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First Commonwealth Reports Fourth Quarter and Full Year 2019 Earnings; Increases Quarterly Dividend 10.0%

FCF

INDIANA, Pa., Jan. 28, 2020 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year 2019.

Financial Summary

(dollars in thousands,For the Three Months Ended
 For the Years Ended
except per share data)December 31,
 September 30,
 December 31,
 December 31,
 December 31,
  2019  2019  2018  2019  2018
Reported Results             
Net income$26,820  $26,644  $26,998  $105,333  $107,498 
Diluted earnings per share$0.27  $0.27  $0.27  $1.07  $1.08 
Return on average assets 1.30%  1.31%  1.39%  1.31%  1.42%
Return on average equity 10.13%  10.22%  11.06%  10.32%  11.41%
              
Operating Results (non-GAAP)(1)             
Core net income$26,634  $29,597  $27,000  $108,126  $108,791 
Core diluted earnings per share$0.27  $0.30  $0.27  $1.10  $1.10 
Core return on average assets 1.29%  1.46%  1.39%  1.35%  1.44%
Return on average tangible common equity 14.99%  14.62%  16.09%  14.92%  16.67%
Core return on average tangible common equity 14.89%  16.20%  16.09%  15.30%  16.87%
Core efficiency ratio 57.23%  55.73%  57.45%  56.97%  57.15%
Net interest margin (FTE) 3.73%  3.76%  3.70%  3.75%  3.71%



(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. A full reconciliation of non-GAAP financial measures can be found at the end of the financial statements which accompany this release.
  



Full Year 2019 Highlights
 
Franchise Growth
     
 The company successfully completed its acquisition of 14 former Santander branches located in Central Pennsylvania on September 6, 2019, which included $471 million in deposits and $100 million in loans at close.
 Total loans grew $419 million, or 7.2% compared to the prior year including $319 million, or 5.5% in organic loan growth (excluding loans acquired in the branch acquisition).
 Average deposits grew $500 million, or 8.6% compared to the prior year including $351 million, or 6.0% in organic deposit growth (excluding deposits acquired in the branch acquisition).
 Tangible book value per share grew 7.3% year-over-year.
     
Earnings
     
 For the year ended December 31, 2019, net income was $105.3 million (or $1.07 diluted earnings per share).  Core net income (non-GAAP)(1), which excludes acquisition expenses, was $108.1 million, or $1.10 diluted earnings per share.
   Core earnings per share (non-GAAP)(1) in 2018 totaled $1.10, but included net security gains of $0.06 per share.
 Total revenue (excluding net security gains) (non-GAAP)(1) grew $22.3 million, or 6.7% from the prior year.
   Net interest income (on a fully tax-equivalent (FTE) basis) (non-GAAP)(1) increased $17.4 million, or 6.9%, from the prior year.
   Noninterest income (excluding net security gains) (non-GAAP)(1) grew $4.9 million, or 6.1%, from the prior year.
 Total noninterest expense decreased $14.4 million, or 7.4% from the prior year.
   Noninterest expense (excluding acquisition expenses) (non-GAAP)(1) increased $12.5 million, or 6.5%, from the prior year.
     
Profitability
     
 The net interest margin improved four basis points to 3.75% compared to the prior year.
 The efficiency ratio improved 18 basis points to 56.97% compared to the prior year.
 The return on average assets (ROA) for the year ended December 31, 2019 was 1.31%.
   Core ROA (non-GAAP)(1) for the year ended December 31, 2019 was 1.35% as compared to 1.44% in the prior year, which included 0.08% attributable to securities gains.
     
Fourth Quarter 2019 Highlights
 
Franchise Growth
     
 Total gross loans (including loans held for sale) grew $85 million, or 5.6% (annualized), compared to the prior quarter.
 Average noninterest bearing deposits grew $113 million, or 28.9% (annualized) compared to the prior quarter including $49 million, or 12.7% (annualized) in organic noninterest bearing deposit growth (excluding acquired deposits).
     
