Financial News

First Commonwealth Announces Fourth Quarter and Full Year 2020 Earnings; Declares Quarterly Dividend and Announces Share Repurchase Program

INDIANA, Pa., Jan. 26, 2021 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year 2020.

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,
 2020 2020 2019 2020 2019
Reported Results         
Net income$25,683  $19,186  $26,820  $73,447  $105,333 
Diluted earnings per share$0.27  $0.20  $0.27  $0.75  $1.07 
Return on average assets 1.12%  0.81%  1.30%  0.82%  1.31%
Return on average equity 9.48%  7.01%  10.13%  6.82%  10.32%
                    
Operating Results (non-GAAP)(1)                   
Core net income$26,120  $23,905  $26,634  $78,951  $108,126 
Core diluted earnings per share$0.27  $0.24  $0.27  $0.81  $1.10 
Core pre-tax pre-provision net revenue$40,448  $41,237  $38,395  $155,351  $150,666 
Provision expense$7,680  $11,212  $4,895  $56,718  $14,533 
Net charge-offs$4,825  $4,346  $3,293  $17,193  $10,660 
Reserve build/(release)(2)$13,002  $6,886  $1,602  $49,672  $3,873 
Core return on average assets (ROAA) 1.14%  1.01%  1.29%  0.88%  1.35%
Core pre-tax pre-provision ROAA 1.76%  1.75%  1.86%  1.73%  1.88%
Return on average tangible common equity 13.80%  10.29%  14.99%  10.06%  14.92%
Core return on average tangible common equity 14.03%  12.73%  14.89%  10.78%  15.30%
Core efficiency ratio 56.00%  54.31%  57.23%  56.28%  56.97%
Net interest margin (FTE) 3.26%  3.11%  3.73%  3.32%  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/(release) represents the net change in the Company’s allowance for credit losses (ACL) from the prior period.

Fourth Quarter 2020 Highlights

Financial results

  • Net income of $25.7 million and diluted earnings per share of $0.27, an increase of $0.07 per share from the previous quarter
    °  Core net income(1) of $26.1 million and diluted earnings per share of $0.27, an increase of $0.03 from the previous quarter
  • Core pre-tax pre-provision net revenue (PPNR)(1) of $40.4 million, a decrease of $0.8 million from the previous quarter and an increase of $2.1 million from the fourth quarter of 2019
    °  Core PPNR ROAA of 1.76% increased by one basis point from the previous quarter
  • Net interest income of $67.8 million increased $1.1 million from the previous quarter
  • Noninterest income of $26.6 million (excluding net security gains) decreased $0.2 million from the previous quarter
  • Noninterest expense of $54.6 million decreased $3.6 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 during the previous quarter
  • Total portfolio loans (excluding Paycheck Protection Program (PPP) loans) decreased $93.9 million from the previous quarter due to lower commercial loan demand
  • Average deposits decreased $270.4 million from the previous quarter due to intentional strategies intended to manage excess liquidity

Asset quality

  • The provision for credit losses, which was calculated under the Current Expected Credit Loss (CECL) accounting standard, was $7.7 million, a decrease of $3.5 million from the previous quarter, and included $3.2 million related to unfunded commitments.   The Company elected to defer its adoption of CECL in accordance with relief provided under the U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act until December 31, 2020, effective January 1, 2020.
  • Reserve build(2) totaled $49.7 million or 0.79% of total portfolio loans (excluding PPP) on a year-to-date basis, bringing reserves to total loans (excluding PPP) to 1.61%
  • Nonaccrual loans of $45.6 million increased $2.9 million from the previous quarter
  • Net charge-offs on loans totaled $4.8 million, an increase of $0.5 million from the previous quarter

Strong liquidity and capital positions

  • Total available liquidity of $3.9 billion
  • Bank-level Tier 1 Capital ratio of 11.7%, which represents $248.3 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

Full Year 2020 Highlights

Franchise Growth

  • Total portfolio loans grew $572.0 million, or 9.2% compared to the prior year and $93.2 million, or 1.5% (excluding PPP loans)
  • Average deposits grew $1.1 billion, or 17.1% compared to the prior year, including $551.9 million, or 35.6%, in average noninterest-bearing deposits
  • Tangible book value per share grew 4.4% year-over-year

