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 losses | 4,895 | | | 2,708 | | | 1,499 | | | 14,533 | | | 12,531 | |
| Noninterest income | 22,528 | | | 22,179 | | | 20,529 | | | 85,485 | | | 88,637 | |
| Noninterest expense | 53,109 | | | 54,897 | | | 50,024 | | | 209,965 | | | 195,556 | |
| Net income | 26,820 | | | 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 assets | 1.30 | % | | 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' equity | 10.13 | % | | 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 share | 14.51 | | | 13.28 | | | 12.08 | | | | | |
| Cash dividends declared per common share | 0.10 | | | 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 leases | 0.90 | % | | 0.91 | % | | 0.90 | % | | | | |
| | | | | | | | | | |
| CAPITAL RATIOS | | | | | | | | | |
| Shareholders' equity as a percent of total assets | 12.7 | % | | 12.7 | % | | 12.5 | % | | | | |
| Tangible common equity as a percent of tangible assets (12) | 9.2 | % | | 9.2 | % | | 9.1 | % | | | | |
| Leverage Ratio | 10.2 | % | | 10.1 | % | | 10.3 | % | | | | |
| Risk Based Capital - Tier I | 12.0 | % | | 11.8 | % | | 12.3 | % | | | | |
| Risk Based Capital - Total | 14.3 | % | | 14.1 | % | | 14.7 | % | | | | |
| Common Equity - Tier I | 10.9 | % | | 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, |
| | 2019 | 2019 | 2018 | | 2019 | 2018 |
| INCOME STATEMENT | | | | | | |
| Interest income | $ | 81,038 | | | $ | 82,575 | | | $ | 77,945 | | | | $ | 325,264 | | | $ | 292,257 | |
| Interest expense | 12,233 | | 14,130 | | 12,896 | | | 55,402 | | 40,035 | |
| Net Interest Income | 68,805 | | 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 losses | 4,895 | | 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 gains | 7 | | 9 | | — | | | 22 | | 8,102 | |
| Trust income | 2,100 | | 2,325 | | 1,887 | | | 8,321 | | 7,901 | |
| Service charges on deposit accounts | 5,134 | | 4,954 | | 4,757 | | | 18,926 | | 18,175 | |
| Insurance and retail brokerage commissions | 1,696 | | 1,912 | | 1,866 | | | 7,583 | | 7,426 | |
| Income from bank owned life insurance | 1,594 | | 1,540 | | 1,445 | | | 6,002 | | 6,686 | |
| Gain on sale of mortgage loans | 1,664 | | 2,599 | | 1,169 | | | 7,765 | | 5,436 | |
| Gain on sale of other loans and assets | 962 | | 970 | | 1,725 | | | 4,793 | | 5,273 | |
| Card-related interchange income | 5,877 | | 5,629 | | 5,258 | | | 21,677 | | 20,187 | |
| Derivative mark-to-market | (181 | ) | (45 | ) | (2 | ) | | (269 | ) | 787 | |
| Swap fee income | 1,763 | | 421 | | 759 | | | 3,397 | | 1,874 | |
| Other income | 1,912 | | 1,865 | | 1,665 | | | 7,268 | | 6,790 | |
| Total Noninterest Income | 22,528 | | 22,179 | | 20,529 | | | 85,485 | | 88,637 | |
| | | | | | | |
| Salaries and employee benefits | 29,032 | | 28,674 | | 27,535 | | | 112,237 | | 105,115 | |
| Net occupancy | 5,045 | | 4,521 | | 4,287 | | | 18,923 | | 17,219 | |
| Furniture and equipment | 3,764 | | 3,904 | | 3,636 | | | 15,160 | | 14,247 | |
| Data processing | 2,704 | | 2,825 | | 2,706 | | | 10,692 | | 10,470 | |
| Pennsylvania shares tax | 1,237 | | 1,189 | | 1,477 | | | 4,602 | | 4,875 | |
| Advertising and promotion | 639 | | 1,140 | | 771 | | | 4,250 | | 3,956 | |
| Intangible amortization | 980 | | 865 | | 787 | | | 3,344 | | 3,217 | |
| Collection and repossession | 548 | | 649 | | 702 | | | 2,204 | | 2,762 | |
| Other professional fees and services | 1,876 | | 969 | | 1,473 | | | 4,631 | | 4,473 | |
| FDIC insurance | 55 | | 35 | | 417 | | | 1,219 | | 2,007 | |
| Litigation and operational losses | 423 | | 308 | | 351 | | | 1,687 | | 1,162 | |
| Loss on sale or write-down of assets | 326 | | 152 | | 205 | | | 1,724 | | 1,080 | |
| Merger and acquisition related | (236 | ) | 3,738 | | 3 | | | 3,536 | | 1,637 | |
| Other operating expenses | 6,716 | | 5,928 | | 5,674 | | | 25,756 | | 23,336 | |
| Total Noninterest Expense | 53,109 | | 54,897 | | 50,024 | | | 209,965 | | 195,556 | |
| | | | | | | |
