Financial News

First Commonwealth Announces Third Quarter 2020 Earnings; Declares Quarterly Dividend

INDIANA, Pa., Oct. 27, 2020 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2020.

Financial Summary

(dollars in thousands,For the Three Months Ended For the Nine Months Ended
except per share data)September 30, June 30, September 30, September 30, September 30,
   2020
 2020
 2019
 2020
 2019
Reported Results         
Net income$19,186 $23,851 $26,644 $47,764 $78,513
Diluted earnings per share$0.20 $0.24 $0.27 $0.49 $0.80
Return on average assets0.81% 1.06% 1.31% 0.71% 1.32%
Return on average equity7.01% 8.95% 10.22% 5.92% 10.39%
            
Operating Results (non-GAAP)(1)         
Core net income$23,806 $23,851 $29,597 $52,384 $81,493
Core diluted earnings per share$0.24 $0.24 $0.30 $0.53 $0.83
Core pre-tax pre-provision net revenue$41,112 $36,101 $39,895 $114,336 $112,271
Provision expense$11,212 $6,859 $2,708 $49,038 $9,638
Net charge-offs$4,346 $4,493 $3,734 $12,368 $7,367
Reserve build/(release)(2)$6,866 $2,366 -$1,026 $36,670 $2,271
Core return on average assets (ROAA)1.01% 1.06% 1.46% 0.78% 1.37%
Core pre-tax pre-provision ROAA1.74% 1.61% 1.97% 1.71% 1.88%
Return on average tangible common equity10.29% 13.13% 14.62% 8.80% 14.90%
Core return on average tangible common equity12.68% 13.13% 16.20% 9.61% 15.45%
Core efficiency ratio54.45% 57.20% 55.73% 56.58% 56.87%
Net interest margin (FTE)3.11% 3.29% 3.76% 3.34% 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.
   

Third Quarter 2020 Highlights

Financial results

  • Net income of $19.2 million and diluted earnings per share of $0.20, a decrease of $0.04 per share from the previous quarter
       --   Core net income of $23.8 million and diluted earnings per share of $0.24, unchanged from the previous quarter
  • Provision for loan losses of $11.2 million increased $4.4 million from the previous quarter
  • Core pre-tax pre-provision net revenue (PPNR)(1) was $41.1 million, an increase of $5.0 million from the previous quarter and an increase of $1.2 million from the third quarter of 2019
       --   Core PPNR ROAA was 1.74%, an increase of 13 basis points from the previous quarter
  • Quarterly and year-to-date positive operating leverage
       --   Core revenue increased $4.6 million, or 5.1% from the previous quarter and $6.4 million, or 2.4% from the first nine months of the previous year
       --   Core noninterest expense increased $39 thousand, or 0.1% from the previous quarter and $2.9 million, or 1.9% from the first nine months of the previous year
  • Net interest income of $66.7 million was essentially flat from the previous quarter, decreasing by $0.3 million due to an 18 basis point decline in the net interest margin, most of which was offset by a $338.5 million increase in average interest-earning assets 
  • Noninterest income of $26.8 million increased $5.0 million from the previous quarter driven by record mortgage volume and strong SBA gain on sale revenue
  • Noninterest expense of $58.2 million increased $5.4 million from the previous quarter due to $5.8 million in charges related to the Company’s previously disclosed voluntary early retirement program and the consolidation of 20% of the Company’s branch facilities
       --   Core expenses were well controlled and essentially flat from the previous quarter
       --   The core efficiency ratio improved to 54.5% as compared to 57.2% in the previous quarter
  • Total period-end loans (excluding PPP loans) increased $32.6 million, or 2.0% annualized, from the previous quarter driven by improved real estate secured consumer and indirect auto demand
  • Average deposits increased $320.1 million (or 17.1% annualized) from the previous quarter due in part to deposit growth associated with PPP loan funds, and period-end deposits decreased $78.3 million (or 4.0% annualized)