Earnings

  • For the year ended December 31, 2020, net income was $73.4 million (or $0.75 diluted earnings per share)
    °  Core net income(1) was $79.0 million, or $0.81 diluted earnings per share, compared to $108.1 million, or $1.10 diluted earnings per share in the prior year
  • Core pre-tax pre-provision income(1) grew $4.7 million, or 3.1% from the prior year
  • Operating leverage was positive for the full year
    °  Total core revenue(1) grew $9.3 million, or 2.6% from the prior year
    °  Total core noninterest expense(1) increased $2.8 million, or 1.4%, from the prior year

Profitability

  • The core efficiency ratio(1) improved 69 basis points to 56.28% compared to the prior year
  • The return on average assets (ROA) for the year ended December 31, 2020 was 0.82%
    °  Core ROA(1) for the year ended December 31, 2020 was 0.88% as compared to 1.35% in the prior year
    °  Core pre-tax pre-provision ROA(1) for the year ended December 31, 2020 was 1.73% as compared to 1.88% in the prior year
  • The net interest margin decreased 43 basis points to 3.32% compared to the prior year

“Despite the many challenges we faced in 2020, I am proud of the progress we made as a company and more importantly our ability to deliver for our customers and communities.  Our proactive approach through Project Thrive to control expenses, grow our business, mitigate net interest margin compression and protect capital resulted in positive operating leverage, along with growth in loans, deposits and fee income – all while building reserves and maintaining our strong capital position throughout the year,” stated T. Michael Price, President and Chief Executive Officer. “Our core pre-tax pre-provision income in 2020 exceeded the previous year by $4.7 million, producing a pre-tax pre-provision ROA of 1.73%.  And our investments in revenue-producing lines of business such as mortgage and indirect auto resulted in a record level of production in 2020, which helped offset a challenging year for commercial businesses.”  Price continued, “We continue to work closely with our borrowers most impacted by the pandemic and remain confident that our disciplined approach to credit over the years combined with our strong capital position will ultimately serve our shareholders well as we emerge on the other side of the pandemic.”

Earnings

Net income of $25.7 million resulted in diluted earnings per share of $0.27, an increase of $0.07 per share from the previous quarter and unchanged from the fourth quarter of 2019.

Net income for the year ended December 31, 2020 was $73.4 million, as compared to $105.3 million for the same period in 2019.

Net Interest Income and Net Interest Margin

Net interest income (FTE) increased $1.1 million from the previous quarter due to the accelerated amortization of $1.7 million of PPP loan fees due to PPP loan forgiveness, partially offset by lower commercial loan demand.  

The net interest margin for the fourth quarter of 2020 was 3.26%, an increase of 15 basis points from the previous quarter and a decrease of 47 basis points from the fourth quarter of 2019.   The increase from the previous quarter was due to aforementioned PPP loan fees (which had a nine basis point impact to the margin) and a seven basis point decrease in the cost of deposits.

Adjusting for the effects of PPP loans and excess liquidity, the core net interest margin(1) was 3.29%, an increase of one basis point from the previous quarter. Loan yields (excluding PPP) decreased 7 basis points from the previous quarter due to the runoff of higher yielding loans and lower commercial originations.   Average loans decreased $39.9 million, or 2.3% (annualized) from the previous quarter, including $24.2 million of PPP loan forgiveness.

The total cost of interest-bearing demand and savings deposits decreased six basis points from the previous quarter.   Average time deposits decreased $86.9 million from the previous quarter due to the intentional runoff of higher cost funding sources.

For the year ended December 31, 2020, net interest income (FTE) decreased $1.9 million from the prior year due to a 43 basis point decrease in the net interest margin, partially offset by $878.9 million increase in average interest earning assets.

