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First Commonwealth Announces First Quarter 2021 Earnings; Increases Quarterly Dividend

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INDIANA, Pa., April 27, 2021 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE:FCF) today announced financial results for the first quarter of 2021.

Financial Summary

(dollars in thousands, For the Three Months Ended
except per share data) March 31,   December 31,   March 31,
  2021
   2020
   2020
Reported Results          
Net income $39,770    $25,683   $4,727
Diluted earnings per share $0.41
  $0.27   $0.05
Return on average assets 1.77 %   1.12 %   0.23 %
Return on average equity 14.98 %   9.48 %   1.77 %
           
Operating Results (non-GAAP)(1)          
Core net income $39,855   $26,102   $4,730
Core diluted earnings per share $0.41
  $0.27   $0.05
Core pre-tax pre-provision net revenue $45,046   $40,092   $36,730
Provision expense ($4,390)   $7,680   $30,967
Net charge-offs $3,270   $4,825   $3,529
Reserve build/(release)(2) ($4,546)   $13,002   $27,439
Core return on average assets (ROAA) 1.77 %   1.14 %   0.23 %
Core pre-tax pre-provision ROAA 2.00 %   1.75 %   1.77 %
Return on average tangible common equity 21.58 %   13.80 %   2.92 %
Core return on average tangible common equity 21.63 %   14.02 %   2.92 %
Core efficiency ratio 53.18 %   56.00 %   58.19 %
Net interest margin (FTE) 3.40 %   3.26 %   3.65 %

(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.
        

First Quarter 2021 Highlights

Financial results

  • Net income of $39.8 million and diluted earnings per share totaled $0.41, an increase of $14.1 million, or $0.14 per share from the previous quarter
  • Pre-tax pre-provision net revenue (PPNR)(1) totaled $44.9 million, an increase of $5.4 million from the previous quarter and an increase of $8.2 million from the first quarter of 2020
    • PPNR ROAA of 2.00% increased by 27 basis points from the previous quarter
  • The Company achieved positive operating leverage during the first quarter of 2021
    • Core revenue(1) grew $0.8 million, or 0.9% from the prior quarter
    • Core noninterest expense(1) decreased $2.2 million, or 4.2%, from the prior quarter
  • Net interest income (FTE) of $69.8 million increased $1.9 million from the previous quarter
  • Noninterest income of $27.3 million (excluding net security gains) increased $0.8 million from the previous quarter
  • Noninterest expense of $51.9 million decreased $2.7 million from the previous quarter
  • Portfolio loans (excluding Paycheck Protection Program (PPP) loans) decreased $23.9 million from the previous quarter despite consumer loan growth, due in part to commercial loan payoffs
  • Approximately $215.7 million of PPP loans were forgiven in the first quarter, offset by $215.3 million in new PPP loan production, resulting in the total PPP loan balance at March 31, 2021 of $478.5 million, which was fairly consistent with the balance at December 31, 2020 of $478.9 million.
  • Average deposits increased $20.4 million, or 1.1% annualized compared to the prior quarter despite $81.1 million in intentional time deposit runoff
    • End of period deposits grew by $430.6 million from the end of the fourth quarter
    • Average noninterest-bearing deposits grew $100.9 million, or 17.4% annualized compared to the prior quarter
  • Tangible book value per share grew 9.7% annualized compared to the prior quarter and 6.2% year-over-year
  • First Commonwealth Bank has been recognized for the third consecutive year by Forbes as one of the World's Best Banks for 2021

Profitability

  • The core efficiency ratio(1) improved 282 basis points to 53.18% compared to the prior quarter
  • The return on average assets (ROA) improved 65 basis points to 1.77% compared to the prior quarter
  • Pre-tax pre-provision ROA(1) for the quarter ended March 31, 2021 was 2.00% as compared to 1.73% in the prior quarter and 1.77% in the prior year quarter
  • The net interest margin of 3.40% increased 14 basis points compared to the prior quarter and decreased 25 basis points as compared to the prior year quarter

Strong capital and liquidity positions

  • On April 26, 2021, the Board of Directors authorized a 4.5% increase in the quarterly cash dividend to shareholders
  • Bank-level Tier 1 Capital ratio of 12.00%, which represents $271.0 million in excess capital above the regulatory "well capitalized" requirement of 8.0%
  • Total available liquidity of $4.5 billion
  • On January 26, 2021, the Company announced that its Board of Directors authorized a new $25.0 million share repurchase program of the Company's common stock. A total of 28,012 shares were purchased under this program during the first quarter of 2021 for a weighted average price of $13.99 per share.

