Financial News

First Commonwealth Announces Second Quarter 2020 Earnings; Declares Quarterly Dividend

INDIANA, Pa., July 28, 2020 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the second quarter of 2020.

Financial Summary

(dollars in thousands,For the Three Months Ended For the Six Months Ended
except per share data)June 30, March 31, June 30, June 30, June 30,
 2020
 2020
 2019
 2020
 2019
Reported Results         
Net income$23,851 $4,727 $27,280 $28,578 $51,869
Diluted earnings per share$0.24 $0.05 $0.28 $0.29 $0.53
Return on average assets 1.06%  0.23%  1.37%  0.66%  1.32%
Return on average equity 8.95%  1.77%  10.84%  5.36%  10.48%
          
Operating Results (non-GAAP)(1)         
Core net income$23,851 $4,727 $27,307 $28,578 $51,896
Core diluted earnings per share$0.24 $0.05 $0.28 $0.29 $0.53
Pre-tax pre-provision net revenue$36,101 $37,123 $37,258 $73,223 $72,343
Provision expense$6,859 $30,967 $2,835 $37,826 $6,930
Net charge-offs$4,493 $3,529 $1,427 $8,022 $3,633
Reserve build(2)$2,366 $27,438 $1,408 $29,804 $3,297
Core return on average assets 1.06%  0.23%  1.37%  0.66%  1.32%
Return on average tangible common equity 13.13%  2.92%  15.47%  8.03%  15.04%
Core return on average tangible common equity 13.13%  2.92%  15.48%  8.03%  15.05%
Core efficiency ratio 57.20%  58.21%  56.80%  57.71%  57.47%
Net interest margin (FTE) 3.29%  3.65%  3.75%  3.46%  3.75%

(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.
(2)  Reserve build represents the amount by which the provision for credit losses exceeds net charge-offs, while reserve release represents the amount by which net charge-offs exceed the provision for credit losses.      

Second Quarter 2020 Highlights

Financial results

  • Net income of $23.9 million and diluted earnings per share of $0.24, an increase of $19.1 million or $0.19 per share from the previous quarter
  • Provision for loan losses of $6.9 million decreased $24.1 million from the previous quarter
  • Pre-tax pre-provision net revenue (PPNR)(1) was $36.1 million
  • Net interest income of $67.0 million decreased $1.1 million from the previous quarter due to a 36 basis point decline in the net interest margin, partially offset by a $678.6 million increase in average interest-earning assets 
  • Noninterest income of $21.8 million increased $2.5 million from the previous quarter on improved mortgage gain on sale
  • Noninterest expense of $52.8 million increased $2.5 million from the previous quarter due to a $3.4 million increase in expense for reserves for unfunded loan commitments
  • Total period-end loans increased $612.8 million from the previous quarter and includes $570.9 million in loans made through the SBA Paycheck Protection Program (“PPP”)
    -- Excluding PPP loans, total period-end loans grew $41.9 million, or 2.7% (annualized) from the previous quarter
  • Average deposits increased $758.2 million (or 44.8% annualized) and period-end deposits increased $859.1 million (or 49.6% annualized) from the previous quarter due to deposit growth associated with PPP loan funds and consumer stimulus checks
    -- Noninterest-bearing deposits increased by $536.8 million (or 122.6% annualized) and comprised 29.4% of total deposits at June 30, 2020

Asset quality

  • Nonaccrual loans of $48.6 million decreased $3.1 million from the previous quarter
  • Net charge-offs on loans totaled $4.5 million, $2.9 million of which represents the charge off of specific reserves provided for in prior periods
  • Reserve build(2) of $29.8 million or 0.43% of total loans (excluding PPP) on a year-to-date basis, bringing reserves to total loans (adjusted for PPP) to 1.28%, and reserves to total originated loans (adjusted for PPP) to 1.34%
  • The Company continues to defer its adoption of CECL in accordance with relief provided under the U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act

Strong liquidity and capital positions

  • Total available liquidity of $3.8 billion
  • Bank-level Tier 1 Capital ratio of 11.3%, which represents $223.4 million in excess capital above the regulatory “well capitalized” requirement of 8.0%
  • The Company temporarily suspended share repurchases in March 2020