Asset quality

  • As of October 23, 2020, loans with modified terms classified under Section 4013 of the CARES Act (Deferrals) totaled $12.0 million, or 0.19% of total portfolio loans (excluding PPP)
  • Nonaccrual loans of $42.7 million decreased $5.9 million from the previous quarter
  • Net charge-offs on loans totaled $4.3 million, a decrease of $0.1 million from the previous quarter
  • Reserve build(2) totaled $36.7 million or 0.58% of total portfolio loans (excluding PPP) on a year-to-date basis, bringing reserves to total loans (adjusted for PPP) to 1.38%, and reserves to total originated loans (adjusted for PPP) to 1.44%
  • 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 $3.9 billion
  • Bank-level Tier 1 Capital ratio of 11.4%, which represents $234.8 million in excess capital above the regulatory “well capitalized” requirement of 8.0%
  • The Company completed the remaining $15.6 million of its previously authorized share repurchase program on October 9, 2020, repurchasing 2.0 million shares at a weighted average price of $7.84

Operational Update

  • In response to the current operating environment and evolving customer preferences, the Company has implemented a profitability initiative termed “Project Thrive” with the goal of growing its business, maintaining adequate capital, protecting against further NIM compression and reducing operating expenses. In keeping with Project Thrive, a targeted 20% reduction in retail locations will occur prior to December 31, 2020.
  • Implemented the Banno Digital Platform, replacing both our online banking and mobile banking, and completed the conversion of our commercial customers to our new Treasury Management system
       --   These implementations represent a major investment in driving ongoing digital delivery and enhancing service
  • All community office drive-ups are open and our lobbies are available by appointment

“I am encouraged by our results for the third quarter of 2020.  Our performance highlights the investments we have made in our fee businesses, geographic expansion and a more balanced approach to commercial and consumer lending,” stated T. Michael Price, President and Chief Executive Officer, “While we saw a meaningful improvement in our fee income and consumer lending, the shift in earning asset mix resulting from the additional liquidity continues to pressure our net interest margin.  Additionally, our operating efficiency continues to improve as reflected in the core efficiency ratio of 54.5% for the third quarter.  This marks the first time our efficiency ratio has been below 55% for a quarter since well before the last financial crisis." 

Price continued, “Although we did see improvement in our asset quality metrics, our reserve build of $6.9 million reflects ongoing uncertainty in the hospitality and retail sectors.  Despite the myriad of challenges facing our industry, we continue to be a source of strength for our customers and communities and we remain focused on delivering sustainable, long-term performance for our shareholders.”

Earnings

Net income for the third quarter of 2020 was $19.2 million, or $0.20 per share, compared to $23.9 million, or $0.24 per share for the second quarter of 2020, and $26.6 million, or $0.27 per share in the third quarter of 2019.

Net income for the first nine months of 2020 was $47.8 million, as compared to $78.5 million for the same period in 2019.

Net Interest Income and Net Interest Margin

Net interest income (FTE) decreased $0.3 million from the previous quarter due to lower replacement yields on new loans, driven by the impact of the lower interest rate environment. 

The net interest margin for the third quarter of 2020 was 3.11%, a decrease of 18 basis points from the previous quarter and a decrease of 65 basis points from the third quarter of 2019.  The decrease from the previous quarter was due primarily to a 25 basis point decrease in the yield on interest-earning assets, partially offset by a 10 basis point decrease in the cost of interest bearing liabilities.

Total average interest-earning assets increased $338.5 million from the previous quarter primarily due to a $30.8 million increase in average traditional loans along with $166.7 million in average PPP loans and a $141.0 million increase in average securities and interest bearing bank deposits due to excess liquidity on the balance sheet.

Total average deposits grew $320.1 million in the third quarter of 2020 as compared to the previous quarter.  Period-end deposits decreased $78.3 million in the third quarter of 2020 as compared to the previous quarter.  The decrease from the previous quarter was driven by a $73.1 million decrease in time deposits, partially offset by a $13.5 million increase in noninterest-bearing demand 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 extraordinary economic conditions and the uncertainty of economic forecasts and resulting volatility of 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 third quarter totaled $11.2 million.  Reserves for loan losses totaled $88.3 million in the third quarter of 2020, an increase of $6.9 million from the previous quarter.  The increase from the previous quarter was primarily due to an increase of $4.7 million in qualitative reserves (due in part to the risk posed by the bank’s hospitality and retail portfolios) and an increase of $0.9 million in normal qualitative reserves due to internal credit metrics.  These qualitative reserves are intended to reflect not only 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.

At September 30, 2020, nonperforming loans totaled $49.7 million, a decrease of $6.3 million from the previous quarter.  The decrease in nonperforming loans was primarily due to the partial resolution of a $5.5 million C&I credit placed into nonaccrual during the previous quarter.

