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First Commonwealth Announces Second Quarter 2018 Earnings; Declares Quarterly Dividend

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INDIANA, Pa., July 24, 2018 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE:FCF) today announced financial results for the second quarter of 2018.

Second Quarter 2018 Highlights        

Earnings

  • Second quarter net income was $32.1 million, or $0.32 diluted earnings per share, an increase of $0.08 from the prior quarter.  Core net income (adjusted only for acquisition expenses) was $33.1 million, or $0.33 diluted earnings per share.
    • Core earnings per share increased $0.09 from the previous quarter and $0.12 from the prior year quarter, an increase of 37.5% and 57.1%, respectively.
  • Total revenue grew $8.3 million, or 10.1% from the prior quarter.
    • Net interest income (FTE) increased $4.0 million, or 6.7% from the prior quarter.
    • Noninterest income grew $4.3 million, or 19.3% from the prior quarter.
  • Total noninterest expense increased $2.3 million from the previous quarter and includes $1.3 million of merger-related expenses resulting from the acquisition of Foundation Bank.
  • Provision for credit losses totaled $1.2 million, a decrease of $5.7 million as compared to the prior quarter.
  • Second quarter core net income includes $5.3 million in net security gains as the result of the successful auction call and open market sale of the company's remaining pooled trust preferred securities during the second quarter of 2018.

Franchise Growth

  • Total assets grew $328 million compared to the prior quarter following the successful completion of the acquisition of Foundation Bank in Cincinnati, Ohio on May 1, 2018, along with net organic loan growth of $72 million or 5.3% on an annualized basis.
    • Total loans grew $256 million, including $184 million acquired from Foundation Bank.
    • Total deposits grew $210 million, including $141 million acquired from Foundation Bank and 4.8% of organic deposit growth on an annualized basis.
  • On May 21, 2018, the company's banking subsidiary, First Commonwealth Bank (Bank), issued $100 million in subordinated debt notes resulting in net proceeds of approximately $98 million.  These notes qualify as Tier II capital for regulatory capital purposes and further strengthen the Bank's capital ratios.

Profitability

  • The net interest margin improved to 3.78%, an increase of nine basis points compared to the prior quarter.
    • During the second quarter of 2018, the company recognized a total of $1.5 million of previously unrecognized interest from the successful resolution of assets that had previously been impaired.  This resulted in a benefit of nine basis points to the net interest margin during the second quarter.
  • Return on average assets improved 42 basis points to 1.71% compared to the first quarter.
    • Core return on average assets (adjusted only for acquisition expenses) improved 45 basis points to 1.76% compared to the prior quarter.
  • The annualized return on average tangible common equity for the second quarter of 2018 was 20.08%.
    • Core return on average tangible common equity (excluding only merger-related expenses) was 20.70%.
  • The core efficiency ratio improved to 55.23%, driven by strong revenue growth and well-controlled operational expenses.

"This year is shaping up to be another record year for our organization," stated T. Michael Price, President and Chief Executive Officer.  "Our fundamental performance continues to improve, our recent acquisitions and ensuing investments in these new markets are bearing fruit, we just added a fourth major metropolitan region to our footprint with the completion of our acquisition of Foundation Bank in Cincinnati, and we raised additional capital to fund further growth.  The steady progression in our core operating results moves us one step closer to our goal of becoming one of the top performing banks in the country."

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,
  2018
  2018
  2017
  2018
  2017
Reported Results                  
Net income $32,081   $23,270   $14,013   $55,351   $29,901
Diluted earnings per share $0.32   $0.24   $0.14   $0.56   $0.32
Return on average assets 1.71%   1.29%   0.76%   1.51%   0.86%
Return on average equity 13.74%   10.57%   6.44%   12.20%   7.40%
                   
Operating Results (non-GAAP)(1)                  
Core net income $33,087   $23,536   $20,428   $56,623   $36,714
Core diluted earnings per share $0.33   $0.24   $0.21   $0.57   $0.39
Core return on average assets 1.76%   1.31%   1.11%   1.54%   1.05%
Return on average tangible common equity 20.08%   15.56%   9.74%   17.89%   10.73%
Core return on average tangible common equity 20.70%   15.73%   14.03%   18.29%   13.10%
Core efficiency ratio 55.23%   58.21%   60.19%   56.66%   60.33%
Net interest margin (FTE) 3.78%   3.69%   3.54%   3.74%   3.52%
                   

(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. See supplemental information included with the release for "non-GAAP Financial Measures and Key Performance Indicators" and additional information.
               