Operational Update

  • In response to the current operating environment and evolving customer preferences, the Company is implementing a profitability initiative termed “Project THRIVE” with a goal of growing our business, maintaining adequate capital, protecting against further NIM compression and reducing operating expenses. A targeted 20% reduction in retail locations will occur prior to December 31, 2020  
  • During the second quarter of 2020, the Company processed 4,920 PPP loan applications representing $606 million approved and $588 million funded to support our business customers; PPP balances totaled $571 million as of June 30, 2020
  • All of our community office drive-ups are open and our lobbies are available by appointment
  • Recent recognitions include:
    -- 2020 Forbes World’s Best Banks
    -- Consumer Federation of America Designation of Savings Excellence
    -- FDIC Impactful Money Smart for Adults Partnership

“Our performance in the second quarter is a reminder of the importance we play as a financial services organization and partner in the communities we serve,” stated T. Michael Price, President and Chief Executive Officer, “We assisted nearly 5,000 businesses secure over $600 million in PPP loans, which impacted approximately 80,000 jobs. At the same time, we originated a record $203 million in consumer mortgages in the quarter that helped roughly 800 customers finance a home.” 

Price continued, “In light of the rapidly changing operating environment and uncertain economic outlook, we have implemented Project THRIVE with the express goal of emerging on the other side of this crisis stronger than ever.  First Commonwealth has a proven track record of executing on its initiatives and I am confident that Project THRIVE will benefit all of our long-term stakeholders.”   

Earnings

Net income for the second quarter of 2020 was $23.9 million, or $0.24 per share, compared to $4.7 million, or $0.05 per share for the first quarter of 2020, and $27.3 million, or $0.28 per share in the second quarter of 2019.

Net income for the first six months of 2020 was $28.6 million, as compared to $51.9 million for the same period in 2019.

Net Interest Income and Net Interest Margin

Net interest income (FTE) decreased $1.1 million from the previous quarter due to loan repricing and lower replacement yields on new loans, driven by the impact of the lower interest rate environment. 

The net interest margin for the second quarter of 2020 was 3.29%, a decrease of 36 basis points from the previous quarter and a decrease of 46 basis points from the second quarter of 2019.  The decrease from the previous quarter was due primarily to a 57 basis point decrease in the yield on interest-earning assets, partially offset by a 26 basis point decrease in the cost of interest bearing liabilities.

Total average interest-earning assets increased $678.6 million from the previous quarter due to a $116.3 million increase in average traditional loans along with $405.7 million in average PPP loans.

Total average deposits grew $758.2 million in the second quarter of 2020 as compared to the previous quarter.  Period-end deposits grew $859.1 million in the second quarter of 2020 as compared to the first quarter of 2020.   Period-end growth was driven by $536.8 million of growth in noninterest-bearing demand deposits and $397.2 million of growth in savings deposits, partially offset by a $76.4 million decrease in time deposits.

Asset Quality

On March 27, 2020, the CARES Act was signed into law, which provides banking organizations with optional, temporary relief from adoption of Accounting Standards Update No. 2016-13, “Financial Instruments—Credit Losses,” Topic 326, “Measurement of Credit Losses on Financial Instruments” (“CECL”).  Due to the extraordinary economic condition and the uncertainty of economic forecasts and resulting volatility in these forecasts, the Company elected to defer its adoption of CECL and has, therefore, calculated reserves for loan losses under the incurred loss method. 

Provision expense in the second quarter totaled $6.9 million.  Reserves for loan losses totaled $81.4 million in the second quarter of 2020, an increase of $2.4 million from the previous quarter.  The increase from the previous quarter was primarily due to an increase of $5.5 million in qualitative reserves partially offset by a $2.9 million decrease in specific reserves primarily as the result of the resolution of three commercial credits reserved for in previous quarters.  These qualitative reserves are intended to reflect the risks of continued weak economic conditions on our loan portfolio, but also loss estimates identified in several loan portfolios deemed to be at risk from the COVID-19 pandemic (e.g., retail and hospitality) and the inherent risk presented by loan forbearances as of June 30, 2020.

At June 30, 2020, nonperforming loans totaled $56.0 million, a decrease of $3.1 million from the previous quarter.  The decrease in nonperforming loans was primarily due to the resolution of the three aforementioned commercial credits with balances totaling $8.0 million, partially offset by a $5.5 million commercial credit placed into nonaccrual.

Nonperforming loans as a percentage of total loans (excluding PPP) were 0.88%, 0.93% and 0.59% for the periods ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

For the originated loan portfolio at June 30, 2020, the general allowance for credit losses to total originated loans (excluding PPP) was 1.23%, compared to 1.16% at March 31, 2020 and 0.88% at June 30, 2019.