Nonperforming loans as a percentage of total loans (excluding PPP) were 0.78%, 0.88% and 0.58% for the periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

For the originated loan portfolio at September 30, 2020, the general allowance for credit losses to total originated loans (excluding PPP) was 1.31% compared to 1.23% at June 30, 2020 and 0.87% at September 30, 2019.

During the third quarter of 2020, net charge-offs were $4.3 million, compared to $4.5 million in the prior quarter and $3.7 million in the third quarter of 2019.  Net charge-offs were 0.27%, 0.28% and 0.25% of average loans (excluding PPP, annualized) for the periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $26.8 million for the third quarter of 2020, as compared to $21.8 million for the second quarter of 2020 and $22.2 million for the third quarter of 2019 (excluding net securities gains).  There were no material securities gains during the current or comparable quarters.

The $5.0 million increase from the previous quarter was primarily due to a $2.2 million increase in gain on sale of mortgage loans, a $0.9 million increase in gain on sale of SBA loans, a $0.7 million increase in deposit service charges and a $0.6 million increase in card related interchange income driven by increased transaction volume on customer accounts.

Noninterest expense totaled $58.2 million for the third quarter of 2020, as compared to $52.8 million for the second quarter of 2020 and $54.9 million for the third quarter of 2019.  The $5.4 million increase from the previous quarter was primarily the result of $5.8 million in charges related to the Company’s previously disclosed voluntary early retirement program and the consolidation of 20% of the company’s branch facilities.

The core efficiency ratio was 54.45% during the third quarter of 2020 as compared to 57.20% in the previous quarter and 55.73% in the third quarter of 2019.

Full time equivalent staff was 1,399 as September 30, 2020, 1,465 at June 30, 2020, and 1,511 at September 30, 2019.  The decrease from the prior quarter is the result of an ongoing 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 November 20, 2020 to shareholders of record as of November 6, 2020. This dividend represents a 4.9% projected annual yield utilizing the October 26, 2020 closing market price of $9.01.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2020 were 14.4%, 11.8%, 8.9%, 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 third quarter 2020 on Wednesday, October 28, 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 #10148727.  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 Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
 2020 2020 2019 2020 2019
SUMMARY RESULTS OF OPERATIONS         
Net interest income (FTE) (1)$66,742  $67,045  $68,875  $201,908  $202,398 
Provision for credit losses11,212  6,859  2,708  49,038  9,638 
Noninterest income26,769  21,812  22,179  67,854  62,957 
Noninterest expense58,247  52,756  54,897  161,274  156,856 
Net income19,186  23,851  26,644  47,764  78,513 
Core net income (5)23,806  23,851  29,597  52,384  81,493 
Earnings per common share (diluted)$0.20  $0.24  $0.27  $0.49  $0.80 
Core earnings per common share (diluted) (6)$0.24  $0.24  $0.30  $0.53  $0.83 
KEY FINANCIAL RATIOS         
Return on average assets0.81% 1.06% 1.31% 0.71% 1.32%
Core return on average assets (7)1.01% 1.06% 1.46% 0.78% 1.37%
Return on average assets, pre-provision, pre-tax1.49% 1.61% 1.78% 1.62% 1.82%
Core return on average assets, pre-provision, pre-tax1.74% 1.61% 1.97% 1.71% 1.88%
Return on average shareholders' equity7.01% 8.95% 10.22% 5.92% 10.39%
Return on average tangible common equity (8)10.29% 13.13% 14.62% 8.80% 14.90%
Core return on average tangible common equity (9)12.68% 13.13% 16.20% 9.61% 15.45%
Core efficiency ratio (2)(10)54.45% 57.20% 55.73% 56.58% 56.87%
Net interest margin (FTE) (1)3.11% 3.29% 3.76% 3.34% 3.75%
          
