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First Commonwealth Announces Third Quarter 2020 Earnings; Declares Quarterly Dividend

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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 assets 0.81%   1.06%   1.31%   0.71%   1.32%
Return on average equity 7.01%   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 ROAA 1.74%   1.61%   1.97%   1.71%   1.88%
Return on average tangible common equity 10.29%   13.13%   14.62%   8.80%   14.90%
Core return on average tangible common equity 12.68%   13.13%   16.20%   9.61%   15.45%
Core efficiency ratio 54.45%   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 losses 11,212     6,859     2,708     49,038     9,638  
Noninterest income 26,769     21,812     22,179     67,854     62,957  
Noninterest expense 58,247     52,756     54,897     161,274     156,856  
Net income 19,186     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 assets 0.81 %   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-tax 1.49 %   1.61 %   1.78 %   1.62 %   1.82 %
Core return on average assets, pre-provision, pre-tax 1.74 %   1.61 %   1.97 %   1.71 %   1.88 %
Return on average shareholders' equity 7.01 %   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 share 7.74     8.28     13.47          
Cash dividends declared per common share 0.11     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 leases 1.31 %   1.22 %   0.91 %        
Allowance for credit losses (originated loans and leases) as a percent of total originated loans and leases, excluding PPP loans 1.44 %   1.34 %   0.92 %        
CAPITAL RATIOS                  
Shareholders' equity as a percent of total assets 11.5 %   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 Ratio 8.9 %   9.3 %   10.1 %        
Risk Based Capital - Tier I 11.8 %   11.8 %   11.8 %        
Risk Based Capital - Total 14.4 %   14.4 %   14.1 %        
Common Equity - Tier I 10.7 %   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 expense 7,224     8,295     14,130     27,124     43,169  
Net Interest Income 66,369     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 losses 11,212     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 gains 20     8     9     47     15  
Trust income 2,554     2,109     2,325     6,774     6,221  
Service charges on deposit accounts 4,035     3,286     4,954     12,066     13,792  
Insurance and retail brokerage commissions 2,156     1,831     1,912     5,982     5,887  
Income from bank owned life insurance 1,547     1,800     1,540     4,963     4,408  
Gain on sale of mortgage loans 6,437     4,243     2,599     13,226     6,101  
Gain on sale of other loans and assets 1,871     581     970     3,151     3,831  
Card-related interchange income 6,441     5,886     5,629     17,589     15,800  
Derivative mark-to-market (160 )   (221 )   (45 )   (2,122 )   (88 )
Swap fee income 41     609     421     864     1,634  
Other income 1,827     1,680     1,865     5,314     5,356  
Total Noninterest Income 26,769     21,812     22,179     67,854     62,957  
Salaries and employee benefits 28,823     28,773     28,674     87,573     83,205  
Net occupancy 4,609     4,397     4,521     13,979     13,878  
Furniture and equipment 4,033     3,657     3,904     11,468     11,396  
Data processing 2,741     2,596     2,825     7,804     7,988  
Pennsylvania shares tax 1,254     1,254     1,189     3,246     3,365  
Advertising and promotion 1,115     1,535     1,140     3,800     3,611  
Intangible amortization 939     919     865     2,792     2,364  
Collection and repossession 260     341     649     1,165     1,656  
Other professional fees and services 937     920     969     2,755     2,755  
FDIC insurance 876     733     35     1,637     1,164  
Litigation and operational losses 329     319     308     1,038     1,264  
Loss on sale or write-down of assets 63     140     152     416     1,398  
Merger and acquisition         3,738         3,772  
COVID-19 125     419         567     567  
Voluntary early retirement 3,304             3,304      
Branch consolidation 2,544             2,544      
Other operating expenses 6,295     6,753     5,928     17,186     19,040  
Total Noninterest Expense 58,247     52,756     54,897     161,274     156,856  
Income before Income Taxes 24,052     29,242     33,449     59,450     98,861  
Taxable equivalent adjustment (1) 373     359     430     1,129     1,341  
Income tax provision 4,493     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 deposits 283,037     348,763     16,408  
Securities available for sale, at fair value 921,202     914,412     823,944  
Securities held to maturity, at amortized cost 268,638     297,986     357,890  
Loans held for sale 37,998     30,409     20,288  
           
Loans 6,949,716     6,922,075     6,099,561  
Allowance for credit losses (88,307 )   (81,441 )   (50,035 )
Net loans 6,861,409     6,840,634     6,049,526  
           
Goodwill and other intangibles 317,423     318,072     320,505  
Other assets 502,599     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 deposits 315,806     327,691     263,312  
Savings deposits 4,425,119     4,431,919     3,867,034  
Time deposits 661,161     734,292     890,143  
Total interest-bearing deposits 5,402,086     5,493,902     5,020,489  
           
Total deposits 7,703,907     7,782,201     6,677,996  
           
Short-term borrowings 122,356     108,484     83,735  
Long-term borrowings 233,490     233,723     234,404  
Total borrowings 355,846     342,207     318,139  
           