During the second quarter of 2020, net charge-offs were $4.5 million, compared to $3.5 million in the prior quarter and $1.4 million in the second quarter of 2019.  Net charge-offs were 0.28%, 0.23% and 0.10% of average loans (excluding PPP, annualized) for the periods ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $21.8 million for the second quarter of 2020, as compared to $19.3 million for the first quarter of 2020 and $21.9 million for the second quarter of 2019 (excluding net securities gains).  There were no material securities gains during the current or comparable quarters.

The $2.5 million increase from the previous quarter was primarily due to a $1.7 million increase in gain on sale of mortgage loans and a $1.5 million quarter over quarter increase in swap-related derivative mark-to-market income (due to a $1.7 million negative mark last quarter), along with a $0.6 million increase in interchange income.  These results were partially offset by a $1.5 million decrease in services charges on deposit accounts driven by lower overdraft fees being incurred by customers.

Noninterest expense totaled $52.8 million for the second quarter of 2020, as compared to $50.3 million for the first quarter of 2020 and $52.2 million for the second quarter of 2019.  The $2.5 million increase from the previous quarter was primarily the result of a $3.4 million increase in unfunded commitment reserves due to a $2.5 million release of unfunded commitment reserves in the previous quarter as compared to $0.9 million in expense related to unfunded commitment reserves this quarter.  This increase was partially offset by a $1.2 million decrease in salaries and benefits and a $0.6 million decrease in occupancy expense.

The core efficiency ratio was 57.20% during the second quarter of 2020 as compared to 58.21% in the previous quarter and 56.80% in the second quarter of 2019.

Full time equivalent staff was 1,465 as June 30, 2020, 1,510 at March 31, 2020, and 1,438 at June 30, 2019.  The decrease from the prior quarter is the result of a company-wide hiring freeze implemented at the end of the first quarter of 2020.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.11 per share, which is payable on August 21, 2020 to shareholders of record as of August 7, 2020. This dividend represents a 5.7% projected annual yield utilizing the July 27, 2020 closing market price of $7.77.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at June 30, 2020 were 14.4%, 11.8%, 9.3%, and 10.7%, 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 second quarter 2020 on Wednesday, July 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 # 10145939.  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 Dayton 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

Certain statements contained in this release that are not historical facts may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the Securities and Exchange Commission, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute “forward-looking statements” as well. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate” or words of similar meaning. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including uncertainties regarding the impact of the COVID-19 pandemic, and could be affected by many factors, including, but not limited to: (1) the length and extent of the economic contraction as a result of the COVID-19 pandemic and the impact of such contraction 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) with which First Commonwealth or its customers must comply; (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 this report and in the other reports that we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K.  Further, statements about the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, clients, third parties and us. 

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements in this release. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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 Six Months Ended
 June 30, March 31, June 30, June 30, June 30,
 2020 2020 2019 2020 2019
SUMMARY RESULTS OF OPERATIONS         
Net interest income (FTE) (1)$67,045  $68,121  $67,581  $135,165  $133,524 
Provision for credit losses6,859  30,967  2,835  37,826  6,930 
Noninterest income21,812  19,273  21,906  41,085  40,778 
Noninterest expense52,756  50,271  52,229  103,027  101,959 
Net income23,851  4,727  27,280  28,578  51,869 
Core net income (5)23,851  4,727  27,307  28,578  51,896 
          
Earnings per common share (diluted)$0.24   $0.05   $0.28   $0.29   $0.53  
Core earnings per common share (diluted) (6)$0.24   $0.05   $0.28   $0.29   $0.53  
          
KEY FINANCIAL RATIOS         
          
Return on average assets1.06% 0.23% 1.37% 0.66% 1.32%
Core return on average assets (7)1.06% 0.23% 1.37% 0.66% 1.32%
Return on average shareholders' equity8.95% 1.77% 10.84% 5.36% 10.48%
Return on average tangible common equity (8)13.13% 2.92% 15.47% 8.03% 15.04%
Core return on average tangible common equity (9)13.13% 2.92% 15.48% 8.03% 15.05%
Core efficiency ratio (2)(10)57.20% 58.21% 56.80% 57.71% 57.47%
Net interest margin (FTE) (1)3.29% 3.65% 3.75% 3.46% 3.75%
          