Asset quality

  • The provision for credit losses was $(4.4) million, a decrease of $12.1 million from the previous quarter
  • Reserve build/(release)(2) totaled $(4.5) million, bringing reserves to total loans (excluding PPP) down to 1.55% from 1.61% last quarter
  • Nonaccrual loans of $43.7 million decreased $1.9 million from the previous quarter
  • Net charge-offs on loans totaled $3.3 million, a decrease of $1.5 million from the previous quarter
    • Net charge-offs as a percentage of average loans outstanding (annualized) was 0.20% in the first quarter of 2021, down from 0.28% last quarter

"While the reserve release is certainly a positive reflection of our asset quality trends and the improved macroeconomic environment, the trajectory of our fundamental operating performance is even more encouraging," stated T. Michael Price, President and Chief Executive Officer. "Our consumer loans are growing, our commercial pipelines have started to build and our fee generating businesses all had another solid quarter. At the same time, the team helped 2,500 small and mid-sized businesses secure roughly $255 million in PPP funding during the quarter." Price continued, "Last week, Forbes released their list of the World's Best Banks for 2021. For the third year in a row, First Commonwealth is proud to be one of 75 banks from the United States receiving this distinction. This recognition gives us even more confidence that our Company is well-positioned to reward all of our stakeholders."

Earnings

Net income for the first quarter of 2021 was $39.8 million, or $0.41 per share, compared to $25.7 million, or $0.27 per share in the fourth quarter of 2020 and $4.7 million, or $0.05 per share for the first quarter of 2020.

Net Interest Income and Net Interest Margin

Net interest income (FTE) of $69.8 million increased $1.9 million from the previous quarter and $1.6 million from the prior year quarter. The increase from the prior quarter was primarily due to a $2.4 million increase in fees and interest on PPP loans and a $189.4 million increase in average investment securities, partially offset by an $81.1 million decrease in higher cost time deposits. Interest and fee income recognized on PPP loans totaled $7.9 million in the first quarter as compared to $5.5 million in the prior quarter.

The net interest margin for the first quarter of 2021 was 3.40%, an increase of 14 basis points from the previous quarter and a decrease of 25 basis points from the first quarter of 2021. The increase from the fourth quarter of 2020 was due primarily to a 258 basis point increase in the yield on PPP loans (inclusive of loan forgiveness) and a six basis point decrease in the cost of deposits, partially offset by a 1 basis point increase in the yield on loans.

Total average deposits grew $20.4 million in the first quarter of 2021 as compared to the previous quarter. Balance sheet management strategies that reduced deposits by the end of the fourth quarter were offset by deposit growth in the first quarter of $430.6 million. Average noninterest bearing deposits grew $100.9 million and offset an $81.1 million decrease in average time deposits.

Asset Quality

The Company adopted CECL on December 31, 2020, effective January 1, 2020.

Provision expense in the first quarter of 2021 totaled $(4.4) million, a decrease of $12.1 million from the previous quarter. The provision expense in the fourth quarter 2020 included $3.2 million for unfunded commitments as a result of the adoption of CECL and use of life-of-loan loss rates.

At March 31, 2021, nonperforming loans totaled $50.4 million, a decrease of $3.7 million from the previous quarter and a decrease of $8.8 million from the previous year quarter. Nonperforming loans represented 0.80% of total loans (excluding PPP) as of March 31, 2021, down from 0.86% and 0.93% for the periods ended December 31, 2020 and March 31, 2020, respectively.

At March 31, 2021, criticized loans totaled $272.1 million, a decrease of $30.7 million from the previous quarter.

During the first quarter of 2021, net charge-offs were $3.3 million, compared to $4.8 million in the prior quarter and $3.5 million in the first quarter of 2020. Net charge-offs were 0.20%, 0.28% and 0.23% of average loans for the periods ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $27.3 million for the first quarter of 2021, as compared to $26.6 million for the fourth quarter of 2020 and $19.3 million for the first quarter of 2020 (excluding net securities gains). There were no material securities gains during the current or comparable quarters.

The $0.8 million increase from the previous quarter was primarily due to a $1.8 million increase in the derivative mark-to-market adjustment on interest rate swaps as a result of changes in fair value due to movement in bond spreads, swap rates and counterparty credit risk. This increase was partially offset by a $0.6 million decrease in fee income related to new interest rate swaps due to lower commercial demand. Income from mortgage gain on sale improved by $0.4 million over the prior quarter but was offset by a $0.9 million negative interest rate hedge adjustment.