Other liabilities 156,782     164,542     116,862  
Shareholders' equity 1,072,831     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/
  2020 Rate 2020 Rate 2019 Rate   2020 Rate 2019 Rate
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 Loans 572,434   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 assets 861,311     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 deposits 696,227   1.28 %   776,892   1.51 %   863,714   1.75 %   766,106   1.49 %   866,746   1.68 %
Short-term borrowings 124,670   0.11 %   112,063   0.17 %   323,041   1.99 %   146,270   0.61 %   489,562   2.21 %
Long-term borrowings 233,588   4.37 %   233,819   4.41 %   234,497   4.51 %   233,818   4.40 %   210,353   4.96 %
Total Interest-Bearing Liabilities 5,873,061   0.49 %   5,690,976   0.59 %   5,354,343   1.05 %   5,681,266   0.64 %   5,363,429   1.08 %
Noninterest-bearing deposits 2,281,200     2,130,775     1,560,478       2,030,364     1,507,826    
Other liabilities 147,603     150,254     101,328       136,655     90,956    
Shareholders' equity 1,088,101     1,071,549     1,033,903       1,077,030     1,010,227    
Total Noninterest-Bearing Funding Sources 3,516,904     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,
  2020 2020 2019
Loan Portfolio Detail      
Commercial Loan Portfolio:      
Commercial, financial, agricultural and other $ 1,163,268   $ 1,202,212   $ 1,210,936  
Paycheck Protection Program 573,468   570,887    
Commercial real estate 2,215,311   2,224,710   2,124,240  
Real estate construction 366,936   339,603   334,533  
Total Commercial 4,318,983   4,337,412   3,669,709  
       
Consumer Loan Portfolio:      
Closed-end mortgages 1,154,366   1,140,101   1,081,170  
Home equity lines of credit 589,654   583,187   585,050  
Real estate construction 86,053   76,726   85,748  
Total Real Estate - Consumer 1,830,073   1,800,014   1,751,968  
       
Auto loans 692,475   671,202   553,617  
Direct installment 40,081   43,629   46,704  
Personal lines of credit 62,155   63,600   70,441  
Student loans 5,949   6,218   7,122  
Total Other Consumer 800,660   784,649   677,884  
Total Consumer Portfolio 2,630,733   2,584,663   2,429,852  
Total Portfolio Loans 6,949,716   6,922,075   6,099,561  
Loans held for sale 37,998   30,409   20,288  
Total Loans $ 6,987,714   $ 6,952,484   $ 6,119,849  
       
       
  September 30, June 30, September 30,
  2020 2020 2019
ASSET QUALITY DETAIL      
Nonperforming Loans:      
Loans on nonaccrual basis $ 38,139   $ 44,968   $ 16,227  
Troubled debt restructured loans on nonaccrual basis 4,511   3,600   11,074  
Troubled debt restructured loans on accrual basis 7,078   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 accruing 1,249   1,421   2,054  
Classified loans 80,190   76,917   50,719  
Criticized loans 188,957   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,
  2020 2020 2019   2020 2019
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 estate 117     2     366     621     427  
Loans to individuals 1,001     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-offs 257.98 %   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,
  2020 2020 2019   2020 2019
             
Net Income $ 19,186     $ 23,851     $ 26,644     $ 47,764     $ 78,513  
Intangible amortization 939     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 intangibles 19,928     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 assets 317,702     318,486     292,529     318,483     288,749  
       Tangible Equity 770,399     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 Equity 10.29 %   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,
  2020 2020 2019   2020 2019
             
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 related 3,304             3,304      
Tax benefit of early retirement related expenses (694 )           (694 )    
Branch consolidation related 2,544             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 amortization 939     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 Equity 12.68 %   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,
  2020 2020 2019   2020 2019
Core Return on Average Assets:            
Total Net Income $ 19,186     $ 23,851     $ 26,644     $ 47,764     $ 78,513  
Total Average Assets 9,389,965     9,043,554     8,050,052     8,925,315     7,972,438  
Return on Average Assets 0.81 %   1.06 %   1.31 %   0.71 %   1.32 %
             
Core Net Income (5) $ 23,806     $ 23,851     $ 29,597     $ 52,384     $ 81,493  
Total Average Assets 9,389,965     9,043,554     8,050,052     8,925,315     7,972,438  
(7) Core Return on Average Assets 1.01 %   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,
  2020 2020 2019   2020 2019
Core Efficiency Ratio:            
Total Noninterest Expense $ 58,247     $ 52,756     $ 54,897     $ 161,274     $ 156,856  
Adjustments to Noninterest Expense:            
Unfunded commitment reserve 471     887     (466 )   (1,181 )   (235 )
Intangible amortization 939     919     865     2,792     2,364  
Merger and acquisition related         3,738         3,772  
Early retirement related 3,304             3,304      
Branch consolidation related 2,544             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 income 26,769     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 Ratio 54.45 %   57.20 %   55.73 %   56.58 %   56.87 %
             
             
  September 30, June 30, September 30,      
  2020 2020 2019      
Tangible Equity:            
Total shareholders' equity $ 1,072,831     $ 1,075,705     $ 1,039,030        
Less: intangible assets 317,423     318,072     320,505        
       Tangible Equity 755,408     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 assets 317,423     318,072     320,505        
       Tangible Assets $ 8,971,943     $ 9,046,583     $ 7,831,522        
Less: PPP loans 573,468      570,887      —         
       Tangible Assets $ 8,398,475      $ 8,475,696     $ 7,831,522        
             
(12)Tangible Common Equity as a percentage of Tangible Assets 8.42 %   8.37 %   9.17 %      
(12)Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans 8.99 %   8.94 %   9.17 %      
             
Shares Outstanding at End of Period 96,924,781     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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