Book value per common share$10.96  $10.79  $10.37     
Tangible book value per common share (11)7.72  7.54  7.46     
Market value per common share8.28  9.14  13.47     
Cash dividends declared per common share0.11  0.11  0.10  0.22  0.20 
          
ASSET QUALITY RATIOS         
Nonperforming loans as a percent of end-of-period loans (3)0.81% 0.93% 0.59%    
Nonperforming loans as a percent of end-of-period loans, excluding PPP loans (3)0.88 % 0.93 % 0.59 %    
Nonperforming assets as a percent of total assets (3)0.62% 0.74% 0.47%    
Nonperforming assets as a percent of total assets, excluding PPP loans (3)0.66 % 0.74 % 0.47 %    
Net charge-offs as a percent of average loans (annualized) (4)0.27% 0.23% 0.10%    
Net charge-offs as a percent of average loans, excluding PPP loans (annualized) (4)0.28 % 0.23 % 0.10 %    
Allowance for credit losses as a percent of nonperforming loans (4)145.37% 133.71% 143.62%    
Allowance for credit losses as a percent of end-of-period loans (4)1.18% 1.25% 0.85%    
Allowance for credit losses as a percent of end-of-period loans, excluding PPP loans (4)1.28 % 1.25 % 0.85 %    
Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases1.22% 1.32% 0.92%    
Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases, excluding PPP loans1.34 % 1.32 % 0.92 %    
          
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets11.5% 12.4% 12.7%    
Tangible common equity as a percent of tangible assets (12)8.4% 9.0% 9.4%    
Tangible common equity as a percent of tangible assets, excluding PPP loans (12)8.9 % 9.0 % 9.4 %    
Leverage Ratio9.3% 9.9% 10.4%    
Risk Based Capital - Tier I11.8% 11.6% 12.2%    
Risk Based Capital - Total14.4% 14.2% 14.6%    
Common Equity - Tier I10.7% 10.5% 11.2%    
             


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited      
(dollars in thousands, except per share data)      
 For the Three Months Ended For the Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
INCOME STATEMENT      
Interest income$74,981  $79,329  $82,057  $154,310  $161,651 
Interest expense8,295  11,605  14,931  19,900  29,039 
Net Interest Income66,686   67,724   67,126   134,410   132,612  
Taxable equivalent adjustment (1)359  397  455  755  912 
Net Interest Income  (FTE)67,045   68,121   67,581   135,165   133,524  
Provision for credit losses6,859  30,967  2,835  37,826  6,930 
Net Interest Income after Provision for Credit Losses (FTE)60,186   37,154   64,746   97,339   126,594  
       
Net securities gains8  19  6  27  6 
Trust income2,109  2,111  1,970  4,220  3,896 
Service charges on deposit accounts3,286  4,745  4,593  8,031  8,838 
Insurance and retail brokerage commissions1,831  1,995  2,014  3,826  3,975 
Income from bank owned life insurance1,800  1,616  1,442  3,416  2,868 
Gain on sale of mortgage loans4,243  2,546  2,074  6,789  3,502 
Gain on sale of other loans and assets581  699  1,777  1,280  2,861 
Card-related interchange income5,886  5,262  5,441  11,148  10,171 
Derivative mark-to-market(221) (1,741) (17) (1,962) (43)
Swap fee income609  214  820  823  1,213 
Other income1,680  1,807  1,786  3,487  3,491 
Total Noninterest Income21,812   19,273   21,906   41,085   40,778  
       
Salaries and employee benefits28,773  29,977  27,311  58,750  54,531 
Net occupancy4,397  4,973  4,441  9,370  9,357 
Furniture and equipment3,657  3,778  3,824  7,435  7,492 
Data processing2,596  2,467  2,619  5,063  5,163 
Pennsylvania shares tax1,254  738  1,260  1,992  2,176 
Advertising and promotion1,535  1,150  1,231  2,685  2,471 
Intangible amortization919  934  745  1,853  1,499 
Collection and repossession341  564  460  905  1,007 
Other professional fees and services920  898  1,032  1,818  1,786 
FDIC insurance733  28  555  761  1,129 
Litigation and operational losses319  390  555  709  956 
Loss on sale or write-down of assets140  213  1,181  353  1,246 
Unfunded commitment reserve887  (2,539) 612  (1,652) 231 
Merger and acquisition    34    34 
COVID-19419  23    442  442 
Other operating expenses5,866  6,677  6,369  12,543  12,881 
Total Noninterest Expense52,756   50,271   52,229   103,027   101,959  
       