Earnings
     
 For the quarter ended December 31, 2019, net income was $26.8 million (or $0.27 diluted earnings per share), resulting in an ROA of 1.30% and an ROE of 10.13%.
 Total revenue grew $5.7 million, or 6.6%, from the prior year quarter and $0.7 million, or 3.0% (annualized), from the third quarter of 2019.
   Net interest income (FTE) increased $3.7 million, or 5.6% from the prior year quarter and increased $0.3 million, or 2.0% (annualized), from the third quarter of 2019.
   Noninterest income (excluding security gains) grew $2.0 million, or 9.7% from the prior year quarter and $0.4 million, or 6.3% (annualized), from the third quarter of 2019.
 Total noninterest expense increased $3.1 million, or 6.2%, from the prior year quarter and decreased $1.8 million, or 3.3%, from the third quarter of 2019.
   Noninterest expense (excluding acquisition expenses) increased $2.1 million from the prior quarter.
 Provision for credit losses totaled $4.9 million, an increase of $2.2 million from the previous quarter.
   Nonperforming loans as a percentage of total loans decreased six basis points from the prior quarter and currently total 0.52% of loans outstanding.  This represents a 10-year low in this metric.

“2019 was another busy and productive year for our company,” stated T. Michael Price, President and Chief Executive Officer, “We expanded our footprint into the nearby Central Pennsylvania market with the acquisition of 14 former Santander branches, our fee income businesses continued to grow and expenses remained well controlled despite strategic investments in talent and technology.  Additionally, our migration to a regional leadership model produced mid-single digit organic loan growth which mirrored our deposits gathering.  We expect headwinds from the lower interest rate environment going into 2020 but I have confidence in our team’s ability to continue to produce positive long-term performance for our shareholders.”

Earnings

Net income for the fourth quarter of 2019 was $26.8 million, as compared to $26.6 million and $27.0 million in the prior quarter and fourth quarter of 2018, respectively.

Net income for the year ended December 31, 2019 was $105.3 million, as compared to $107.5 million for the year ended December 31, 2018.  Core net income, which excludes merger-related expenses of $1.6 million (pretax) in 2018 and merger-related expenses of $3.5 million (pre-tax) in 2019, was $108.1 million and $108.8 million for the years ended December 31, 2019 and 2018, respectively.  However, the results for the prior year were impacted by an $8.1 million (pre-tax) gain on the sale of the company’s remaining pooled trust preferred securities.  Excluding securities gains, adjusted core net income (non-GAAP) for the year ended December 31, 2019 was $108.1 million, an increase of $5.7 million, or 5.6%, from the previous year.

Net Interest Margin and Net Interest Income

The net interest margin for the fourth quarter of 2019 was 3.73%, a decrease of three basis points from the previous quarter and an increase of three basis points from the fourth quarter of 2018.  Loan yields decreased 17 basis points from the previous quarter due to the repricing of variable and adjustable rate loans and lower replacement yields on new loans.  Average loans increased $99 million, or 6.5% (annualized) from the previous quarter, including $25 million of average organic loan growth (excluding acquired loans).

The total cost of interest-bearing demand and savings deposits decreased six basis points from the previous quarter.  Average noninterest bearing deposits grew $113 million, or 28.9% (annualized) from the previous quarter, including $49 million of average organic noninterest bearing deposit growth (excluding acquired deposits).

The increase in the net interest margin from the prior year quarter was primarily due to a seven basis point decrease in total funding costs due to an improved funding mix, as the company was able to pay down higher cost short-term borrowings with acquired deposits.

The net interest margin for the year ended December 31, 2019 was 3.75%, an increase of four basis points from the previous year.  The increase from the prior year was due to a $399 million increase in average interest earning assets and a $115 million increase in average noninterest bearing deposits. The yield on interest-earning assets increased 21 basis points, which was partially offset by a 25 basis point increase in the cost of interest-bearing liabilities.  The yield on total loans increased by 26 basis points compared to the prior year, while the cost of deposits increased by 21 basis points.

For the year ended December 31, 2019, total average loans grew $405 million, or 7.3% and includes $373 million of average organic loan growth (excluding acquired loans) from the prior year.  For the year ended December 31, 2019, total average deposits grew $500 million, or 8.6% and includes $351 million of average organic loan growth (excluding acquired deposits) from the prior year.

Credit Quality

At December 31, 2019, nonperforming loans were $32.2 million, a decrease of $3.1 million from the prior quarter and relatively unchanged from the fourth quarter of 2018.  Nonperforming loans as a percentage of total loans were 0.52%, 0.58% and 0.55% for the periods ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

The provision for credit losses totaled $4.9 million in the fourth quarter of 2019, an increase of $2.2 million from the previous quarter.  The increase from the prior quarter was partially due to provision expense associated with organic loan growth and the resolution and chargeoff of two commercial credits.