The net interest margin for the year ended December 31, 2020 was 3.32%, a decrease of 43 basis points from the previous year.   The decrease from the previous year was due to a 79 basis point decrease in the yield on interest-earning assets, which was partially offset by a 45 basis point decrease in the cost of interest-bearing liabilities.   The yield on total loans (excluding PPP) decreased 74 basis points compared to the prior year due primarily to the repricing of variable and adjustable interest rate loans following the Federal Reserve’s decision to cut interest rates 150 basis points in March 2020.

For the year ended December 31, 2020, total average loans grew $749.9 million, or 12.5%, including $382.6 million of average PPP loans.   For the year ended December 31, 2020, total average deposits grew $1.1 billion, or 17.1% compared to the prior year, including $551.9 million, or 35.6%, in average noninterest-bearing deposits.

Asset Quality

The Company adopted CECL on December 31, 2020, effective January 1, 2020, resulting in a transition adjustment to retained earnings of $13.4 million.   Provision expense in the fourth quarter of 2020 totaled $7.7 million, a decrease of $3.5 million from the previous quarter.   The provision expense in the fourth quarter included a $3.2 million reserve established for the life-of-loan loss rates for unfunded commitments.

At December 31, 2020, nonperforming loans totaled $54.1 million, an increase of $4.3 million from the previous quarter.   The increase in nonperforming loans was due to the deterioration of a $7.0 million hospitality relationship.

Nonperforming loans as a percentage of total loans (excluding PPP) were 0.86%, 0.78% and 0.52% for the periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

At December 31, 2020, criticized loans totaled $302.8 million, an increase of $113.9 million from the previous quarter and an increase of $202.2 million from December 31, 2019.   The increase in criticized loans has been primarily driven by weakened borrower cash flow caused by the COVID-19 pandemic.

During the fourth quarter of 2020, net charge-offs were $4.8 million, compared to $4.3 million in the prior quarter and $3.3 million in the fourth quarter of 2019.   Net charge-offs were 0.30%, 0.27% and 0.21% of average loans (excluding PPP, annualized) for the periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $26.6 million for the fourth quarter of 2020 as compared to $26.8 million for the prior quarter and $22.5 million for the fourth quarter of 2019.   The $0.2 million decrease from the prior quarter was primarily due to a $0.9 million decrease in gain on sale of mortgage loans, which was partially offset by a $0.7 million increase in swap fee income.

For the year ended December 31, 2020, noninterest income (excluding security gains) totaled $94.4 million, an increase of $8.9 million from the prior year.   The increase from the prior year was due to an $11.0 million increase in gain on sale of mortgage loans and a $2.3 million increase in card related interchange income, partially offset by a $2.5 million decrease in service charges on deposit accounts and a $2.3 million decrease in derivative mark-to-market.

There were no material security gains during 2020 or 2019.

Noninterest expense totaled $54.6 million for the fourth quarter of 2020, as compared to $58.2 million for the third quarter of 2020 and $53.1 million for the fourth quarter of 2019.  

Core noninterest expense(1) totaled $53.1 million for the fourth quarter of 2020, as compared to $50.9 million for the third quarter of 2020 and $52.6 million for the fourth quarter of 2019.   The $2.2 million increase from the previous quarter was primarily the result of a $2.6 million increase in salaries and benefits due to $0.7 million decrease in deferred FAS-91 fees, $0.7 million increase in incentives, $0.6 million increase in hospitalization and $0.4 million true-up of the split-dollar BOLI expense.

For the year ended December 31, 2020, noninterest expense totaled $215.8 million and core noninterest expense(1) totaled $206.4 million, as compared to noninterest expense of $210.0 million and core noninterest expense(1) of $203.6 million in the prior year.   The $2.8 million increase in core noninterest expense was primarily driven by a $6.7 million increase in salaries and benefits due to a $3.5 million increase in incentives and a $2.7 million increase in hospitalization as well as a full year impact of the Company’s acquisition of 14 former Santander branches in September 2019.   This was partially offset by a $1.3 million decrease in occupancy expense and a $1.0 million decrease in loss on sale or writedown of other assets.