Income before Income Taxes29,242   6,156   34,423   35,397   65,413  
Taxable equivalent adjustment (1)359  397  455  755  912 
Income tax provision5,032  1,032  6,688  6,064  12,632 
Net Income$23,851   $4,727   $27,280   $28,578   $51,869  
       
Shares Outstanding at End of Period98,132,697  98,015,396  98,499,937  98,132,697  98,499,937 
Average Shares Outstanding Assuming Dilution98,146,854  98,361,494  98,600,609  98,254,429  98,651,810 
       


FIRST COMMONWEALTH FINANCIAL CORPORATION   
CONSOLIDATED FINANCIAL DATA     
Unaudited     
(dollars in thousands)     
      
 June 30, March 31, June 30,
 2020 2020 2019
BALANCE SHEET (Period End)     
Assets     
Cash and due from banks$108,970  $118,413  $95,047 
Interest-bearing bank deposits348,763  15,762  1,233 
Securities available for sale, at fair value914,412  992,041  895,471 
Securities held to maturity, at amortized cost297,986  318,256  373,453 
Loans held for sale30,409  25,783  16,036 
      
Loans6,922,075  6,313,944  6,003,059 
Allowance for credit losses(81,441) (79,075) (51,061)
Net loans6,840,634  6,234,869  5,951,998 
      
Goodwill and other intangibles318,072  318,891  286,545 
Other assets505,409  491,090  451,071 
Total Assets$9,364,655   $8,515,105   $8,070,854  
      
Liabilities and Shareholders' Equity     
Noninterest-bearing demand deposits$2,288,299  $1,751,524  $1,528,307 
      
Interest-bearing demand deposits327,691  326,122  238,406 
Savings deposits4,431,919  4,034,759  3,530,705 
Time deposits734,292  810,683  858,547 
Total interest-bearing deposits5,493,902  5,171,564  4,627,658 
      
Total deposits7,782,201  6,923,088  6,155,965 
      
Short-term borrowings108,484  146,971  555,080 
Long-term borrowings233,723  233,955  234,623 
Total borrowings342,207  380,926  789,703 
      
Other liabilities164,542  153,167  103,355 
Shareholders' equity1,075,705  1,057,924  1,021,831 
Total Liabilities and Shareholders' Equity$9,364,655   $8,515,105   $8,070,854  
            


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    
 For the Three Months Ended For the Six Months Ended
 June 30, Yield/  March 31, Yield/  June 30, Yield/  June 30, Yield/  June 30, Yield/ 
 2020 Rate  2020 Rate  2019Rate 2020 Rate  2019 Rate 
NET INTEREST MARGIN                           
                         
Assets                        
Loans, excluding PPP loans (FTE)(1)(3)$6,372,145  4.14% $6,255,825  4.63% $5,949,332  4.97% $6,313,985  4.38% $5,880,840  4.95%
PPP Loans$405,738  2.73% $  0.00% $  0.00% $202,869  2.73% $  0.00%
Securities and interest-bearing bank deposits (FTE) (1)1,412,275  1.99% 1,255,699  2.46% 1,279,032  2.75% 1,333,987  2.21% 1,297,636  2.81%
Total Interest-Earning Assets (FTE) (1)8,190,158  3.70 % 7,511,524  4.27 % 7,228,364  4.58 % 7,850,841  3.97 % 7,178,476  4.57 %
Noninterest-earning assets853,396     825,797     758,110     839,596     754,512    
Total Assets$9,043,554      $8,337,321      $7,986,474      $8,690,437      $7,932,988     
                         
Liabilities and Shareholders' Equity                        
Interest-bearing demand and savings deposits$4,568,202  0.24% $4,215,323  0.48% $3,777,016  0.59% $4,391,763  0.36% $3,727,477  0.56%
Time deposits776,892  1.51% 825,966  1.65% 870,603  1.72% 801,429  1.58% 868,286  1.64%
Short-term borrowings112,063  0.17% 202,314  1.17% 533,716  2.27% 157,188  0.81% 574,203  2.27%
Long-term borrowings233,819  4.41% 234,050  4.41% 211,087  5.01% 233,934  4.41% 198,081  5.22%
Total Interest-Bearing Liabilities5,690,976  0.59 % 5,477,653  0.85 % 5,392,422  1.11 % 5,584,314  0.72 % 5,368,047  1.09 %
Noninterest-bearing deposits2,130,775     1,676,362     1,497,199     1,903,569     1,481,064    
Other liabilities150,254     111,988     87,429     131,121     85,685    
Shareholders' equity1,071,549     1,071,318     1,009,424     1,071,433     998,192    
Total Noninterest-Bearing Funding Sources3,352,578     2,859,668     2,594,052     3,106,123     2,564,941    
Total Liabilities and Shareholders' Equity$9,043,554      $8,337,321      $7,986,474      $8,690,437      $7,932,988     
                         