Total provision for credit losses totaled $14.5 million for the year ended December 31, 2019 as compared to $12.5 million in the prior year. For the year ended December 31, 2019, net charge-offs were $10.7 million, or 0.18% of average loans, compared to $13.1 million in the prior year period, a decrease of $2.4 million.

For the originated loan portfolio at December 31, 2019, the general allowance for credit losses to total originated loans was 0.86%, compared to 0.87% at September 30, 2019 and 0.87% at December 31, 2018.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $22.5 million for the fourth quarter of 2019 as compared to $22.2 million for the third quarter of 2019 and $20.5 million for the fourth quarter of 2018.  Swap fee income increased $1.3 million from the prior quarter, and was partially offset by a $0.9 million decrease in the gain on sale of mortgage loans.

For the year ended December 31, 2019, noninterest income (excluding security gains) totaled $85.5 million, an increase of $4.9 million from the year ended December 31, 2018.  The increase from the prior year was due to a $2.3 million increase in gain on sale of mortgage loans, a $1.5 million increase in card related interchange income and a $1.5 million increase in swap fee income, partially offset by a $1.1 million decrease in derivative mark-to-market.

There were no material security gains during 2019; however, the company recognized an $8.1 million gain during the prior year following the successful auction call and sale of the company’s remaining pooled trust preferred securities.

Noninterest expense (excluding merger-related expenses) totaled $53.3 million for the fourth quarter of 2019, as compared to $51.2 million for the third quarter of 2019 and $50.0 million for the fourth quarter of 2018.  The $2.1 million increase from the previous quarter was primarily the result of a $0.9 million increase in other professional fees, as well as a $0.5 million increase in occupancy expense and a $0.4 million increase in salaries and benefits due to a full quarterly impact of the aforementioned branch acquisition.  This was partially offset by a $0.5 million decrease in advertising and promotion expense.

The $3.3 million increase compared to the prior year quarter was primarily due to higher operating expenses following the completion of the company’s aforementioned branch acquisition, partially offset by a $0.4 million decrease in FDIC insurance due to a quarterly assessment credit and a $0.2 million decrease in collection and repossession expense.

Full time equivalent staff was 1,484 at December 31, 2019, as compared to 1,511 at September 30, 2019 and 1,426 at December 31, 2018.  The increase from the prior year is the result of the addition of employees from acquisitions and the continued expansion of the mortgage, SBA and commercial banking businesses.

Dividends and Capital

First Commonwealth Financial Corporation declared a quarterly common stock dividend of $0.11 per share, which is payable on February 21, 2020 to shareholders of record as of February 7, 2020.  This dividend represents a 10.0% increase over the previous quarter and a 3.2% projected annual yield utilizing the January 27, 2020 closing market price of $13.82.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2019 were 14.3%, 12.0%, 10.2% and 10.9%, 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 quarter and year ended December 31, 2019 on Wednesday, January 29, 2020 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 #10138059.  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 147 community banking offices in 28 counties throughout western and central Pennsylvania and throughout Ohio, as well as business banking operations in Pittsburgh, Pennsylvania, and Canton, Cleveland, Columbus and Cincinnati, Ohio. The company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson and Lewis Center, 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) the soundness of other financial institutions; (7)  political instability; (8) impairment of First Commonwealth’s goodwill or other intangible assets; (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) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) First Commonwealth’s ability to attract and retain qualified employees; (16) changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (17) the ability to increase market share and control expenses; (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 reliability of First Commonwealth’s vendors, internal control systems or information systems; (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:
Jonathan E. Longwill
Vice President / Communications and Media Relations
Phone: 724-463-6806
E-mail: JLongwill@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 Years Ended
 December 31, September 30, December 31, December 31, December 31,
 2019 2019 2018 2019 2018
SUMMARY RESULTS OF OPERATIONS         
Net interest income (FTE) (1)$69,212  $68,875  $65,514  $271,610  $254,196 
Provision for credit losses4,895  2,708  1,499  14,533  12,531 
Noninterest income22,528  22,179  20,529  85,485  88,637 
Noninterest expense53,109  54,897  50,024  209,965  195,556 
Net income26,820  26,644  26,998  105,333  107,498 
Core net income (5)26,634  29,597  27,000  108,126  108,791 
          