Full time equivalent staff was 1,398 at December 31, 2020, as compared to 1,399 at September 30, 2020 and 1,484 at December 31, 2019.   The decrease from the prior year 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 February 19, 2021 to shareholders of record as of February 5, 2021. This dividend represents a 3.5% projected annual yield utilizing the January 25, 2021 closing market price of $12.59.

In addition, the Board of Directors has authorized a new $25.0 million share repurchase program of the company’s common stock.   Under the new program, management is authorized to repurchase shares through Rule 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or otherwise in a manner that is intended to comply with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934. First Commonwealth may suspend or discontinue the program at any time.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2020 were 14.9%, 12.2%, 9.4%, and 11.2%, 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 fourth quarter 2020 on Wednesday, January 27, 2021 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 #10150975.   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 119 community banking offices in 26 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

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 Years Ended
 December 31, September 30, December 31, December 31, December 31,
 2020 2020 2019 2020 2019
SUMMARY RESULTS OF OPERATIONS         
Net interest income (FTE) (1)$67,825  $66,742  $69,212  $269,733  $271,610 
Provision for credit losses7,680  11,212  4,895  56,718  14,533 
Noninterest income26,622  26,769  22,528  94,476  85,485 
Noninterest expense54,552  58,247  53,109  215,826  209,965 
Net income25,683  19,186  26,820  73,447  105,333 
Core net income (5)26,120  23,905  26,634  78,951  108,126 
Earnings per common share (diluted)$0.27  $0.20  $0.27  $0.75  $1.07 
Core earnings per common share (diluted) (6)$0.27  $0.24  $0.27  $0.81  $1.10 
KEY FINANCIAL RATIOS         
Return on average assets1.12% 0.81% 1.30% 0.82% 1.31%
Core return on average assets (7)1.14% 1.01% 1.29% 0.88% 1.35%
Return on average assets, pre-provision, pre-tax1.74% 1.49% 1.87% 1.65% 1.83%
Core return on average assets, pre-provision, pre-tax1.76% 1.75% 1.86% 1.73% 1.88%
Return on average shareholders' equity9.48% 7.01% 10.13% 6.82% 10.32%
Return on average tangible common equity (8)13.80% 10.29% 14.99% 10.06% 14.92%
Core return on average tangible common equity (9)14.03% 12.73% 14.89% 10.78% 15.30%
Core efficiency ratio (2)(10)56.00% 54.31% 57.23% 56.28% 56.97%
Net interest margin (FTE) (1)3.26% 3.11% 3.73% 3.32% 3.75%
          
Book value per common share$11.12  $11.07  $10.74     
Tangible book value per common share (11)7.82  7.79  7.49     
Market value per common share10.94  7.74  14.51     
Cash dividends declared per common share0.11  0.11  0.10  0.44  0.40 
ASSET QUALITY RATIOS         
Nonperforming loans as a percent of end-of-period loans (3)0.80% 0.71% 0.52%    
Nonperforming loans as a percent of end-of-period loans, excluding PPP loans (3)0.86 % 0.78 % 0.52 %    
Nonperforming assets as a percent of total assets (3)0.62% 0.55% 0.42%    
Nonperforming assets as a percent of total assets, excluding PPP loans (3)0.65 % 0.59 % 0.42 %    
Net charge-offs as a percent of average loans (annualized) (4)0.28% 0.25% 0.21%    
Net charge-offs as a percent of average loans, excluding PPP loans (annualized) (4)0.30 % 0.27 % 0.21 %    
Allowance for credit losses as a percent of nonperforming loans (4)187.43% 177.58% 160.28%    
Allowance for credit losses as a percent of end-of-period loans (4)1.50% 1.27% 0.83%    
Allowance for credit losses as a percent of end-of-period loans, excluding PPP loans (4)1.61 % 1.38 % 0.83 %    
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets11.8% 11.5% 12.7%    
Tangible common equity as a percent of tangible assets (12)8.6% 8.4% 9.2%    
Tangible common equity as a percent of tangible assets, excluding PPP loans (12)9.1 % 9.0 % 9.2 %    
Leverage Ratio9.4% 8.9% 10.2%    
Risk Based Capital - Tier I12.2% 11.8% 12.0%    
Risk Based Capital - Total14.9% 14.4% 14.3%    
Common Equity - Tier I11.2% 10.7% 10.9%    
             


