||||
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
September 30, 2008 | June 30, 2008 | September 30, 2007 | September 30, 2008 | September 30, 2007 | ||||||||||||||||
GAAP non-interest income | $ | 6,274 | $ | 13,089 | $ | 12,213 | $ | 32,819 | $ | 36,040 | ||||||||||
Less: net securities (losses) gains | (7,709 | ) | (451 | ) | 16 | (7,659 | ) | 771 | ||||||||||||
Core non-interest income | $ | 13,983 | $ | 13,540 | $ | 12,197 | $ | 40,478 | $ | 35,269 | ||||||||||
GAAP net income | $ | 10,164 | $ | 12,913 | $ | 12,219 | $ | 34,198 | $ | 34,602 | ||||||||||
Less: net securities (losses) gains, net of tax | (5,011 | ) | (293 | ) | 10 | (4,978 | ) | 501 | ||||||||||||
Core net income | $ | 15,175 | $ | 13,206 | $ | 12,209 | $ | 39,176 | $ | 34,101 | ||||||||||
GAAP diluted earnings per share | $ | 0.14 | $ | 0.18 | $ | 0.17 | $ | 0.47 | $ | 0.47 | ||||||||||
Less: net securities (losses) gains per diluted share | ($ | 0.07 | ) | $ | 0.00 | $ | 0.00 | ($ | 0.07 | ) | $ | 0.00 | ||||||||
Core diluted earnings per share | $ | 0.21 | $ | 0.18 | $ | 0.17 | $ | 0.54 | $ | 0.47 | ||||||||||
GAAP return on average assets | 0.65 | % | 0.84 | % | 0.85 | % | 0.74 | % | 0.80 | % | ||||||||||
Less: net securities (losses) gains as a percentage of average assets | -0.32 | % | -0.01 | % | 0.00 | % | -0.11 | % | 0.02 | % | ||||||||||
Core return on average assets | 0.97 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.78 | % | ||||||||||
GAAP return on average equity | 7.38 | % | 9.03 | % | 8.59 | % | 8.05 | % | 8.08 | % | ||||||||||
Less: net securities (losses) gains as a percentage of average equity | -3.63 | % | -0.21 | % | 0.01 | % | -1.17 | % | 0.12 | % | ||||||||||
Core return on average equity | 11.01 | % | 9.24 | % | 8.58 | % | 9.22 | % | 7.96 | % |
(a) | This release includes core net income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure that is calculated by excluding securities gains and losses and other-than-temporary impairment charges from GAAP net income. Management believes that core net income is useful to the investment community in analyzing financial results and trends of First Commonwealth. This information facilitates comparisons with prior periods and reflects the principal basis on which our management internally monitors financial performance. The table in the financial section reconciles GAAP financial measures to non-GAAP financial measures for the periods presented. |
Pooled Trust Preferred Security Detail
(dollars in thousands)
Deal | Class | Book Value | Fair Value | Unrealized Loss | Moody’s/Fitch Ratings | |||||
Pre TSL I | Senior | $3,841 | $2,350 | $(1,491) | Aaa(n)/AAA | |||||
Pre TSL IV | Mezzanine | 1,830 | 1,092 | (738) | A3/A+(n) | |||||
Pre TSL V | Mezzanine | 620 | 349 | (271) | Aa3/A | |||||
Pre TSLVI | Mezzanine | 418 | 290 | (128) | A1/A+ | |||||
Pre TSL VII | Mezzanine | 5,327 | 5,327 | — | Baa3(n)/A+(n) | |||||
Pre TSLVIII | Mezzanine | 5,978 | 2,886 | (3,092) | Baa3(n)/A(n) | |||||
Pre TSL IX | Mezzanine | 3,000 | 1,544 | (1,456) | A2(n)/A(n) | |||||
Pre TSL X | Mezzanine | 4,000 | 2,026 | (1,974) | A2(n)/A(n) | |||||
Pre TSL XII | Mezzanine | 10,000 | 5,004 | (4,996) | A2(n)/A(n) | |||||
Pre TSL XIII | Mezzanine | 17,582 | 8,983 | (8,599) | A2(n)/A(n) | |||||
Pre TSL XIV | Mezzanine | 16,072 | 7,926 | (8,146) | A2(n)/A(n) | |||||
MMCap I | Senior | 8,939 | 7,604 | (1,335) | Aaa(n)/AAA | |||||
MMCap I | Mezzanine | 1,068 | 598 | (470) | Baa2(n)/BBB(n) | |||||
MM Cap IX | Mezzanine | 20,000 | 10,354 | (9,646) | A2(n)/A-(n) | |||||
Total | $98,675 | $56,333 | $(42,342) |