Book value per common share$11.07  $10.96  $10.57     
Tangible book value per common share (11)7.79  7.72  7.31     
Market value per common share7.74  8.28  13.47     
Cash dividends declared per common share0.11  0.11  0.10  0.33  0.30 
ASSET QUALITY RATIOS         
Nonperforming loans as a percent of end-of-period loans (3)0.71% 0.81% 0.58%    
Nonperforming loans as a percent of end-of-period loans, excluding PPP loans (3)0.78% 0.88% 0.58%    
Nonperforming assets as a percent of total assets (3)0.55% 0.62% 0.46%    
Nonperforming assets as a percent of total assets, excluding PPP loans (3)0.59% 0.66% 0.46%    
Net charge-offs as a percent of average loans (annualized) (4)0.25% 0.27% 0.25%    
Net charge-offs as a percent of average loans, excluding PPP loans (annualized) (4)0.27% 0.28% 0.25%    
Allowance for credit losses as a percent of nonperforming loans (4)177.58% 145.37% 141.64%    
Allowance for credit losses as a percent of end-of-period loans (4)1.27% 1.18% 0.82%    
Allowance for credit losses as a percent of end-of-period loans, excluding PPP loans (4)1.38% 1.28% 0.82%    
Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases1.31% 1.22% 0.91%    
Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases, excluding PPP loans1.44% 1.34% 0.92%    
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets11.5% 11.5% 12.7%    
Tangible common equity as a percent of tangible assets (12)8.4% 8.4% 9.2%    
Tangible common equity as a percent of tangible assets, excluding PPP loans (12)9.0% 8.9% 9.2%    
Leverage Ratio8.9% 9.3% 10.1%    
Risk Based Capital - Tier I11.8% 11.8% 11.8%    
Risk Based Capital - Total14.4% 14.4% 14.1%    
Common Equity - Tier I10.7% 10.7% 10.7%    


FIRST COMMONWEALTH FINANCIAL CORPORATION   
CONSOLIDATED FINANCIAL DATA     
Unaudited     
(dollars in thousands, except per share data)     
 For the Three Months Ended
 For the Nine Months Ended
 September 30,
 June 30,
 September 30,
 September 30,
 September 30,
 2020
 2020
 2019
 2020
 2019
INCOME STATEMENT                   
Interest income$73,593  $74,981  $82,575  $227,903  $244,226 
Interest expense7,224  8,295  14,130  27,124  43,169 
Net Interest Income66,369  66,686  68,445  200,779  201,057 
Taxable equivalent adjustment (1)373  359  430  1,129  1,341 
Net Interest Income  (FTE)66,742  67,045  68,875  201,908  202,398 
Provision for credit losses11,212  6,859  2,708  49,038  9,638 
Net Interest Income after Provision for Credit Losses (FTE)55,530  60,186  66,167  152,870  192,760 
Net securities gains20  8  9  47  15 
Trust income2,554  2,109  2,325  6,774  6,221 
Service charges on deposit accounts4,035  3,286  4,954  12,066  13,792 
Insurance and retail brokerage commissions2,156  1,831  1,912  5,982  5,887 
Income from bank owned life insurance1,547  1,800  1,540  4,963  4,408 
Gain on sale of mortgage loans6,437  4,243  2,599  13,226  6,101 
Gain on sale of other loans and assets1,871  581  970  3,151  3,831 
Card-related interchange income6,441  5,886  5,629  17,589  15,800 
Derivative mark-to-market(160) (221) (45) (2,122) (88)
Swap fee income41  609  421  864  1,634 
Other income1,827  1,680  1,865  5,314  5,356 
Total Noninterest Income26,769  21,812  22,179  67,854  62,957 
Salaries and employee benefits28,823  28,773  28,674  87,573  83,205 
Net occupancy4,609  4,397  4,521  13,979  13,878 
Furniture and equipment4,033  3,657  3,904  11,468  11,396 
Data processing2,741  2,596  2,825  7,804  7,988 
Pennsylvania shares tax1,254  1,254  1,189  3,246  3,365 
Advertising and promotion1,115  1,535  1,140  3,800  3,611 
Intangible amortization939  919  865  2,792  2,364 
Collection and repossession260  341  649  1,165  1,656 
Other professional fees and services937  920  969  2,755  2,755 
FDIC insurance876  733  35  1,637  1,164 
Litigation and operational losses329  319  308  1,038  1,264 
Loss on sale or write-down of assets63  140  152  416  1,398 
Merger and acquisition    3,738    3,772 
COVID-19125  419    567  567 
Voluntary early retirement3,304      3,304   
Branch consolidation2,544      2,544   
Other operating expenses6,295  6,753  5,928  17,186  19,040 
Total Noninterest Expense58,247  52,756  54,897  161,274  156,856 
Income before Income Taxes24,052  29,242  33,449  59,450  98,861 
Taxable equivalent adjustment (1)373  359  430  1,129  1,341 
Income tax provision4,493  5,032  6,375  10,557  19,007 
Net Income$19,186  $23,851  $26,644  $47,764  $78,513 
                    