Net Interest Margin (FTE) (annualized)(1)  3.29 %   3.65 %   3.75 %   3.46 %   3.75 %


FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA   
Unaudited   
(dollars in thousands)   
 June 30,March 31,June 30,
 202020202019
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,202,212 $1,272,240 $1,236,424 
Paycheck Protection Program570,887   
Commercial real estate2,224,710 2,190,098 2,118,582 
Real estate construction339,603 332,814 361,028 
Total Commercial4,337,412  3,795,152  3,716,034  
    
Consumer Loan Portfolio:   
Closed-end mortgages1,140,101 1,103,281 1,060,348 
Home equity lines of credit583,187 587,859 519,093 
Real estate construction76,726 80,644 80,826 
Total Real Estate - Consumer1,800,014  1,771,784  1,660,267  
    
Auto loans671,202 626,256 515,569 
Direct installment43,629 46,029 40,568 
Personal lines of credit63,600 68,240 63,155 
Student loans6,218 6,483 7,466 
Total Other Consumer784,649  747,008  626,758  
Total Consumer Portfolio2,584,663  2,518,792  2,287,025  
Total Portfolio Loans6,922,075  6,313,944  6,003,059  
Loans held for sale30,409 25,783 16,036 
Total Loans$6,952,484  $6,339,727  $6,019,095  
    
    
 June 30,March 31,June 30,
 202020202019
ASSET QUALITY DETAIL   
Nonperforming Loans:   
Loans on nonaccrual basis$44,968 $46,109 $15,665 
Troubled debt restructured loans on nonaccrual basis3,600 5,522 10,914 
Troubled debt restructured loans on accrual basis7,455 7,509 8,975 
  Total Nonperforming Loans$56,023  $59,140  $35,554  
Other real estate owned ("OREO")1,634 2,697 1,884 
Repossessions ("Repos")537 836 319 
  Total Nonperforming Assets$58,194  $62,673  $37,757  
Loans past due in excess of 90 days and still accruing1,421 1,427 2,656 
Classified loans76,917 90,233 49,975 
Criticized loans125,432 117,535 117,976 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos (4)0.84%0.99%0.63%
Allowance for credit losses$81,441 $79,075 $51,061 
    


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    
 For the Three Months Ended For the Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
Net Charge-offs (Recoveries):      
Commercial, financial, agricultural and other$1,234 $405 $301  $1,639 $1,223 
Real estate construction(26) (42) (26)(84)
Commercial real estate2,151 222 (38) 2,373 220 
Residential real estate2 502 (15) 504 61 
Loans to individuals1,132 2,400 1,221  3,532 2,213 
Net Charge-offs$4,493  $3,529  $1,427   $8,022  $3,633  
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4)0.27%0.23%0.10% 0.25%0.12%
Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4)0.28 %0.23 %0.10 % 0.26 %0.12 %
Provision for credit losses as a percentage of net charge-offs152.66%877.50%198.67  471.53%190.75%
Provision for credit losses$6,859 $30,967 $2,835  $37,826 $6,930 


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%.
(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 Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
       
Net Income$23,851  $4,727  $27,280   $28,578  $51,869 
Intangible amortization919  934  745   1,853  1,499 
Tax benefit of amortization of intangibles(193) (196) (156)  (389) (315)
Net Income, adjusted for tax affected amortization of intangibles24,577   5,465   27,869    30,042   53,053  
       
Average Tangible Equity:      
Total shareholders' equity$1,071,549  $1,071,318  $1,009,424   $1,071,433  $998,192 
Less: intangible assets318,486  319,269  286,781   318,877  286,828 
  Tangible Equity753,063   752,049   722,643    752,556   711,364  
Less: preferred stock—   —   —    —   —  
  Tangible Common Equity$753,063   $752,049   $722,643    $752,556   $711,364  
       
(8)Return on Average Tangible Common Equity13.13 % 2.92 % 15.47 %  8.03 % 15.04 %
       