| Income before Income Taxes | 33,736 | | 33,449 | | 34,520 | | | 132,597 | | 134,746 | |
| Taxable equivalent adjustment (1) | 407 | | 430 | | 465 | | | 1,748 | | 1,974 | |
| Income tax provision | 6,509 | | 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 deposits | 19,510 | | | 16,408 | | | 3,013 | |
| Securities available for sale, at fair value | 919,053 | | | 823,944 | | | 941,373 | |
| Securities held to maturity, at amortized cost | 337,123 | | | 357,890 | | | 393,855 | |
| Loans held for sale | 15,989 | | | 20,288 | | | 11,881 | |
| | | | | | |
| Loans | 6,189,148 | | | 6,099,561 | | | 5,774,139 | |
| Allowance for credit losses | (51,637 | ) | | (50,035 | ) | | (47,764 | ) |
| Net loans | 6,137,511 | | | 6,049,526 | | | 5,726,375 | |
| | | | | | |
| Goodwill and other intangibles | 319,694 | | | 320,505 | | | 287,240 | |
| Other assets | 457,547 | | | 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 deposits | 254,981 | | | 263,312 | | | 180,209 | |
| Savings deposits | 3,896,536 | | | 3,867,034 | | | 3,401,354 | |
| Time deposits | 835,851 | | | 890,143 | | | 850,216 | |
| Total interest-bearing deposits | 4,987,368 | | | 5,020,489 | | | 4,431,779 | |
| | | | | | |
| Total deposits | 6,677,615 | | | 6,677,996 | | | 5,897,992 | |
| | | | | | |
| Short-term borrowings | 201,853 | | | 83,735 | | | 721,823 | |
| Long-term borrowings | 234,182 | | | 234,404 | | | 185,056 | |
| Total borrowings | 436,035 | | | 318,139 | | | 906,879 | |
| | | | | | |
| Other liabilities | 139,458 | | | 116,862 | | | 47,995 | |
| Shareholders' equity | 1,055,665 | | | 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/ |
| | 2019 | Rate | 2019 | Rate | 2018 | Rate | | 2019 | Rate | 2018 | Rate |
| 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 assets | 832,509 | | | 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 deposits | 856,076 | | 1.69 | % | 863,714 | | 1.75 | % | 842,123 | | 1.40 | % | | 864,056 | | 1.68 | % | 749,408 | | 1.13 | % |
| Short-term borrowings | 100,698 | | 0.88 | % | 323,041 | | 1.99 | % | 633,363 | | 2.10 | % | | 391,547 | | 2.12 | % | 618,957 | | 1.74 | % |
| Long-term borrowings | 234,274 | | 4.37 | % | 234,497 | | 4.51 | % | 185,144 | | 5.29 | % | | 216,383 | | 4.80 | % | 147,915 | | 5.13 | % |
| Total Interest-Bearing Liabilities | 5,362,711 | | 0.91 | % | 5,354,343 | | 1.05 | % | 5,261,984 | | 0.97 | % | | 5,363,248 | | 1.03 | % | 5,137,046 | | 0.78 | % |
| Noninterest-bearing deposits | 1,673,188 | | | 1,560,478 | | | 1,456,983 | | | | 1,549,507 | | | 1,434,233 | | |
| Other liabilities | 114,523 | | | 101,328 | | | 45,445 | | | | 96,896 | | | 41,740 | | |
| Shareholders' equity | 1,050,593 | | | 1,033,903 | | | 968,591 | | | | 1,020,401 | | | 942,337 | | |
| Total Noninterest-Bearing Funding Sources | 2,838,304 | | | 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, |
| | 2019 | 2019 | 2018 |
| Loan Portfolio Detail | | | |
| Commercial Loan Portfolio: | | | |
| Commercial, financial, agricultural and other | $ | 1,241,853 | | | $ | 1,210,936 | | | $ | 1,138,473 | |
| Commercial real estate | 2,117,519 | | 2,124,240 | | 2,123,544 | |
| Real estate construction | 375,149 | | 334,533 | | 305,875 | |
| Total Commercial | 3,734,521 | | 3,669,709 | | 3,567,892 | |
| | | | |
| Consumer Loan Portfolio: | | | |
| Closed-end mortgages | 1,094,281 | | 1,081,170 | | 1,037,124 | |
| Home equity lines of credit | 587,081 | | 585,050 | | 525,281 | |
| Real estate construction | 73,890 | | 85,748 | | 53,103 | |
| Total Real Estate - Consumer | 1,755,252 | | 1,751,968 | | 1,615,508 | |
| | | | |
| Auto loans | 573,699 | | 553,617 | | 481,954 | |
| Direct installment | 47,738 | | 46,704 | | 37,454 | |
| Personal lines of credit | 71,103 | | 70,441 | | 63,131 | |
| Student loans | 6,835 | | 7,122 | | 8,200 | |
| Total Other Consumer | 699,375 | | 677,884 | | 590,739 | |
| Total Consumer Portfolio | 2,454,627 | | 2,429,852 | | 2,206,247 | |
| Total Portfolio Loans | 6,189,148 | | 6,099,561 | | 5,774,139 | |