Shares Outstanding at End of Period 96,924,781   98,132,697   98,319,081   96,924,781   98,319,081 
Average Shares Outstanding Assuming Dilution 98,160,143   98,146,854   98,547,898   98,224,506   98,615,787 
                    


FIRST COMMONWEALTH FINANCIAL CORPORATION   
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
      
 September 30, June 30, September 30,
 2020 2020 2019
BALANCE SHEET (Period End)     
Assets     
Cash and due from banks$97,060  $108,970  $112,241 
Interest-bearing bank deposits283,037  348,763  16,408 
Securities available for sale, at fair value921,202  914,412  823,944 
Securities held to maturity, at amortized cost268,638  297,986  357,890 
Loans held for sale37,998  30,409  20,288 
      
Loans6,949,716  6,922,075  6,099,561 
Allowance for credit losses(88,307) (81,441) (50,035)
Net loans6,861,409  6,840,634  6,049,526 
      
Goodwill and other intangibles317,423  318,072  320,505 
Other assets502,599  505,409  451,225 
Total Assets$9,289,366  $9,364,655  $8,152,027 
      
Liabilities and Shareholders' Equity     
Noninterest-bearing demand deposits$2,301,821  $2,288,299  $1,657,507 
      
Interest-bearing demand deposits315,806  327,691  263,312 
Savings deposits4,425,119  4,431,919  3,867,034 
Time deposits661,161  734,292  890,143 
Total interest-bearing deposits5,402,086  5,493,902  5,020,489 
      
Total deposits7,703,907  7,782,201  6,677,996 
      
Short-term borrowings122,356  108,484  83,735 
Long-term borrowings233,490  233,723  234,404 
Total borrowings355,846  342,207  318,139 
      
Other liabilities156,782  164,542  116,862 
Shareholders' equity1,072,831  1,075,705  1,039,030 
Total Liabilities and Shareholders' Equity$9,289,366  $9,364,655  $8,152,027 


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 
 For the Three Months Ended For the Nine Months Ended
 September 30,Yield/June 30,Yield/September 30,Yield/ September 30,Yield/September 30,Yield/
 2020Rate2020Rate2019Rate 2020Rate2019Rate
NET INTEREST MARGIN          
            
Assets           
Loans, excluding PPP loans (FTE)(1)(3)$6,402,968 3.97% $6,372,145 4.14% $6,042,822 4.93% $6,343,862 4.25% $5,935,427 4.95%
PPP Loans572,434 2.67% 405,738 2.73%  % 326,957 2.69%  %
Securities and interest-bearing bank deposits (FTE) (1)1,553,252 1.59% 1,412,275 1.99% 1,226,270 2.58% 1,407,609 1.98% 1,273,594 2.73%
Total Interest-Earning Assets (FTE) (1)8,528,654 3.45% 8,190,158 3.70% 7,269,092 4.53% 8,078,428 3.79% 7,209,021 4.55%
Noninterest-earning assets861,311  853,396  780,960   846,887  763,417  
Total Assets$9,389,965   $9,043,554   $8,050,052    $8,925,315   $7,972,438   
            
Liabilities and Shareholders' Equity           
Interest-bearing demand and savings deposits$4,818,576 0.20% $4,568,202 0.24% $3,933,091 0.61% $4,535,072 0.30% $3,796,768 0.58%
Time deposits696,227 1.28% 776,892 1.51% 863,714 1.75% 766,106 1.49% 866,746 1.68%
Short-term borrowings124,670 0.11% 112,063 0.17% 323,041 1.99% 146,270 0.61% 489,562 2.21%
Long-term borrowings233,588 4.37% 233,819 4.41% 234,497 4.51% 233,818 4.40% 210,353 4.96%
Total Interest-Bearing Liabilities5,873,061 0.49% 5,690,976 0.59% 5,354,343 1.05% 5,681,266 0.64% 5,363,429 1.08%
Noninterest-bearing deposits2,281,200  2,130,775  1,560,478   2,030,364  1,507,826  
Other liabilities147,603  150,254  101,328   136,655  90,956  
Shareholders' equity1,088,101  1,071,549  1,033,903   1,077,030  1,010,227  
Total Noninterest-Bearing Funding Sources3,516,904  3,352,578  2,695,709   3,244,049  2,609,009  
Total Liabilities and Shareholders' Equity$9,389,965  $9,043,554  $8,050,052   $8,925,315  $7,972,438  
            