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 Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
       
Core Net Income:      
Total Net Income$23,851  $4,727  $27,280   $28,578  $51,869 
Merger & acquisition related expenses    34     34 
Tax benefit of merger & acquisition related expenses    (7)    (7)
(5) Core net income$23,851   $4,727   $27,307    $28,578   $51,896  
Average Shares Outstanding Assuming Dilution98,146,854   98,361,494   98,600,609    98,254,429   98,651,810 
(6) Core Earnings per common share (diluted)$0.24   $0.05   $0.28    $0.29   $0.53  
       
Intangible amortization919  934  745   1,853  1,499 
Tax benefit of amortization of intangibles(193) (196) (156)  (389) (315)
Core Net Income, adjusted for tax affected amortization of intangibles$24,577   $5,465   $27,896    $30,042   $53,080  
       
(9) Core Return on Average Tangible Common Equity13.13 % 2.92 % 15.48 %  8.03 % 15.05 %
       
 For the Three Months Ended For the Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
Core Return on Average Assets:      
Total Net Income$23,851  $4,727  $27,280   $28,578  $51,869 
Total Average Assets9,043,554  8,337,321  7,986,474   8,690,437  7,932,988 
Return on Average Assets1.06 % 0.23 % 1.37 %  0.66 % 1.32 %
                     
Core Net Income (5)$23,851  $4,727  $27,307   $28,578  $51,896 
Total Average Assets9,043,554  8,337,321  7,986,474   8,690,437  7,932,988 
(7) Core Return on Average Assets1.06 % 0.23 %  1.37 %  0.66 % 1.32 %


 For the Three Months Ended For the Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
Pre-tax pre-provision income:      
Net interest income (FTE)$67,045$68,121$67,581 $135,165$133,524
Noninterest income 21,812 19,273 21,906  41,085 40,778
Noninterest expense 52,756 50,271 52,229  103,027 101,959
Pre-tax pre-provision income$36,101$37,123$37,258 $73,223$72,343
       
Merger and acquisition related expenses$0$0$34 $0$34
Core pre-tax pre-provision income$36,101$37,123$37,292 $73,223$72,377
       
Net charge-offs$4,493$3,529$1,427 $8,022$3,633


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
    
 For the Three Months Ended For the Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 202020202019 20202019
Core Efficiency Ratio:      
Total Noninterest Expense$52,756 $50,271 $52,229  $103,027 $101,959 
Adjustments to Noninterest Expense:      
Unfunded commitment reserve887 (2,539)612  (1,652)231 
Intangible amortization919 934 745  1,853 1,499 
Merger and acquisition related  34   34 
Noninterest Expense - Core$50,950  $51,876  $50,838   $102,826  $100,195  
       
Net interest income, fully tax equivalent$67,045 $68,121 $67,581  $135,165 $133,524 
Total noninterest income21,812 19,273 21,906  41,085 40,778 
Net securities gains(8)(19)(6) (27)(6)
Total Revenue$88,849 $87,375 $89,481  $176,223 $174,296 
       
Adjustments to Revenue:      
Derivative mark-to-market(221)(1,741)(17) (1,962)(43)
Total Revenue - Core$89,070  $89,116  $89,498   $178,185  $174,339  
       
(10)Core Efficiency Ratio57.20 %58.21 %56.80 % 57.71 %57.47 %
       
       
 June 30,March 31,June 30,   
 202020202019   
Tangible Equity:      
Total shareholders' equity$1,075,705 $1,057,924 $1,021,831    
Less: intangible assets318,072 318,891 286,545    
  Tangible Equity757,633  739,033  735,286     
Less: preferred stock      
  Tangible Common Equity$757,633  $739,033  $735,286     
       
Tangible Assets:      
Total assets$9,364,655 $8,515,105 $8,070,854    
Less: intangible assets318,072 318,891 286,545    
  Tangible Assets$9,046,583  $8,196,214  $7,784,309     
Less: PPP loans570,887  —  —     
  Tangible Assets$8,475,696  $8,196,214  $7,784,309     
       
(12)Tangible Common Equity as a percentage of Tangible Assets8.37 %9.02 %9.45 %
   
(12)Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans8.94 %9.02 %9.45 %   
       
Shares Outstanding at End of Period98,132,697 98,015,396 98,499,937    
(11)Tangible Book Value Per Common Share$7.72  $7.54  $7.46     
       
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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