Earnings

Net income for the second quarter of 2018 was $32.1 million, as compared to $23.3 million in the previous quarter and $14.0 million for the second quarter of 2017.

Excluding merger-related expenses, core net income for the second quarter of 2018 was $33.1 million, as compared to $23.5 million in the previous quarter and $20.4 million for the second quarter of 2017, representing a $9.6 million and $12.7 million increase, respectively.  Core net income includes net security gains of $5.3 million for the second quarter of 2018, as compared to $2.8 million for the first quarter of 2018.

Net income for the first six months of 2018 was $55.4 million, as compared to $29.9 million for the same period in 2017.  Excluding merger-related expenses of $1.2 million after tax, net income for the first six months of 2018 was $56.6 million.

Net Interest Income and Net Interest Margin

During the second quarter, net interest income (FTE) was $64.2 million, an increase of $4.0 million from the previous quarter.  The increase in net interest income was the result of a $203 million increase in average interest-earning assets due, in part, to the aforementioned acquisition, and a nine basis point expansion in the net interest margin.

The net interest margin for the second quarter of 2018 was 3.78%, an increase of nine basis points from the previous quarter and an increase of 24 basis points from the second quarter of 2017.  The increase from the first quarter of 2018 was due primarily to the recognition of previously unrecognized interest totaling $1.5 million on one commercial credit and the sale of the company's remaining pooled trust preferred securities.  The recognition of this unrecognized interest increased the quarterly net interest margin by approximately nine basis points.

In addition, the quarterly net interest margin was impacted by an increase of $0.4 million of purchase accounting accretion as a result of the Foundation Bank acquisition.  Purchase accounting accretion totaled six basis points in the second quarter which includes three basis points from the aforementioned acquisition.

The yield on interest-earning assets increased 21 basis points from the previous quarter due to increased yields on variable and adjustable loan portfolios following the Federal Reserve's decision to increase short-term interest rates in March and June of 2018, which also contributed to a 17 basis points increase in the cost of interest-bearing liabilities from the prior quarter.  This increase was partially offset by growth in noninterest-bearing deposits that led to a 12 basis point increase in the bank's total cost of funds.  The aforementioned recognition of unrecognized interest contributed nine basis points to the improvement in the yields on interest-earning assets.

Average long-term borrowings increased $44 million during the quarter due to the Bank's successful issuance of $100 million in subordinated debt notes on May 21, 2018.  Total cost of long-term debt increased $0.7 million and the yield increased 60 basis points over the previous quarter, due to the issuance of the subordinated debt, resulting in a three basis point decline in the net interest margin exclusive of the reinvestment of these proceeds.

Total deposits grew $210 million in the second quarter of 2018 compared to the previous quarter, which includes $141 million in deposits acquired at the closing of the Foundation Bank acquisition.  Organic deposits grew $69 million or 4.8% on an annualized basis from the previous quarter.  Total deposits increased $380 million from the prior year quarter due to the aforementioned acquisition and $239 million in organic deposit growth or 4.3%.

Credit Quality

The provision for credit losses totaled $1.2 million for the quarter ended June 30, 2018, a decrease of $5.7 million as compared to the prior quarter and an increase of $2.8 million from the same quarter last year.  The decrease from the prior quarter is primarily due to $7.7 million in specific reserves for two commercial credits in the previous quarter combined with the successful resolution of one large commercial real estate credit during the current quarter which resulted in a $1.8 million decrease in specific reserves.  The increase from the previous year was due to the recognition of $3.1 million of recoveries during the second quarter of 2017 on two commercial credits that had been previously charged-off.