Earnings per common share (diluted)$0.27  $0.27  $0.27  $1.07  $1.08 
Core earnings per common share (diluted) (6)$0.27  $0.30  $0.27  $1.10  $1.10 
          
KEY FINANCIAL RATIOS         
          
Return on average assets1.30% 1.31% 1.39% 1.31% 1.42%
Core return on average assets (7)1.29% 1.46% 1.39% 1.35% 1.44%
Return on average shareholders' equity10.13% 10.22% 11.06% 10.32% 11.41%
Return on average tangible common equity (8)14.99% 14.62% 16.09% 14.92% 16.67%
Core return on average tangible common equity (9)14.89% 16.20% 16.09% 15.30% 16.87%
Core efficiency ratio (2)(10)57.23% 55.73% 57.45% 56.97% 57.15%
Net interest margin (FTE) (1)3.73% 3.76% 3.70% 3.75% 3.71%
          
Book value per common share$10.74  $10.57  $9.90     
Tangible book value per common share (11)7.49  7.31  6.98     
Market value per common share14.51  13.28  12.08     
Cash dividends declared per common share0.10  0.10  0.09  $0.40  $0.35 
          
ASSET QUALITY RATIOS         
Nonperforming loans as a percent of end-of-period loans (3)0.52% 0.58% 0.55%    
Nonperforming assets as a percent of total assets (3)0.42% 0.46% 0.46%    
Net charge-offs as a percent of average loans (annualized) (4)0.21% 0.25% 0.31%    
Allowance for credit losses as a percent of nonperforming loans (4)160.28% 141.64% 149.14%    
Allowance for credit losses as a percent of end-of-period loans (4)0.83% 0.82% 0.83%    
Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases0.90% 0.91% 0.90%    
          
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets12.7% 12.7% 12.5%    
Tangible common equity as a percent of tangible assets (12)9.2% 9.2% 9.1%    
Leverage Ratio10.2% 10.1% 10.3%    
Risk Based Capital - Tier I12.0% 11.8% 12.3%    
Risk Based Capital - Total14.3% 14.1% 14.7%    
Common Equity - Tier I10.9% 10.7% 11.1%    
             


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands, except per share data) 
 For the Three Months Ended For the Years Ended
 December 31,September 30,December 31, December 31,December 31,
 201920192018 20192018
INCOME STATEMENT      
Interest income$81,038  $82,575  $77,945   $325,264  $292,257 
Interest expense12,233 14,130 12,896  55,402 40,035 
Net Interest Income68,805 68,445 65,049  269,862 252,222 
Taxable equivalent adjustment (1)407 430 465  1,748 1,974 
Net Interest Income  (FTE)69,212 68,875 65,514  271,610 254,196 
Provision for credit losses4,895 2,708 1,499  14,533 12,531 
Net Interest Income after Provision for Credit Losses (FTE)64,317 66,167 64,015  257,077 241,665 
       
Net securities gains7 9   22 8,102 
Trust income2,100 2,325 1,887  8,321 7,901 
Service charges on deposit accounts5,134 4,954 4,757  18,926 18,175 
Insurance and retail brokerage commissions1,696 1,912 1,866  7,583 7,426 
Income from bank owned life insurance1,594 1,540 1,445  6,002 6,686 
Gain on sale of mortgage loans1,664 2,599 1,169  7,765 5,436 
Gain on sale of other loans and assets962 970 1,725  4,793 5,273 
Card-related interchange income5,877 5,629 5,258  21,677 20,187 
Derivative mark-to-market(181)(45)(2) (269)787 
Swap fee income1,763 421 759  3,397 1,874 
Other income1,912 1,865 1,665  7,268 6,790 
Total Noninterest Income22,528 22,179 20,529  85,485 88,637 
       