Net Interest Margin (FTE) (annualized)(1) 3.11%  3.29%  3.76%  3.34%  3.75%


FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA   
Unaudited   
(dollars in thousands)   
 September 30,June 30,September 30,
 202020202019
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,163,268 $1,202,212 $1,210,936 
Paycheck Protection Program573,468 570,887  
Commercial real estate2,215,311 2,224,710 2,124,240 
Real estate construction366,936 339,603 334,533 
Total Commercial4,318,983 4,337,412 3,669,709 
    
Consumer Loan Portfolio:   
Closed-end mortgages1,154,366 1,140,101 1,081,170 
Home equity lines of credit589,654 583,187 585,050 
Real estate construction86,053 76,726 85,748 
Total Real Estate - Consumer1,830,073 1,800,014 1,751,968 
    
Auto loans692,475 671,202 553,617 
Direct installment40,081 43,629 46,704 
Personal lines of credit62,155 63,600 70,441 
Student loans5,949 6,218 7,122 
Total Other Consumer800,660 784,649 677,884 
Total Consumer Portfolio2,630,733 2,584,663 2,429,852 
Total Portfolio Loans6,949,716 6,922,075 6,099,561 
Loans held for sale37,998 30,409 20,288 
Total Loans$6,987,714 $6,952,484 $6,119,849 
    
    
 September 30,June 30,September 30,
 202020202019
ASSET QUALITY DETAIL   
Nonperforming Loans:   
Loans on nonaccrual basis$38,139 $44,968 $16,227 
Troubled debt restructured loans on nonaccrual basis4,511 3,600 11,074 
Troubled debt restructured loans on accrual basis7,078 7,455 8,024 
       Total Nonperforming Loans$49,728 $56,023 $35,325 
Other real estate owned ("OREO")1,079 1,634 1,622 
Repossessions ("Repos")685 537 486 
       Total Nonperforming Assets$51,492 $58,194 $37,433 
Loans past due in excess of 90 days and still accruing1,249 1,421 2,054 
Classified loans80,190 76,917 50,719 
Criticized loans188,957 125,432 128,691 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos (4)0.74%0.84%0.61%
Allowance for credit losses$88,307 $81,441 $50,035 
    


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202020202019 20202019
Net Charge-offs (Recoveries):      
Commercial, financial, agricultural and other$3,338  $1,234  $729  $4,977  $1,952 
Real estate construction  (26) (74) (26) (158)
Commercial real estate(110) 2,151  1,301  2,263  1,521 
Residential real estate117  2  366  621  427 
Loans to individuals1,001  1,132  1,412  4,533  3,625 
Net Charge-offs$4,346  $4,493  $3,734  $12,368  $7,367 
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4)0.25% 0.27% 0.25% 0.25% 0.17%
Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4)0.27% 0.28% 0.25% 0.26% 0.17%
Provision for credit losses as a percentage of net charge-offs257.98% 152.66% 72.52% 396.49% 130.83%
Provision for credit losses$11,212  $6,859  $2,708  $49,038  $9,638 


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 Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202020202019 20202019
       
Net Income$19,186  $23,851  $26,644  $47,764  $78,513 
Intangible amortization939  919  865  2,792  2,364 
Tax benefit of amortization of intangibles(197) (193) (182) (586) (496)
Net Income, adjusted for tax affected amortization of intangibles19,928  24,577  27,327  49,970  80,381 
       
Average Tangible Equity:      
Total shareholders' equity$1,088,101  $1,071,549  $1,033,903  $1,077,030  $1,010,227 
Less: intangible assets317,702  318,486  292,529  318,483  288,749 
       Tangible Equity770,399  753,063  741,374  758,547  721,478 
Less: preferred stock         
       Tangible Common Equity$770,399  $753,063  $741,374  $758,547  $721,478 
       
(8)Return on Average Tangible Common Equity10.29% 13.13% 14.62% 8.80% 14.90%
       


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
 
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
    
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202020202019 20202019
       
Core Net Income:      
Total Net Income$19,186  $23,851  $26,644  $47,764  $78,513 
Merger & acquisition related expenses    3,738    3,772 
Tax benefit of merger & acquisition related expenses    (785)   (792)
Early retirement related3,304      3,304   
Tax benefit of early retirement related expenses(694)     (694)  
Branch consolidation related2,544      2,544   
Tax benefit of bank consolidation related expenses(534)     (534)  
(5) Core net income$23,806  $23,851  $29,597  $52,384  $81,493 
Average Shares Outstanding Assuming Dilution 98,160,143   98,146,854   98,547,898   98,224,506   98,615,787 
(6) Core Earnings per common share (diluted)$0.24  $0.24  $0.30  $0.53  $0.83 
       