 
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,
 202020202019 20202019
INCOME STATEMENT      
Interest income$73,306 $73,593 $81,038  $301,209 $325,264 
Interest expense5,814 7,224 12,233  32,938 55,402 
Net Interest Income67,492 66,369 68,805  268,271 269,862 
Taxable equivalent adjustment (1)333 373 407  1,462 1,748 
Net Interest Income (FTE)67,825 66,742 69,212  269,733 271,610 
Provision for credit losses7,680 11,212 4,895  56,718 14,533 
Net Interest Income after Provision for Credit Losses (FTE)60,145 55,530 64,317  213,015 257,077 
Net securities gains23 20 7  70 22 
Trust income2,327 2,554 2,100  9,101 8,321 
Service charges on deposit accounts4,321 4,035 5,134  16,387 18,926 
Insurance and retail brokerage commissions1,868 2,156 1,696  7,850 7,583 
Income from bank owned life insurance1,589 1,547 1,594  6,552 6,002 
Gain on sale of mortgage loans5,538 6,437 1,664  18,764 7,765 
Gain on sale of other loans and assets1,676 1,871 962  4,827 4,793 
Card-related interchange income6,377 6,441 5,877  23,966 21,677 
Derivative mark-to-market(399)(160)(181) (2,521)(269)
Swap fee income724 41 1,763  1,588 3,397 
Other income2,578 1,827 1,912  7,892 7,268 
Total Noninterest Income26,622 26,769 22,528  94,476 85,485 
Salaries and employee benefits31,388 28,823 29,032  118,961 112,237 
Net occupancy3,668 4,609 5,045  17,647 18,923 
Furniture and equipment3,925 4,033 3,764  15,393 15,160 
Data processing2,739 2,741 2,704  10,543 10,692 
Pennsylvania shares tax1,254 1,254 1,237  4,500 4,602 
Advertising and promotion879 1,115 639  4,679 4,250 
Intangible amortization897 939 980  3,689 3,344 
Collection and repossession424 260 548  1,589 2,204 
Other professional fees and services1,131 937 1,876  3,886 4,631 
FDIC insurance1,062 876 55  2,699 1,219 
Litigation and operational losses373 329 423  1,411 1,687 
Loss on sale or write-down of assets264 63 326  680 1,724 
Merger and acquisition  (236)  3,536 
COVID-19307 125   874  
Voluntary early retirement118 3,304   3,422  
Branch consolidation128 2,544   2,672  
Other operating expenses5,995 6,295 6,716  23,181 25,756 
Total Noninterest Expense54,552 58,247 53,109  215,826 209,965 
Income before Income Taxes32,215 24,052 33,736  91,665 132,597 
Taxable equivalent adjustment (1)333 373 407  1,462 1,748 
Income tax provision6,199 4,493 6,509  16,756 25,516 
Net Income$25,683 $19,186 $26,820  $73,447 $105,333 
       
Shares Outstanding at End of Period 96,130,751  96,924,781  98,311,840   96,130,751  98,311,840 
Average Shares Outstanding Assuming Dilution 96,344,398  98,160,143  98,508,219   97,758,965  98,588,164 
                 


    
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
      
 December 31, September 30, December 31,
 2020 2020 2019
BALANCE SHEET (Period End)     
Assets     
Cash and due from banks$100,009  $97,060  $102,346 
Interest-bearing bank deposits256,572  283,037  19,510 
Securities available for sale, at fair value843,450  921,202  919,053 
Securities held to maturity, at amortized cost361,844  268,638  337,123 
Loans held for sale33,436  37,998  15,989 
      
Loans6,761,183  6,949,716  6,189,148 
Allowance for credit losses(101,309) (88,307) (51,637)
Net loans6,659,874  6,861,409  6,137,511 
      
Goodwill and other intangibles316,820  317,423  319,694 
Other assets496,099  502,599  457,547 
Total Assets$9,068,104  $9,289,366  $8,308,773 
      