Salaries and employee benefits29,032 28,674 27,535  112,237 105,115 
Net occupancy5,045 4,521 4,287  18,923 17,219 
Furniture and equipment3,764 3,904 3,636  15,160 14,247 
Data processing2,704 2,825 2,706  10,692 10,470 
Pennsylvania shares tax1,237 1,189 1,477  4,602 4,875 
Advertising and promotion639 1,140 771  4,250 3,956 
Intangible amortization980 865 787  3,344 3,217 
Collection and repossession548 649 702  2,204 2,762 
Other professional fees and services1,876 969 1,473  4,631 4,473 
FDIC insurance55 35 417  1,219 2,007 
Litigation and operational losses423 308 351  1,687 1,162 
Loss on sale or write-down of assets326 152 205  1,724 1,080 
Merger and acquisition related(236)3,738 3  3,536 1,637 
Other operating expenses6,716 5,928 5,674  25,756 23,336 
Total Noninterest Expense53,109 54,897 50,024  209,965 195,556 
       
Income before Income Taxes33,736 33,449 34,520  132,597 134,746 
Taxable equivalent adjustment (1)407 430 465  1,748 1,974 
Income tax provision6,509 6,375 7,057  25,516 25,274 
Net Income$26,820  $26,644  $26,998   $105,333  $107,498 
                     
Shares Outstanding at End of Period 98,311,840   98,319,081   98,518,668    98,311,840   98,518,668 
Average Shares Outstanding Assuming Dilution 98,508,219   98,547,898   99,358,759    98,588,164   99,223,513 
       


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands) 
      
 December 31, September 30, December 31,
 2019 2019 2018
BALANCE SHEET (Period End)     
Assets     
Cash and due from banks$102,346  $112,241  $95,934 
Interest-bearing bank deposits19,510  16,408  3,013 
Securities available for sale, at fair value919,053  823,944  941,373 
Securities held to maturity, at amortized cost337,123  357,890  393,855 
Loans held for sale15,989  20,288  11,881 
      
Loans6,189,148  6,099,561  5,774,139 
Allowance for credit losses(51,637) (50,035) (47,764)
Net loans6,137,511  6,049,526  5,726,375 
      
Goodwill and other intangibles319,694  320,505  287,240 
Other assets457,547  451,225  368,584 
Total Assets$8,308,773  $8,152,027  $7,828,255 
      
Liabilities and Shareholders' Equity     
Noninterest-bearing demand deposits$1,690,247  $1,657,507  $1,466,213 
      
Interest-bearing demand deposits254,981  263,312  180,209 
Savings deposits3,896,536  3,867,034  3,401,354 
Time deposits835,851  890,143  850,216 
Total interest-bearing deposits4,987,368  5,020,489  4,431,779 
      
Total deposits6,677,615  6,677,996  5,897,992 
      
Short-term borrowings201,853  83,735  721,823 
Long-term borrowings234,182  234,404  185,056 
Total borrowings436,035  318,139  906,879 
      
Other liabilities139,458  116,862  47,995 
Shareholders' equity1,055,665  1,039,030  975,389 
Total Liabilities and Shareholders' Equity$8,308,773  $8,152,027  $7,828,255 
            


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    
 For the Three Months Ended For the Years Ended
 December 31,Yield/September 30,Yield/December 31,Yield/ December 31,Yield/December 31,Yield/
 2019Rate2019Rate2018Rate 2019Rate2018Rate
NET INTEREST MARGIN         
            
Assets           
Loans (FTE)(1)(3)$6,141,614 4.76%$6,042,822 4.93%$5,704,468 4.81% $5,987,397 4.90%$5,582,651 4.64%
Securities and interest-bearing bank deposits (FTE) (1)1,226,892 2.51%1,226,270 2.58%1,316,488 2.79% 1,261,822 2.68%1,267,471 2.79%
Total Interest-Earning Assets (FTE) (1)7,368,506 4.39%7,269,092 4.53%7,020,956 4.43% 7,249,219 4.51%6,850,122 4.30%
Noninterest-earning assets832,509  780,960  712,047   780,833  705,234  
Total Assets$8,201,015  $8,050,052  $7,733,003   $8,030,052  $7,555,356  
            