| Loans held for sale | 15,989 | | 20,288 | | 11,881 | |
| Total Loans | $ | 6,205,137 | | | $ | 6,119,849 | | | $ | 5,786,020 | |
| | | | |
| | | | |
| | December 31, | September 30, | December 31, |
| | 2019 | 2019 | 2018 |
| ASSET QUALITY DETAIL | | | |
| Nonperforming Loans: | | | |
| Loans on nonaccrual basis | $ | 18,638 | | | $ | 16,227 | | | $ | 11,509 | |
| Troubled debt restructured loans on nonaccrual basis | 6,037 | | 11,074 | | 11,761 | |
| Troubled debt restructured loans on accrual basis | 7,542 | | 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 accruing | 2,073 | | 2,054 | | 1,582 | |
| Classified loans | 52,031 | | 50,719 | | 40,241 | |
| Criticized loans | 100,607 | | 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, |
| | 2019 | 2019 | 2018 | | 2019 | 2018 |
| 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 estate | 298 | | 1,301 | | 1,489 | | | 1,819 | | 3,777 | |
| Residential real estate | 300 | | 366 | | 243 | | | 727 | | 952 | |
| Loans to individuals | 1,580 | | 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-offs | 148.65 | % | 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, |
| | 2019 | 2019 | 2018 | | 2019 | 2018 |
| | | | | | | |
| Net Income | $ | 26,820 | | | $ | 26,644 | | | $ | 26,998 | | | | $ | 105,333 | | | $ | 107,498 | |
| Intangible amortization | 980 | | 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 intangibles | 27,594 | | 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 assets | 320,077 | | 292,529 | | 287,610 | | | 296,645 | | 282,281 | |
| Tangible Equity | 730,516 | | 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 Equity | 14.99 | % | 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, |
| | 2019 | 2019 | 2018 | | 2019 | 2018 |
| | | | | | | |
| 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 expenses | 50 | | (785 | ) | (1 | ) | | (743 | ) | (344 | ) |
| (5) Core net income | 26,634 | | 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 amortization | 980 | | 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 Equity | 14.89 | % | 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, |
| | 2019 | 2019 | 2018 | | 2019 | 2018 |
| Core Return on Average Assets: | | | | | | |
| Total Net Income | $ | 26,820 | | | $ | 26,644 | | | $ | 26,998 | | | | $ | 105,333 | | | $ | 107,498 | |
| Total Average Assets | 8,201,015 | | 8,050,052 | | 7,733,003 | | | 8,030,052 | | 7,555,356 | |
| Return on Average Assets | 1.30 | % | 1.31 | % | 1.39 | % | | 1.31 | % | 1.42 | % |
| | | | | | | |
| Core Net Income (5) | $ | 26,634 | | | $ | 29,597 | | | $ | 27,000 | | | | $ | 108,126 | | | $ | 108,791 | |
| Total Average Assets | 8,201,015 | | 8,050,052 | | 7,733,003 | | | 8,030,052 | | 7,555,356 | |
| (7) Core Return on Average Assets | 1.29 | % | 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, |
| | 2019 | 2019 | 2018 | | 2019 | 2018 |
| 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 amortization | 980 | | 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 income | 22,528 | | 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 Ratio | 57.23 | % | 55.73 | % | 57.45 | % | | 56.97 | % | 57.15 | % |
| | | | | | | |
| | | | | | | |
| | December 31, | September 30, | December 31, | | | |
| | 2019 | 2019 | 2018 | | | |
| Tangible Equity: | | | | | | |
| Total shareholders' equity | $ | 1,055,665 | | | $ | 1,039,030 | | | $ | 975,389 | | | | |
| Less: intangible assets | 319,694 | | 320,505 | | 287,240 | | | | |
| Tangible Equity | 735,971 | | 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 assets | 319,694 | | 320,505 | | 287,240 | | | | |
| Tangible Assets | $ | 7,989,079 | | | $ | 7,831,522 | | | $ | 7,541,015 | | | | |
| | | | | | | |
| (12)Tangible Common Equity as a percentage of Tangible Assets | 9.21 | % | 9.17 | % | 9.13 | % | | | |
| | | | | | | |
| Shares Outstanding at End of Period | 98,311,840 | | 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. |