Intangible amortization939  919  865  2,792  2,364 
Tax benefit of amortization of intangibles(197) (193) (182) (586) (496)
 Core Net Income, adjusted for tax
 affected amortization of intangibles
$24,548  $24,577  $30,280  $54,590  $83,361 
       
(9) Core Return on Average Tangible Common Equity12.68% 13.13% 16.20% 9.61% 15.45%
       
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202020202019 20202019
Core Return on Average Assets:      
Total Net Income$19,186  $23,851  $26,644  $47,764  $78,513 
Total Average Assets9,389,965  9,043,554  8,050,052  8,925,315  7,972,438 
Return on Average Assets0.81% 1.06% 1.31% 0.71% 1.32%
       
Core Net Income (5)$23,806  $23,851  $29,597  $52,384  $81,493 
Total Average Assets9,389,965  9,043,554  8,050,052  8,925,315  7,972,438 
(7) Core Return on Average Assets1.01% 1.06% 1.46% 0.78% 1.37%


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202020202019 20202019
Core Efficiency Ratio:      
Total Noninterest Expense$58,247  $52,756  $54,897  $161,274  $156,856 
Adjustments to Noninterest Expense:      
Unfunded commitment reserve471  887  (466) (1,181) (235)
Intangible amortization939  919  865  2,792  2,364 
Merger and acquisition related    3,738    3,772 
Early retirement related3,304      3,304   
Branch consolidation related2,544      2,544   
Noninterest Expense - Core$50,989  $50,950  $50,760  $153,815  $150,955 
       
Net interest income, fully tax equivalent$66,742  $67,045  $68,875  $201,908  $202,398 
Total noninterest income26,769  21,812  22,179  67,854  62,957 
Net securities gains(20) (8) (9) (47) (15)
Total Revenue$93,491  $88,849  $91,045  $269,715  $265,340 
       
Adjustments to Revenue:      
Derivative mark-to-market(160) (221) (45) (2,122) (88)
Total Revenue - Core$93,651  $89,070  $91,090  $271,837  $265,428 
       
(10)Core Efficiency Ratio54.45% 57.20% 55.73% 56.58% 56.87%
       
       
 September 30,June 30,September 30,   
 202020202019   
Tangible Equity:      
Total shareholders' equity$1,072,831  $1,075,705  $1,039,030    
Less: intangible assets317,423  318,072  320,505    
       Tangible Equity755,408  757,633  718,525    
Less: preferred stock        
       Tangible Common Equity$755,408  $757,633  $718,525    
       
Tangible Assets:      
Total assets$9,289,366  $9,364,655  $8,152,027    
Less: intangible assets317,423  318,072  320,505    
       Tangible Assets$8,971,943  $9,046,583  $7,831,522    
Less: PPP loans573,468   570,887   —     
       Tangible Assets$8,398,475   $8,475,696  $7,831,522    
       
(12)Tangible Common Equity as a percentage of Tangible Assets8.42% 8.37% 9.17%   
(12)Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans8.99% 8.94% 9.17%   
       
Shares Outstanding at End of Period96,924,781  98,132,697  98,319,081    
(11)Tangible Book Value Per Common Share$7.79  $7.72  $7.31    
       
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.


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
 
 For the Three Months Ended For the Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
  2020 2020 2019  2020 2019
Pre-tax pre-provision income:      
Net interest income (FTE)$66,742 $67,045 $68,875 $201,908 $202,398
Noninterest income 26,769  21,812  22,179  67,854  62,957
Noninterest expense 58,247  52,756  54,897  161,274  156,856
Pre-tax pre-provision income$35,264 $36,101 $36,157 $108,488 $108,499
       
Merger and acquisition related expenses$0 $0 $3,738 $0 $3,772
   Voluntary early retirement 3,304  0  0  3,304  0
   Branch consolidation 2,544  0  0  2,544  0
Core pre-tax pre-provision income$41,112 $36,101 $39,895 $114,336 $112,271
       
Net charge-offs$4,346 $4,493 $3,734 $12,368 $7,367

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