At June 30, 2018, nonperforming loans were $45.9 million, a decrease of $11.4 million from March 31, 2018.  The decrease from the previous quarter was primarily related to the sale of a restructured commercial and industrial loan and charge-off of a nonaccrual commercial real estate loan.  Nonperforming loans as a percentage of total loans were 0.81%, 1.06% and 0.75% for the periods ended June 30, 2018, March 31, 2018 and June 30, 2017, respectively.

During the second quarter of 2018, net charge-offs (recoveries) were $3.6 million, compared to $1.5 million in the prior quarter and ($1.0) million in the second quarter of 2017.  Net charge-offs in the second quarter of 2018 included a $2.2 million charge-off on one commercial real estate credit, which was moved to nonaccrual status in the first quarter of 2018.  The increase from the previous year quarter was due, in part, to recoveries for two large commercial credits totaling $3.1 million, which were previously charged-off.

For the originated loan portfolio at June 30, 2018, the allowance for credit losses to total originated loans was 1.01%, compared to 1.07% at March 31, 2018 and 0.97% at June 30, 2017.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $21.0 million for the second quarter of 2018 as compared to $19.2 million for the first quarter of 2018 and $19.0 million for the second quarter of 2017.  The increase from the prior periods was primarily due to a $1.2 million gain on the sale of a restructured commercial credit.  Additionally, bank owned life insurance income increased $0.7 million from the previous and year ago quarter due to higher death claim benefits.

Net security gains totaled $5.3 million for the second quarter of 2018 as compared to $2.8 million for the first quarter of 2018.  The increase from the previous quarter was the result of the successful auction call and open market sale of the company's remaining pooled trust preferred securities during the second quarter of 2018.

Noninterest expense (excluding merger-related expenses) totaled $47.9 million for the second quarter of 2018 as compared to $46.5 million for the first quarter of 2018 and $48.4 million for the second quarter of 2017.  The increase from the previous quarter was primarily driven by higher operating expenses following the Company's acquisition of Foundation Bank on May 1, 2018.  The decrease from the second quarter of 2017 was due to $1.1 million in write-downs on three commercial OREO properties in the second quarter of 2017 as well as a $0.4 million decrease in FDIC insurance expense as a result of a decrease in the Bank's assessment rate.

Full time equivalent staff was 1,438 at June 30, 2018 and 1,365 at March 31, 2018 and was 1,426 at June 30, 2017.  The increase from the previous periods is the result of the addition of employees from acquisitions and the company's ongoing expansion in its mortgage, commercial banking, wealth management, and SBA businesses.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.09 per share, which is payable on August 17, 2018 to shareholders of record as of August 3, 2018. This dividend represents a 2.2% projected annual yield utilizing the July 23, 2018 closing market price of $16.60.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at June 30, 2018 were 14.8%, 12.3%, 10.4% 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 second quarter 2018 on Wednesday, July 25, 2018 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 # 10121795.  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 140 banking offices in 22 counties throughout western and central Pennsylvania and Ohio, as well as Corporate Banking Centers in Pittsburgh, Pennsylvania and Cleveland and Columbus, Ohio. The company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson and Dublin, Ohio. First Commonwealth provides a full range of commercial banking, consumer banking, mortgage, wealth management and insurance products and services through its subsidiaries First Commonwealth Bank and First Commonwealth Insurance Agency. For more information about First Commonwealth or to open an account today, please visit www.fcbanking.com.

Forward-Looking Statements

This release contains forward-looking statements about First Commonwealth's future plans, strategies and financial performance.  These statements can be identified by the fact that they do not relate strictly to historical or current facts and often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."  Such statements are based on assumptions and involve risks and uncertainties, many of which are beyond First Commonwealth's control.  Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national and international economic conditions and the impact they may have on First Commonwealth and its customers; (2) volatility and disruption in national and international financial markets; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (4) inflation, interest rate, commodity price, securities market and monetary fluctuations; (5) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance); (6) changes in the financial performance and/or condition of First Commonwealth's borrowers; (7)  changes in the competitive environment in First Commonwealth's markets and among banking organizations and other financial service providers; (8) political instability; (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) First Commonwealth's ability to attract and retain qualified employees; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) the reliability of First Commonwealth's vendors, internal control systems or information systems; (16) the ability to increase market share and control expenses; (17) impairment of First Commonwealth's goodwill or other intangible assets; (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 soundness of other financial institutions; (20) the costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals; and (21) other risks and uncertainties described in the reports that First Commonwealth files with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. Forward-looking statements speak only as of the date on which they are made. First Commonwealth undertakes no obligation to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