Liabilities and Shareholders' Equity     
Noninterest-bearing demand deposits$2,319,958  $2,301,821  $1,690,247 
      
Interest-bearing demand deposits250,353  315,806  254,981 
Savings deposits4,305,391  4,425,119  3,896,536 
Time deposits562,964  661,161  835,851 
Total interest-bearing deposits5,118,708  5,402,086  4,987,368 
      
Total deposits7,438,666  7,703,907  6,677,615 
      
Short-term borrowings117,373  122,356  201,853 
Long-term borrowings233,255  233,490  234,182 
Total borrowings350,628  355,846  436,035 
      
Other liabilities210,193  156,782  139,458 
Shareholders' equity1,068,617  1,072,831  1,055,665 
Total Liabilities and Shareholders' Equity$9,068,104  $9,289,366  $8,308,773 
            



 
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/
 2020Rate2020Rate2019Rate 2020Rate2019Rate
NET INTEREST MARGIN          
            
Assets           
Loans, excluding PPP loans (FTE) (1)(3)$6,387,174 3.90%$6,402,968 3.97%$6,141,614 4.76% $6,354,749 4.16%$5,987,397 4.90%
PPP Loans548,279 4.00%572,434 2.67% % 382,590 3.16% %
Securities and interest-bearing bank deposits (FTE) (1)1,340,756 1.62%1,553,252 1.59%1,226,892 2.51% 1,390,804 1.89%1,261,822 2.68%
Total Interest-Earning Assets (FTE) (1)8,276,209 3.54%8,528,654 3.45%7,368,506 4.39% 8,128,143 3.72%7,249,219 4.51%
Noninterest-earning assets845,094  861,311  832,509   846,437  780,833  
Total Assets$9,121,303  $9,389,965  $8,201,015   $8,974,580  $8,030,052  
            
Liabilities and Shareholders' Equity           
Interest-bearing demand and savings deposits$4,603,255 0.14%$4,818,576 0.20%$4,171,663 0.55% $4,552,211 0.26%$3,891,262 0.57%
Time deposits609,350 1.05%696,227 1.28%856,076 1.69% 726,702 1.40%864,056 1.68%
Short-term borrowings131,806 0.10%124,670 0.11%100,698 0.88% 142,634 0.49%391,547 2.12%
Long-term borrowings233,352 4.37%233,588 4.37%234,274 4.37% 233,701 4.39%216,383 4.80%
Total Interest-Bearing Liabilities5,577,763 0.41%5,873,061 0.49%5,362,711 0.91% 5,655,248 0.58%5,363,248 1.03%
Noninterest-bearing deposits2,313,009  2,281,200  1,673,188   2,101,412  1,549,507  
Other liabilities152,396  147,603  114,523   140,612  96,896  
Shareholders' equity1,078,135  1,088,101  1,050,593   1,077,308  1,020,401  
Total Noninterest-Bearing Funding Sources3,543,540  3,516,904  2,838,304   3,319,332  2,666,804  
Total Liabilities and Shareholders' Equity$9,121,303  $9,389,965  $8,201,015   $8,974,580  $8,030,052  
            
Net Interest Margin (FTE) (annualized) (1) 3.26% 3.11% 3.73%  3.32% 3.75%
                 


  
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 
 December 31,September 30,December 31,
 202020202019
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,077,132 $1,163,268 $1,241,853 
Paycheck Protection Program478,854 573,468  
Commercial real estate2,211,569 2,215,311 2,117,519 
Real estate construction340,850 366,936 375,149 
Total Commercial4,108,405 4,318,983 3,734,521 
    
Consumer Loan Portfolio:   
Closed-end mortgages1,165,951 1,154,366 1,094,281 
Home equity lines of credit584,641 589,654 587,081 
Real estate construction86,371 86,053 73,890 
Total Real Estate - Consumer1,836,963 1,830,073 1,755,252 
    