Noninterest expense (excluding branch consolidation, early retirement and COVID-19 related expenses) totaled $51.7 million for the first quarter of 2021, as compared to $54.0 million for the fourth quarter of 2020 and $50.2 million for the first quarter of 2020. The $2.3 million decrease from the previous quarter was primarily the result of a $2.7 million decrease in salaries and benefits due to a $1.0 million seasonal decrease in hospitalization expense, a $0.7 million decrease in incentive expense and an increase of $0.5 million in deferred expense related to PPP originations. The decrease from the previous quarter was partially offset by a $1.1 million increase in occupancy expense due to seasonal snow removal expense and maintenance.

The core efficiency ratio was 53.18% during the first quarter of 2021 as compared to 56.00% in the previous quarter and 58.19% in the first quarter of 2020.

Full time equivalent staff was 1,387 at March 31, 2021, 1,389 at December 31, 2020, and 1,510 at March 31, 2020. The decrease from the prior year quarter is the result of a company-wide hiring freeze implemented at the end of the first quarter of 2020 and the consolidation of 20% of the bank's branch facilities in the fourth quarter of 2020.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.115 per share, which represents a 4.5% increase from the previous quarter. The cash dividend is payable on May 21, 2021 to shareholders of record as of May 7, 2021. This dividend represents a 3.2% projected annual yield utilizing the April 26, 2021 closing market price of $14.34.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at March 31, 2021 were 15.3%, 12.6%, 9.7% and 11.6% 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 first quarter of 2021 on Wednesday, April 28, 2021 at 2:00 PM (ET). The call can be accessed by dialing (toll free) 1-833-302-1887 conference ID # 4592861 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 1-800-585-8367 and entering the conference ID # 4592861. A link to the webcast replay will also be accessible on the company's web.

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 effects of the COVID-19 pandemic 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
  March 31,   December 31,   March 31,
  2021   2020   2020
SUMMARY RESULTS OF OPERATIONS          
Net interest income $ 69,442       $ 67,492     $ 67,724  
Provision for credit losses (4,390 )     7,680     30,967  
Noninterest income 27,355       26,622     19,273  
Noninterest expense 51,859       54,552     50,271  
Net income 39,770       25,683     4,727  
Core net income (5) 39,855       26,102     4,730  
Earnings per common share (diluted) $ 0.41       $ 0.27     $ 0.05  
Core earnings per common share (diluted) (6) $ 0.41       $ 0.27     $ 0.05  
KEY FINANCIAL RATIOS          
Return on average assets 1.77   %   1.12 %   0.23 %
Core return on average assets (7) 1.77   %   1.14 %   0.23 %
Return on average assets, pre-provision, pre-tax 2.00   %   1.73 %   1.77 %
Core return on average assets, pre-provision, pre-tax 2.00   %   1.75 %   1.77 %
Return on average shareholders' equity 14.98   %   9.48 %   1.77 %
Return on average tangible common equity (8) 21.58   %   13.80 %   2.92 %
Core return on average tangible common equity (9) 21.63   %   14.02 %   2.92 %
Core efficiency ratio (2)(10) 53.18   %   56.00 %   58.19 %
Net interest margin (FTE) (1) 3.40   %   3.26 %   3.65 %
           
Book value per common share $ 11.30       $ 11.12     $ 10.79  
Tangible book value per common share (11) 8.01       7.82     7.54  
Market value per common share 14.37       10.94     9.14  
Cash dividends declared per common share 0.11       0.11     0.11  
ASSET QUALITY RATIOS          
Nonperforming loans as a percent of end-of-period loans (3) 0.75   %   0.80 %   0.93 %
Nonperforming loans as a percent of end-of-period loans, excluding PPP loans (3) 0.80   %   0.86 %   0.93 %
Nonperforming assets as a percent of total assets (3) 0.55   %   0.62 %   0.74 %
Nonperforming assets as a percent of total assets, excluding PPP loans (3) 0.58   %   0.65 %   0.74 %
Net charge-offs as a percent of average loans (annualized) (4) 0.20   %   0.28 %   0.23 %
Net charge-offs as a percent of average loans, excluding PPP loans (annualized) (4) 0.21   %   0.30 %   0.23 %
Allowance for credit losses as a percent of nonperforming loans (4) 192.06   %   187.43 %   133.71 %
Allowance for credit losses as a percent of end-of-period loans (4) 1.44   %   1.50 %   1.25 %
Allowance for credit losses as a percent of end-of-period loans, excluding PPP loans (4) 1.55    %   1.61  %   1.25  %
CAPITAL RATIOS          
Shareholders' equity as a percent of total assets 11.5   %   11.8 %   12.4 %
Tangible common equity as a percent of tangible assets (12) 8.5   %   8.6 %   9.0 %
Tangible common equity as a percent of tangible assets, excluding PPP loans (12) 8.9   %   9.1 %   9.0 %
Leverage Ratio 9.7   %   9.4 %   9.9 %
Risk Based Capital - Tier I 12.6   %   12.2 %   11.6 %
Risk Based Capital - Total 15.3   %   14.9 %   14.2 %
Common Equity - Tier I 11.6   %   11.2 %   10.5 %