             
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,
  2018   2018   2017   2018   2017
SUMMARY RESULTS OF OPERATIONS                  
Net interest income (FTE) (1) $ 64,192     $ 60,178     $ 58,896     $ 124,371     $ 111,714  
Provision for credit losses 1,168     6,903     (1,609 )   8,071     1,620  
Noninterest income 26,308     22,043     18,904     48,351     35,836  
Noninterest expense 49,129     46,873     58,263     96,002     101,028  
Net income 32,081     23,270     14,013     55,351     29,901  
Core net income (5) 33,087     23,536     20,428     56,623     36,714  
                   
Earnings per common share (diluted) $ 0.32     $ 0.24     $ 0.14     $ 0.56     $ 0.32  
Core earnings per common share (diluted) (6) $ 0.33     $ 0.24     $ 0.21     $ 0.57     $ 0.39  
                   
KEY FINANCIAL RATIOS                  
                   
Return on average assets 1.71 %   1.29 %   0.76 %   1.51 %   0.86 %
Core return on average assets (7) 1.76 %   1.31 %   1.11 %   1.54 %   1.05 %
Return on average shareholders' equity 13.74 %   10.57 %   6.44 %   12.20 %   7.40 %
Return on average tangible common equity (8) 20.08 %   15.56 %   9.74 %   17.89 %   10.73 %
Core return on average tangible common equity (9) 20.70 %   15.73 %   14.03 %   18.29 %   13.10 %
Core efficiency ratio (2)(10) 55.23 %   58.21 %   60.19 %   56.66 %   60.33 %
Net interest margin (FTE) (1) 3.78 %   3.69 %   3.54 %   3.74 %   3.52 %
                   
Book value per common share $ 9.57     $ 9.21     $ 9.02          
Tangible book value per common share (11) 6.69     6.45     6.23          
Market value per common share 15.51     14.13     12.68          
Cash dividends declared per common share 0.09     0.08     0.08     $ 0.17     $ 0.16  
                   
ASSET QUALITY RATIOS                  
Nonperforming loans as a percent of end-of-period loans (3) 0.81 %   1.06 %   0.75 %        
Nonperforming assets as a percent of total assets (3) 0.65 %   0.83 %   0.63 %        
Net charge-offs as a percent of average loans (annualized) 0.26 %   0.11 %   (0.07 )%        
Allowance for credit losses as a percent of nonperforming loans (4) 111.89 %   93.84 %   119.61 %        
Allowance for credit losses as a percent of end-of-period loans (4) 0.91 %   1.00 %   0.89 %        
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases 1.01 %   1.07 %   0.98 %        
                   
CAPITAL RATIOS                  
Shareholders' equity as a percent of total assets 12.6 %   12.3 %   11.9 %        
Tangible common equity as a percent of tangible assets (12) 9.1 %   8.9 %   8.5 %        
Leverage Ratio 10.4 %   10.1 %   9.6 %        
Risk Based Capital - Tier I 12.3 %   11.9 %   11.3 %        
Risk Based Capital - Total 14.8 %   12.9 %   12.2 %        
Common Equity - Tier I 11.2 %   10.7 %   10.2 %        
                         


         
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,
  2018 2018 2017   2018 2017
INCOME STATEMENT            
Interest income $ 72,940   $ 66,499   $ 63,120     $ 139,439   $ 119,299  
Interest expense 9,265   6,814   5,303     16,079   9,652  
Net Interest Income 63,675   59,685   57,817     123,360   109,647  
Taxable equivalent adjustment (1) 517   493   1,079     1,011   2,067  
Net Interest Income  (FTE) 64,192   60,178   58,896     124,371   111,714  
Provision for credit losses 1,168   6,903   (1,609 )   8,071   1,620  
Net Interest Income after Provision for Credit Losses (FTE) 63,024   53,275   60,505     116,300   110,094  
             