Auto loans712,800 692,475 573,699 
Direct installment36,165 40,081 47,738 
Personal lines of credit61,072 62,155 71,103 
Student loans5,778 5,949 6,835 
Total Other Consumer815,815 800,660 699,375 
Total Consumer Portfolio2,652,778 2,630,733 2,454,627 
Total Portfolio Loans6,761,183 6,949,716 6,189,148 
Loans held for sale33,436 37,998 15,989 
Total Loans$6,794,619 $6,987,714 $6,205,137 
    
    
 December 31,September 30,December 31,
 202020202019
ASSET QUALITY DETAIL   
Nonperforming Loans:   
Loans on nonaccrual basis$30,801 $38,139 $18,638 
Loans held for sale on a nonaccrual basis13   
Troubled debt restructured loans on nonaccrual basis14,740 4,511 6,037 
Troubled debt restructured loans on accrual basis8,512 7,078 7,542 
Total Nonperforming Loans$54,066 $49,728 $32,217 
Other real estate owned ("OREO")1,215 1,079 2,228 
Repossessions ("Repos")613 685 628 
Total Nonperforming Assets$55,894 $51,492 $35,073 
Loans past due in excess of 90 days and still accruing1,523 1,249 2,073 
Classified loans76,179 80,190 52,031 
Criticized loans302,813 188,957 100,607 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos (4)0.83%0.74%0.57%
Allowance for credit losses$101,309 $88,307 $51,637 
    


 


 
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,
 202020202019 20202019
Net Charge-offs (Recoveries):      
Commercial, financial, agricultural and other$1,027 $3,338 $1,115  $6,004 $3,067 
Real estate construction    (26)(158)
Commercial real estate2,364 (110)298  4,627 1,819 
Residential real estate5 117 300  626 727 
Loans to individuals1,429 1,001 1,580  5,962 5,205 
Net Charge-offs$4,825 $4,346 $3,293  $17,193 $10,660 
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4)0.28%0.25%0.21% 0.26%0.18%
Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4)0.30 %0.27 %0.21 % 0.27 %0.18 %
Provision for credit losses as a percentage of net charge-offs159.17%257.98%148.65% 329.89%136.33%
Provision for credit losses$7,680 $11,212 $4,895  $56,718 $14,533 
                 


    
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 Years Ended
 December 31,September 30,December 31, December 31,December 31,
 202020202019 20202019
       
Net Income$25,683 $19,186 $26,820  $73,447 $105,333 
Intangible amortization897 939 980  3,689 3,344 
Tax benefit of amortization of intangibles(188)(197)(206) (775)(702)
Net Income, adjusted for tax affected amortization of intangibles$26,392 $19,928 $27,594  $76,361 $107,975 
       
Average Tangible Equity:      
Total shareholders' equity$1,078,135 $1,088,101 $1,050,593  $1,077,308 $1,020,401 
Less: intangible assets317,178 317,702 320,077  318,155 296,645 
Tangible Equity760,957 770,399 730,516  759,153 723,756 
Less: preferred stock—  —  —   —  —  
Tangible Common Equity$760,957 $770,399 $730,516  $759,153 $723,756 
       
(8) Return on Average Tangible Common Equity13.80%10.29%14.99% 10.06%14.92%
       


 


      
 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,
 202020202019 20202019
       
Core Net Income:      
Total Net Income$25,683 $19,186 $26,820  $73,447 $105,333 
Merger & acquisition related expenses  (236)  3,536 
Tax benefit of merger & acquisition related expenses  50   (743)
COVID-19307 125   874  
Tax benefit of COVID 19 related(64)(26)  (184) 
Early retirement related118 3,304   3,422  
Tax benefit of early retirement related expenses(25)(694)  (719) 
Branch consolidation related128 2,544   2,672  
Tax benefit of bank consolidation related expenses(27)(534)  (561) 
(5) Core net income$26,120 $23,905 $26,634  $78,951 $108,126 
Average Shares Outstanding Assuming Dilution 96,344,398  98,160,143  98,508,219   97,758,965  98,588,164 
(6) Core Earnings per common share (diluted)$0.27 $0.24 $0.27  $0.81 $1.10 
       
Intangible amortization897 939 980  3,689 3,344 
Tax benefit of amortization of intangibles(188)(197)(206) (775)(702)
Core Net Income, adjusted for tax affected amortization of intangibles$26,829 $24,647 $27,408  $81,865 $110,768 
       