FIRST COMMONWEALTH FINANCIAL CORPORATION  
CONSOLIDATED FINANCIAL DATA      
Unaudited      
(dollars in thousands, except per share data)      
  For the Three Months Ended
  March 31, December 31, March 31,
  2021 2020 2020
INCOME STATEMENT      
Interest income $ 74,061   $ 73,306   $ 79,329  
Interest expense 4,619   5,814   11,605  
Net Interest Income 69,442   67,492   67,724  
Provision for credit losses (4,390 ) 7,680   30,967  
Net Interest Income after Provision for Credit Losses 73,832    59,812    36,757   
Net securities gains 6   23   19  
Trust income 2,516   2,327   2,111  
Service charges on deposit accounts 4,047   4,321   4,745  
Insurance and retail brokerage commissions 2,172   1,868   1,995  
Income from bank owned life insurance 1,951   1,589   1,616  
Gain on sale of mortgage loans 5,046   5,538   2,546  
Gain on sale of other loans and assets 1,690   1,676   699  
Card-related interchange income 6,427   6,377   5,262  
Derivative mark-to-market 1,430   (399 ) (1,741 )
Swap fee income 146   724   214  
Other income 1,924   2,578   1,807  
Total Noninterest Income 27,355   26,622   19,273  
Salaries and employee benefits 28,671   31,388   29,977  
Net occupancy 4,773   3,668   4,973  
Furniture and equipment 3,948   3,925   3,778  
Data processing 3,052   2,739   2,467  
Pennsylvania shares tax 832   1,254   738  
Advertising and promotion 1,324   879   1,150  
Contributions 731   439   472  
Intangible amortization 866   897   934  
Other professional fees and services 751   1,131   898  
FDIC insurance 696   1,062   28  
Litigation and operational losses 479   373   390  
Loss on sale or write-down of assets 9   264   213  
COVID-19 related 74   307   23  
Voluntary early retirement   118    
Branch consolidation 40   128    
Other operating expenses 5,613   5,980   4,230  
Total Noninterest Expense 51,859   54,552   50,271  
Income before Income Taxes 49,328   31,882   5,759  
Income tax provision 9,558   6,199   1,032  
Net Income $ 39,770   $ 25,683   $ 4,727  
       
Shares Outstanding at End of Period 96,248,476   96,130,751   98,015,396  
Average Shares Outstanding Assuming Dilution 96,233,647   96,344,398   98,361,494  
       


FIRST COMMONWEALTH FINANCIAL CORPORATION      
CONSOLIDATED FINANCIAL DATA          
Unaudited          
(dollars in thousands)          
           
  March 31,   December 31,   March 31,
  2021   2020   2020
BALANCE SHEET (Period End)          
Assets          
Cash and due from banks $ 83,989     $ 100,009     $ 118,413  
Interest-bearing bank deposits 420,645     256,572     15,762  
Securities available for sale, at fair value 1,056,703     843,450     992,041  
Securities held to maturity, at amortized cost 407,833     361,844     318,256  
Loans held for sale 20,604     33,436     25,783  
           
Loans 6,736,894     6,761,183     6,313,944  
Allowance for credit losses (96,763 )   (101,309 )   (79,075 )
Net loans 6,640,131     6,659,874     6,234,869  
           
Goodwill and other intangibles 316,148     316,820     318,891  
Other assets 470,936     496,099     491,090  
Total Assets $ 9,416,989     $ 9,068,104     $ 8,515,105  
           
Liabilities and Shareholders' Equity          
Noninterest-bearing demand deposits $ 2,616,303     $ 2,319,958     $ 1,751,524  
           