Net securities gains (losses) 5,262   2,840   (49 )   8,102   603  
Trust income 1,880   1,928   1,711     3,808   3,128  
Service charges on deposit accounts 4,423   4,406   4,736     8,829   9,055  
Insurance and retail brokerage commissions 1,820   1,868   2,442     3,688   4,524  
Income from bank owned life insurance 2,168   1,494   1,449     3,662   2,741  
Gain on sale of mortgage loans 1,241   1,484   1,315     2,725   2,292  
Gain on sale of other loans and assets 2,331   574   457     2,905   764  
Card-related interchange income 5,143   4,742   4,842     9,885   9,093  
Derivative mark-to-market   789   (37 )   789   (35 )
Swap fee income 297   290   314     587   241  
Other income 1,743   1,628   1,724     3,371   3,430  
Total Noninterest Income 26,308   22,043   18,904     48,351   35,836  
             
Salaries and employee benefits 26,154   24,873   25,298     51,027   48,764  
Net occupancy 4,222   4,369   4,121     8,591   7,882  
Furniture and equipment 3,647   3,540   3,323     7,187   6,411  
Data processing 2,478   2,433   2,345     4,911   4,430  
Pennsylvania shares tax 1,247   903   1,161     2,150   1,977  
Advertising and promotion 1,176   809   988     1,985   1,794  
Intangible amortization 829   784   846     1,613   1,418  
Collection and repossession 607   823   443     1,430   940  
Other professional fees and services 1,031   1,007   1,096     2,038   2,055  
FDIC insurance 597   776   977     1,373   1,770  
Litigation and operational losses 197   179   277     376   509  
Loss on sale or write-down of assets 497   197   1,220     694   1,319  
Merger and acquisition related 1,273   337   9,870     1,610   10,481  
Other operating expenses 5,174   5,843   6,298     11,017   11,278  
Total Noninterest Expense 49,129   46,873   58,263     96,002   101,028  
             
Income before Income Taxes 40,203   28,445   21,146     68,649   44,902  
Taxable equivalent adjustment (1) 517   493   1,079     1,011   2,067  
Income tax provision 7,605   4,682   6,054     12,287   12,934  
Net Income $ 32,081   $ 23,270   $ 14,013     $ 55,351   $ 29,901  
             
Shares Outstanding at End of Period 100,364,567   97,603,151   97,483,067     100,364,567   97,483,067  
Average Shares Outstanding Assuming Dilution 99,504,409   97,601,162   97,232,288     98,529,160   93,125,939  
             


       
FIRST COMMONWEALTH FINANCIAL CORPORATION      
CONSOLIDATED FINANCIAL DATA          
Unaudited          
(dollars in thousands)          
           
  June 30,   March 31,   June 30,
  2018   2018   2017
BALANCE SHEET (Period End)          
Assets          
Cash and due from banks $ 101,744     $ 65,886     $ 103,602  
Interest-bearing bank deposits 2,237     9,736     12,310  
Securities available for sale, at fair value 876,570     837,277     820,586  
Securities held to maturity, at amortized cost 403,019     410,430     450,886  
Loans held for sale 7,038     9,759     9,785  
           
Loans 5,640,106     5,381,305     5,374,782  
Allowance for credit losses (51,314 )   (53,732 )   (48,067 )
Net loans 5,588,792     5,327,573     5,326,715  
           
Goodwill and other intangibles 289,051     269,403     272,030  
Other assets 380,304     390,703     387,472  
Total Assets $ 7,648,755     $ 7,320,767     $ 7,383,386  
           
Liabilities and Shareholders' Equity          
Noninterest-bearing demand deposits $ 1,489,058     $ 1,443,747     $ 1,404,081  
           
Interest-bearing demand deposits 126,296     187,286     237,801  
Savings deposits 3,516,714     3,428,967     3,330,351  
Time deposits 781,506     643,522     560,902  
Total interest-bearing deposits 4,424,516     4,259,775     4,129,054  
           