Liabilities and Shareholders' Equity           
Interest-bearing demand and savings deposits$4,171,663 0.55%$3,933,091 0.61%$3,601,354 0.45% $3,891,262 0.57%$3,620,766 0.37%
Time deposits856,076 1.69%863,714 1.75%842,123 1.40% 864,056 1.68%749,408 1.13%
Short-term borrowings100,698 0.88%323,041 1.99%633,363 2.10% 391,547 2.12%618,957 1.74%
Long-term borrowings234,274 4.37%234,497 4.51%185,144 5.29% 216,383 4.80%147,915 5.13%
Total Interest-Bearing Liabilities5,362,711 0.91%5,354,343 1.05%5,261,984 0.97% 5,363,248 1.03%5,137,046 0.78%
Noninterest-bearing deposits1,673,188  1,560,478  1,456,983   1,549,507  1,434,233  
Other liabilities114,523  101,328  45,445   96,896  41,740  
Shareholders' equity1,050,593  1,033,903  968,591   1,020,401  942,337  
Total Noninterest-Bearing Funding Sources2,838,304  2,695,709  2,471,019   2,666,804  2,418,310  
Total Liabilities and Shareholders' Equity$8,201,015  $8,050,052  $7,733,003   $8,030,052  $7,555,356  
            
Net Interest Margin (FTE) (annualized)(1) 3.73% 3.76% 3.70%  3.75% 3.71%
                 


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands) 
 December 31,September 30,December 31,
 201920192018
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,241,853  $1,210,936  $1,138,473 
Commercial real estate2,117,519 2,124,240 2,123,544 
Real estate construction375,149 334,533 305,875 
Total Commercial3,734,521 3,669,709 3,567,892 
    
Consumer Loan Portfolio:   
Closed-end mortgages1,094,281 1,081,170 1,037,124 
Home equity lines of credit587,081 585,050 525,281 
Real estate construction73,890 85,748 53,103 
Total Real Estate - Consumer1,755,252 1,751,968 1,615,508 
    
Auto loans573,699 553,617 481,954 
Direct installment47,738 46,704 37,454 
Personal lines of credit71,103 70,441 63,131 
Student loans6,835 7,122 8,200 
Total Other Consumer699,375 677,884 590,739 
Total Consumer Portfolio2,454,627 2,429,852 2,206,247 
Total Portfolio Loans6,189,148 6,099,561 5,774,139 
Loans held for sale15,989 20,288 11,881 
Total Loans$6,205,137  $6,119,849  $5,786,020 
    
    
 December 31,September 30,December 31,
 201920192018
ASSET QUALITY DETAIL   
Nonperforming Loans:   
Loans on nonaccrual basis$18,638  $16,227  $11,509 
Troubled debt restructured loans on nonaccrual basis6,037 11,074 11,761 
Troubled debt restructured loans on accrual basis7,542 8,024 8,757 
Total Nonperforming Loans$32,217  $35,325  $32,027 
Other real estate owned ("OREO")2,228 1,622 3,935 
Repossessions ("Repos")628 486 266 
Total Nonperforming Assets$35,073  $37,433  $36,228 
Loans past due in excess of 90 days and still accruing2,073 2,054 1,582 
Classified loans52,031 50,719 40,241 
Criticized loans100,607 128,691 127,235 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos (4)0.57%0.61%0.63%
Allowance for credit losses$51,637  $50,035  $47,764 
    


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    
 For the Three Months Ended For the Years Ended
 December 31,September 30,December 31, December 31,December 31,
 201920192018 20192018
Net Charge-offs (Recoveries):      
Commercial, financial, agricultural and other$1,115  $729  $1,672   $3,067  $4,506 
Real estate construction (74)(42) (158)(141)
Commercial real estate298 1,301 1,489  1,819 3,777 
Residential real estate300 366 243  727 952 
Loans to individuals1,580 1,412 1,119  5,205 3,971 
Net Charge-offs$3,293  $3,734  $4,481   $10,660  $13,065 
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4)0.21%0.25%0.31% 0.18%0.23%
Provision for credit losses as a percentage of net charge-offs148.65%72.52%33.45% 136.33%95.91%
Provision for credit losses$4,895  $2,708  $1,499   $14,533  $12,531 


DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
  
(1)Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the federal income tax statutory rate of 21% for 2019 and  2018. 
(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 Years Ended
 December 31,September 30,December 31, December 31,December 31,
 201920192018 20192018
       
Net Income$26,820  $26,644  $26,998   $105,333  $107,498 
Intangible amortization980 865 787  3,344 3,217 
Tax benefit of amortization of intangibles(206)(182)(165) (702)(676)
Net Income, adjusted for tax affected amortization of intangibles27,594 27,327 27,620  107,975 110,039 
       