Interest-bearing demand deposits 267,571     250,353     326,122  
Savings deposits 4,501,456     4,305,391     4,034,759  
Time deposits 483,926     562,964     810,683  
Total interest-bearing deposits 5,252,953     5,118,708     5,171,564  
           
Total deposits 7,869,256     7,438,666     6,923,088  
           
Short-term borrowings 110,762     117,373     146,971  
Long-term borrowings 233,012     233,255     233,955  
Total borrowings 343,774     350,628     380,926  
           
Other liabilities 116,479     210,193     153,167  
Shareholders' equity 1,087,480     1,068,617     1,057,924  
Total Liabilities and Shareholders' Equity $ 9,416,989     $ 9,068,104     $ 8,515,105  


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)


  For the Three Months Ended
  March 31, Yield/ December 31, Yield/ March 31, Yield/
  2021 Rate 2020 Rate 2020 Rate
NET INTEREST MARGIN        
             
Assets            
Loans, excluding PPP loans (FTE)(1)(3) $ 6,292,076   3.91 % $ 6,387,174   3.90 % $ 6,255,825   4.63 %
PPP Loans 489,375   6.58 % 548,279   4.00 %   %
Securities and interest-bearing bank deposits (FTE) (1) 1,530,107   1.54 % 1,340,756   1.62 % 1,255,699   2.46 %
Total Interest-Earning Assets (FTE) (1) 8,311,558   3.63 % 8,276,209   3.54 % 7,511,524   4.27 %
Noninterest-earning assets 818,896     845,094     825,797    
Total Assets $ 9,130,454     $ 9,121,303     $ 8,337,321    
             
Liabilities and Shareholders' Equity            
Interest-bearing demand and savings deposits $ 4,603,822   0.10 % $ 4,603,255   0.14 % $ 4,215,323   0.48 %
Time deposits 528,265   0.75 % 609,350   1.05 % 825,966   1.65 %
Short-term borrowings 119,369   0.11 % 131,806   0.10 % 202,314   1.17 %
Long-term borrowings 233,113   4.41 % 233,352   4.37 % 234,050   4.41 %
Total Interest-Bearing Liabilities 5,484,569   0.34 % 5,577,763   0.41 % 5,477,653   0.85 %
Noninterest-bearing deposits 2,413,887     2,313,009     1,676,362    
Other liabilities 155,443     152,396     111,988    
Shareholders' equity 1,076,555     1,078,135     1,071,318    
Total Noninterest-Bearing Funding Sources 3,645,885     3,543,540     2,859,668    
Total Liabilities and Shareholders' Equity $ 9,130,454     $ 9,121,303     $ 8,337,321    
             
Net Interest Margin (FTE) (annualized)(1)   3.40 %   3.26 %   3.65 %


FIRST COMMONWEALTH FINANCIAL CORPORATION  
CONSOLIDATED FINANCIAL DATA      
Unaudited      
(dollars in thousands)      
  March 31, December 31, March 31,
  2021 2020 2020
Loan Portfolio Detail      
Commercial Loan Portfolio:      
Commercial, financial, agricultural and other $ 1,077,218    $ 1,077,132    $ 1,272,240   
Paycheck Protection Program 478,453    478,854    —   
Commercial real estate 2,167,506    2,211,569    2,190,098   
Real estate construction 316,207    340,850    332,814   
Total Commercial 4,039,384    4,108,405    3,795,152   
       
Consumer Loan Portfolio:      
Closed-end mortgages 1,178,640    1,165,951    1,103,281   
Home equity lines of credit 577,975    584,641    587,859   
Real estate construction 88,373    86,371    80,644   
Total Real Estate - Consumer 1,844,988    1,836,963    1,771,784   
       
Auto loans 759,061    712,800    626,256   
Direct installment 32,143    36,165    46,029   
Personal lines of credit 55,719    61,072    68,240   
Student loans 5,599    5,778    6,483   
Total Other Consumer 852,522    815,815    747,008   
Total Consumer Portfolio 2,697,510    2,652,778    2,518,792   
Total Portfolio Loans 6,736,894    6,761,183    6,313,944   
Loans held for sale 20,604    33,436    25,783   
Total Loans $ 6,757,498    $ 6,794,619    $ 6,339,727   
       