Total deposits 5,913,574     5,703,522     5,533,135  
           
Short-term borrowings 545,187     588,016     846,137  
Long-term borrowings 185,568     87,676     88,389  
Total borrowings 730,755     675,692     934,526  
           
Other liabilities 43,641     42,204     36,260  
Shareholders' equity 960,785     899,349     879,465  
Total Liabilities and Shareholders' Equity $ 7,648,755     $ 7,320,767     $ 7,383,386  
                       


       
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/
  2018 Rate 2018 Rate 2017 Rate   2018 Rate 2017 Rate
NET INTEREST MARGIN                  
                       
Assets                      
Loans (FTE)(1)(3) $ 5,551,053   4.65 % $ 5,413,677   4.41 % $ 5,358,089   4.18 %   $ 5,482,745   4.53 % $ 5,138,643   4.11 %
Securities and interest bearing bank deposits (FTE) (1) 1,263,956   2.89 % 1,198,728   2.75 % 1,312,814   2.57 %   1,231,522   2.82 % 1,262,698   2.64 %
Total Interest-Earning Assets (FTE) (1) 6,815,009   4.32 % 6,612,405   4.11 % 6,670,903   3.86 %   6,714,267   4.22 % 6,401,341   3.82 %
Noninterest-earning assets 705,076     687,977     710,913       696,573     645,835    
Total Assets $ 7,520,085     $ 7,300,382     $ 7,381,816       $ 7,410,840     $ 7,047,176    
                       
Liabilities and Shareholders' Equity                      
Interest-bearing demand and savings deposits $ 3,650,406   0.35 % $ 3,573,153   0.25 % $ 3,513,479   0.15 %   $ 3,611,993   0.31 % $ 3,307,985   0.14 %
Time deposits 732,677   1.02 % 633,214   0.83 % 580,874   0.60 %   683,220   0.93 % 576,834   0.61 %
Short-term borrowings 601,633   1.66 % 672,135   1.38 % 902,547   0.98 %   636,689   1.52 % 916,694   0.87 %
Long-term borrowings 131,851   5.12 % 87,780   4.52 % 88,351   4.08 %   109,937   4.88 % 84,616   4.02 %
Total Interest-Bearing Liabilities 5,116,567   0.73 % 4,966,282   0.56 % 5,085,251   0.42 %   5,041,839   0.64 % 4,886,129   0.40 %
Noninterest-bearing deposits 1,431,007     1,400,218     1,386,240       1,415,698     1,309,019    
Other liabilities 35,918     41,264     38,092       38,576     37,055    
Shareholders' equity 936,593     892,618     872,233       914,727     814,973    
Total Noninterest-Bearing Funding Sources 2,403,518     2,334,100     2,296,565       2,369,001     2,161,047    
Total Liabilities and Shareholders' Equity $ 7,520,085     $ 7,300,382     $ 7,381,816       $ 7,410,840     $ 7,047,176    
                       
Net Interest Margin (FTE) (annualized)(1)   3.78 %   3.69 %   3.54 %     3.74 %   3.52 %
                                 


   
FIRST COMMONWEALTH FINANCIAL CORPORATION  
CONSOLIDATED FINANCIAL DATA      
Unaudited      
(dollars in thousands)      
  June 30, March 31, June 30,
  2018 2018 2017
Loan Portfolio Detail      
Commercial Loan Portfolio:      
Commercial, financial, agricultural and other $ 1,130,638   $ 1,131,594   $ 1,199,800  
Commercial real estate 2,172,615   2,027,072   1,963,001  
Real estate construction 259,825   246,961   249,255  
Total Commercial 3,563,078   3,405,627   3,412,056  
       
Consumer Loan Portfolio:      
Closed-end mortgages 996,324   916,130   886,335  
Home equity lines of credit 522,526   518,493   530,591  
Total Real Estate - Consumer 1,518,850   1,434,623   1,416,926  
       
Auto loans 459,333   451,445   450,561  
Direct installment 31,915   23,820   24,501  
Personal lines of credit 57,789   56,145   59,450  
Student loans 9,141   9,645   11,288  
Total Other Consumer 558,178   541,055   545,800  
Total Consumer Portfolio 2,077,028   1,975,678   1,962,726  
Total Portfolio Loans 5,640,106   5,381,305   5,374,782  
Loans held for sale 7,038   9,759   9,785  
Total Loans $ 5,647,144   $ 5,391,064   $ 5,384,567  
       