Average Tangible Equity:      
Total shareholders' equity$1,050,593  $1,033,903  $968,591   $1,020,401  $942,337 
Less: intangible assets320,077 292,529 287,610  296,645 282,281 
Tangible Equity730,516 741,374 680,981  723,756 660,056 
Less: preferred stock      
Tangible Common Equity$730,516  $741,374  $680,981   $723,756  $660,056 
       
(8)Return on Average Tangible Common Equity14.99%14.62%16.09% 14.92%16.67%
       


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 Years Ended
 December 31,September 30,December 31, December 31,December 31,
 201920192018 20192018
       
Core Net Income:      
Total Net Income$26,820  $26,644  $26,998   $105,333  $107,498 
Merger & acquisition related expenses(236)3,738 3  3,536 1,637 
Tax benefit of merger & acquisition related expenses50 (785)(1) (743)(344)
(5) Core net income26,634 29,597 27,000  108,126 108,791 
Average Shares Outstanding Assuming Dilution 98,508,219   98,547,898   99,358,759    98,588,164   99,223,513 
(6) Core Earnings per common share (diluted)$0.27  $0.30  $0.27   $1.10  $1.10 
       
Intangible amortization980 865 787  3,344 3,217 
Tax benefit of amortization of intangibles(206)(182)(165) (702)(676)
Core Net Income, adjusted for tax affected amortization of intangibles$27,408  $30,280  $27,622   $110,768  $111,332 
       
(9) Core Return on Average Tangible Common Equity14.89%16.20%16.09% 15.30%16.87%
       
       
 For the Three Months Ended For the Years Ended
 December 31,September 30,December 31, December 31,December 31,
 201920192018 20192018
Core Return on Average Assets:      
Total Net Income$26,820  $26,644  $26,998   $105,333  $107,498 
Total Average Assets8,201,015 8,050,052 7,733,003  8,030,052 7,555,356 
Return on Average Assets1.30%1.31%1.39% 1.31%1.42%
       
Core Net Income (5)$26,634  $29,597  $27,000   $108,126  $108,791 
Total Average Assets8,201,015 8,050,052 7,733,003  8,030,052 7,555,356 
(7) Core Return on Average Assets1.29%1.46%1.39% 1.35%1.44%


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 Years Ended
 December 31,September 30,December 31, December 31,December 31,
 201920192018 20192018
Core Efficiency Ratio:      
Total Noninterest Expense$53,109  $54,897  $50,024   $209,965  $195,556 
Adjustments to Noninterest Expense:      
Unfunded commitment reserve(240)(466)(203) (475)(162)
Intangible amortization980 865 787  3,344 3,217 
Merger and acquisition related(236)3,738 3  3,536 1,637 
Noninterest Expense - Core$52,605  $50,760  $49,437   $203,560  $190,864 
       
Net interest income, fully tax equivalent$69,212  $68,875  $65,514   $271,610  $254,196 
Total noninterest income22,528 22,179 20,529  85,485 88,637 
Net securities gains(7)(9)  (22)(8,102)
Total Revenue$91,733  $91,045  $86,043   $357,073  $334,731 
       
Adjustments to Revenue:      
Derivative mark-to-market(181)(45)(2) (269)787 
Total Revenue - Core$91,914  $91,090  $86,045   $357,342  $333,944 
       
(10)Core Efficiency Ratio57.23%55.73%57.45% 56.97%57.15%
       
       
 December 31,September 30,December 31,   
 201920192018   
Tangible Equity:      
Total shareholders' equity$1,055,665  $1,039,030  $975,389    
Less: intangible assets319,694 320,505 287,240    
Tangible Equity735,971 718,525 688,149    
Less: preferred stock      
Tangible Common Equity$735,971  $718,525  $688,149    
       
Tangible Assets:      
Total assets$8,308,773  $8,152,027  $7,828,255    
Less: intangible assets319,694 320,505 287,240    
Tangible Assets$7,989,079  $7,831,522  $7,541,015    
       
(12)Tangible Common Equity as a percentage of Tangible Assets9.21%9.17%9.13%   
       
Shares Outstanding at End of Period98,311,840 98,319,081 98,518,668    
(11)Tangible Book Value Per Common Share$7.49  $7.31  $6.98    
       
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.

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