(9) Core Return on Average Tangible Common Equity14.03%12.73%14.89% 10.78%15.30%
       
 For the Three Months Ended For the Years Ended
 December 31,September 30,December 31, December 31,December 31,
 202020202019 20202019
Core Return on Average Assets:      
Total Net Income$25,683 $19,186 $26,820  $73,447 $105,333 
Total Average Assets9,121,303 9,389,965 8,201,015  8,974,580 8,030,052 
Return on Average Assets1.12%0.81%1.30% 0.82%1.31%
       
Core Net Income (5)$26,120 $23,905 $26,634  $78,951 $108,126 
Total Average Assets9,121,303 9,389,965 8,201,015  8,974,580 8,030,052 
(7) Core Return on Average Assets1.14%1.01%1.29% 0.88%1.35%
            



 
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,
 202020202019 20202019
Core Efficiency Ratio:      
Total Noninterest Expense$54,552 $58,247 $53,109  $215,826 $209,965 
Adjustments to Noninterest Expense:      
Unfunded commitment reserve 471 (240) (1,181)(475)
Intangible amortization897 939 980  3,689 3,344 
Merger and acquisition related  (236)  3,536 
COVID-19307 125   874  
Early retirement related118 3,304   3,422  
Branch consolidation related128 2,544   2,672  
Noninterest Expense - Core$53,102 $50,864 $52,605  $206,350 $203,560 
       
Net interest income, fully tax equivalent$67,825 $66,742 $69,212  $269,733 $271,610 
Total noninterest income26,622 26,769 22,528  94,476 85,485 
Net securities gains(23)(20)(7) (70)(22)
Total Revenue$94,424 $93,491 $91,733  $364,139 $357,073 
       
Adjustments to Revenue:      
Derivative mark-to-market(399)(160)(181) (2,521)(269)
Total Revenue - Core$94,823 $93,651 $91,914  $366,660 $357,342 
       
(10) Core Efficiency Ratio56.00%54.31%57.23% 56.28%56.97%
       
       
 December 31,September 30,December 31,   
 202020202019   
Tangible Equity:      
Total shareholders' equity$1,068,617 $1,072,831 $1,055,665    
Less: intangible assets316,820 317,423 319,694    
Tangible Equity751,797 755,408 735,971    
Less: preferred stock      
Tangible Common Equity$751,797 $755,408 $735,971    
       
Tangible Assets:      
Total assets$9,068,104 $9,289,366 $8,308,773    
Less: intangible assets316,820 317,423 319,694    
Tangible Assets$8,751,284 $8,971,943 $7,989,079    
Less: PPP loans478,854  573,468  —     
Tangible Assets$8,272,430 $8,398,475 $7,989,079    
       
(12) Tangible Common Equity as a percentage of Tangible Assets8.59%8.42%9.21%   
(12) Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans9.09%8.99%9.21%   
       
Shares Outstanding at End of Period96,130,751 96,924,781 98,311,840    
(11) Tangible Book Value Per Common Share$7.82 $7.79 $7.49    
       
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 Years Ended
 December 31,September 30,December 31, December 31,December 31,
  2020  2020  2019   2020  2019 
Pre-tax pre-provision income:      
Net interest income (FTE)$67,825 $66,742 $69,212  $269,733 $271,610 
Noninterest income 26,622  26,769  22,528   94,476  85,485 
Noninterest expense 54,552  58,247  53,109   215,826  209,965 
Pre-tax pre-provision income$39,895 $35,264 $38,631  $148,383 $147,130 
       
Merger and acquisition related expenses$0 $0 ($236) $0 $3,536 
COVID-19 307  125  0   874  0 
Voluntary early retirement 118  3,304  0   3,422  0 
Branch consolidation 128  2,544  0   2,672  0 
Core pre-tax pre-provision income$40,448 $41,237 $38,395  $155,351 $150,666 
       
Net charge-offs$4,825 $4,346 $3,293  $17,193 $10,660 
                 



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