       
  June 30, March 31, June 30,
  2018 2018 2017
ASSET QUALITY DETAIL      
Nonperforming Loans:      
Loans on nonaccrual basis $ 16,128   $ 28,317   $ 15,553  
Loans held for sale on a nonaccrual basis      
Troubled debt restructured loans on nonaccrual basis 18,573   10,233   11,868  
Troubled debt restructured loans on accrual basis 11,162   18,707   12,764  
Total Nonperforming Loans $ 45,863   $ 57,257   $ 40,185  
Other real estate owned ("OREO") 3,757   2,997   5,964  
Repossessions ("Repos") 298   162   208  
Total Nonperforming Assets $ 49,918   $ 60,416   $ 46,357  
Loans past due in excess of 90 days and still accruing 1,725   1,955   1,898  
Classified loans 60,511   78,154   69,748  
Criticized loans 142,145   126,438   160,220  
       
Nonperforming assets as a percentage of total loans, plus OREO and Repos 0.88 % 1.12 % 0.86 %
Allowance for credit losses $ 51,314   $ 53,732   $ 48,067  
       


       
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,
  2018 2018 2017   2018 2017
Net Charge-offs (Recoveries):            
Commercial, financial, agricultural and other $ 291   $ 27   $ (1,816 )   $ 318   $ 1,641  
Real estate construction   (7 ) (43 )   (7 ) (97 )
Commercial real estate 2,225   99   (4 )   2,324   (90 )
Residential real estate 104   379   55     483   400  
Loans to individuals 966   971   808     1,937   1,884  
Net Charge-offs $ 3,586   $ 1,469   $ (1,000 )   $ 5,055   $ 3,738  
             
Net charge-offs as a percentage of average loans outstanding (annualized) 0.26 % 0.11 % (0.07 )%   0.19 % 0.15 %
Provision for credit losses as a percentage of net charge-offs 32.57 % 469.91 % 160.90 %   159.66 % 43.34 %
Provision for credit losses $ 1,168   $ 6,903   $ (1,609 )   $ 8,071   $ 1,620  
                                 
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
 
(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the 21% federal income tax statutory rate.
(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,
  2018 2018 2017   2018 2017
             
Net Income $ 32,081   $ 23,270   $ 14,013     $ 55,351   $ 29,901  
Intangible amortization 829   784   846     1,613   1,418  
Tax benefit of amortization of intangibles (174 ) (165 ) (296 )   (339 ) (496 )
Net Income, adjusted for tax affected amortization of intangibles 32,736   23,889   14,563     56,625   30,823  
             
Average Tangible Equity:            
Total shareholders' equity $ 936,593   $ 892,618   $ 872,233     $ 914,727   $ 814,973  
Less: intangible assets 282,734   269,947   272,488     276,376   235,484  
Tangible Equity 653,859   622,671   599,745     638,351   579,489  
Less: preferred stock            
Tangible Common Equity $ 653,859   $ 622,671   $ 599,745     $ 638,351   $ 579,489  
             
(8)Return on Average Tangible Common Equity 20.08 % 15.56 % 9.74 %   17.89 % 10.73 %
             


           
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,
  2018 2018 2017   2018 2017
             
Core Net Income:            
Total Net Income $ 32,081   $ 23,270   $ 14,013     $ 55,351   $ 29,901  
Merger & Acquisition related expenses 1,273   337   9,870     1,610   10,481  
Tax benefit of merger & acquisition related expenses (267 ) (71 ) (3,455 )   (338 ) (3,668 )
(5) Core net income 33,087   23,536   20,428     56,623   36,714  
Average Shares Outstanding Assuming Dilution 99,504,409   97,601,162   97,232,288     98,529,160   93,125,939  
(6) Core Earnings per common share (diluted) $ 0.33   $ 0.24   $ 0.21     $ 0.57   $ 0.39  
             
Intangible amortization 829   784   846     1,613   1,418  
Tax benefit of amortization of intangibles (174 ) (165 ) (296 )   (339 ) (496 )
Core Net Income, adjusted for tax affected amortization of intangibles $ 33,742   $ 24,155   $ 20,978     $ 57,897   $ 37,636  
             
(9) Core Return on Average Tangible Common Equity 20.70 % 15.73 % 14.03 %   18.29 % 13.10 %
             
             
  For the Three Months Ended   For the Six Months Ended
  June 30, March 31, June 30,   June 30, June 30,
  2018 2018 2017   2018 2017
Core Return on Average Assets:            
Total Net Income $ 32,081   $ 23,270   $ 14,013     $ 55,351   $ 29,901  
Total Average Assets 7,520,085   7,300,382   7,381,816     7,410,840   7,047,176  
Return on Average Assets 1.71 % 1.29 % 0.76 %   1.51 % 0.86 %
             
Core Net Income (5) $ 33,087   $ 23,536   $ 20,428     $ 56,623   $ 36,714  
Total Average Assets 7,520,085   7,300,382   7,381,816     7,410,840   7,047,176  
(7) Core Return on Average Assets 1.76 % 1.31 % 1.11 %   1.54 % 1.05 %
                       


           
FIRST COMMONWEALTH FINANCIAL CORPORATION           
CONSOLIDATED FINANCIAL DATA           
Unaudited           
(dollars in thousands)          
           
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES          
             
  For the Three Months Ended   For the Six Months Ended
  June 30, March 31, June 30,   June 30, June 30,
  2018 2018 2017   2018 2017
Core Efficiency Ratio:            
Total Noninterest Expense $ 49,129   $ 46,873   $ 58,263     $ 96,002   $ 101,028  
Adjustments to Noninterest Expense:            
Unfunded commitment reserve (46 ) 5   664     (41 ) 452  
Intangible amortization 829   784   846     1,613   1,418  
Merger and acquisition related 1,273   337   9,870     1,610   10,481  
Noninterest Expense - Core $ 47,073   $ 45,747   $ 46,883     $ 92,820   $ 88,677  
             
Net interest income, fully tax equivalent $ 64,192   $ 60,178   $ 58,896     $ 124,371   $ 111,714  
Total noninterest income 26,308   22,043   18,904     48,351   35,836  
Net securities gains (5,262 ) (2,840 ) 49     (8,102 ) (603 )
Total Revenue $ 85,238   $ 79,381   $ 77,849     $ 164,620   $ 146,947  
             
Adjustments to Revenue:            
Derivative mark-to-market   789   (37 )   789   (35 )
Total Revenue - Core $ 85,238   $ 78,592   $ 77,886     $ 163,831   $ 146,982  
             
(10)Core Efficiency Ratio 55.23 % 58.21 % 60.19 %   56.66 % 60.33 %
             
             
  June 30, March 31, June 30,      
  2018 2018 2017      
Tangible Equity:            
Total shareholders' equity $ 960,785   $ 899,349   $ 879,465        
Less: intangible assets 289,051   269,403   272,030        
Tangible Equity 671,734   629,946   607,435        
Less: preferred stock            
Tangible Common Equity $ 671,734   $ 629,946   $ 607,435        
             
Tangible Assets:            
Total assets $ 7,648,755   $ 7,320,767   $ 7,383,386        
Less: intangible assets 289,051   269,403   272,030        
Tangible Assets $ 7,359,704   $ 7,051,364   $ 7,111,356        
             
(12)Tangible Common Equity as a percentage of Tangible Assets 9.13 % 8.93 % 8.54 %      
             
Shares Outstanding at End of Period 100,364,567   97,603,151   97,483,067        
(11)Tangible Book Value Per Common Share $ 6.69   $ 6.45   $ 6.23        
             
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.

Media Relations
Kristine N. Levan
Vice President / Marketing and Communications Manager
Phone:  724-463-4777
E-mail:  KLevan@fcbanking.com 

Investor Relations
Ryan M. Thomas
Vice President / Finance and Investor Relations
Phone: 724-463-1690
E-mail: RThomas1@fcbanking.com 

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