       
  March 31, December 31, March 31,
  2021 2020 2020
ASSET QUALITY DETAIL      
Nonperforming Loans:      
Loans on nonaccrual basis $ 23,056    $ 30,801    $ 46,109   
Loans held for sale on a nonaccrual basis —    13    —   
Troubled debt restructured loans on nonaccrual basis 20,628    14,740    5,522   
Troubled debt restructured loans on accrual basis 6,697    8,512    7,509   
Total Nonperforming Loans $ 50,381    $ 54,066    $ 59,140   
Other real estate owned ("OREO") 916    1,215    2,697   
Repossessions ("Repos") 833    613    836   
Total Nonperforming Assets $ 52,130    $ 55,894    $ 62,673   
Loans past due in excess of 90 days and still accruing 1,079    1,523    1,427   
Classified loans 72,026    76,179    90,233   
Criticized loans 272,143    302,813    117,535   
       
Nonperforming assets as a percentage of total loans, plus OREO and Repos (4) 0.77  % 0.83  % 0.99  %
Allowance for credit losses $ 96,763    $ 101,309    $ 79,075   
       


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)


  For the Three Months Ended
  March 31, December 31, March 31,
  2021 2020 2020
Net Charge-offs (Recoveries):      
Commercial, financial, agricultural and other $ 479     $ 1,027   $ 405  
Real estate construction        
Commercial real estate 1,511     2,364   222  
Residential real estate 68     5   502  
Loans to individuals 1,212     1,429   2,400  
Net Charge-offs $ 3,270     $ 4,825   $ 3,529  
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4) 0.20   % 0.28 % 0.23 %
Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4) 0.21   % 0.30 % 0.23 %
Provision for credit losses as a percentage of net charge-offs (134.25 ) % 159.17 % 877.50 %
Provision for credit losses $ (4,390 )   $ 7,680   $ 30,967  


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
  March 31, December 31, March 31,
  2021 2020 2020
       
Interest income $ 74,061    $ 73,306    $ 79,329   
Adjustment to fully taxable equivalent basis (1) 309    333    397   
Interest income adjusted to fully taxable equivalent basis (non-GAAP) 74,370    73,639    79,726   
Interest expense 4,619    5,814    11,605   
Net interest income, (FTE) $ 69,751    $ 67,825    $ 68,121   


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
  March 31, December 31, March 31,
  2021 2020 2020
       
Net Income $ 39,770     $ 25,683     $ 4,727    
Intangible amortization 866     897     934    
Tax benefit of amortization of intangibles (182 )   (188 )   (196 )  
Net Income, adjusted for tax affected amortization of intangibles $ 40,454     $ 26,392     $ 5,465    
       
Average Tangible Equity:      
Total shareholders' equity $ 1,076,555     $ 1,078,135     $ 1,071,318    
Less: intangible assets 316,438     317,178     319,269    
Tangible Equity 760,117     760,957     752,049    
Less: preferred stock —      —      —     
Tangible Common Equity $ 760,117     $ 760,957     $ 752,049    
       
(8)Return on Average Tangible Common Equity 21.58   % 13.80   % 2.92   %
       


  For the Three Months Ended
  March 31, December 31, March 31,
  2021 2020 2020
       
Core Net Income:      
Total Net Income $ 39,770     $ 25,683     $ 4,727    
Net securities gains (6 )   (23 )   (19 )  
Tax benefit of net securities gains 1     5     4    
COVID-19 related 74     307     23    
Tax benefit of COVID 19 related (16 )   (64 )   (5 )  
Early retirement related     118        
Tax benefit of early retirement related expenses     (25 )      
Branch consolidation related 40     128        
Tax benefit of bank consolidation related expenses (8 )   (27 )      
(5) Core net income $ 39,855     $ 26,102     $ 4,730    
Average Shares Outstanding Assuming Dilution 96,233,647   96,344,398   98,361,494  
(6) Core Earnings per common share (diluted) $ 0.41     $ 0.27     $ 0.05    
       
Intangible amortization 866     897     934    
Tax benefit of amortization of intangibles (182 )   (188 )   (196 )  
Core Net Income, adjusted for tax affected amortization of intangibles $ 40,539     $ 26,811     $ 5,468    
       
(9) Core Return on Average Tangible Common Equity 21.63   % 14.02   % 2.92   %


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
  March 31, December 31, March 31,
  2021 2020 2020
Core Return on Average Assets:      
Total Net Income $ 39,770    $ 25,683    $ 4,727   
Total Average Assets 9,130,454    9,121,303    8,337,321   
Return on Average Assets 1.77  % 1.12  % 0.23  %
       
Core Net Income (5) $ 39,855    $ 26,102    $ 4,730   
Total Average Assets 9,130,454    9,121,303    8,337,321   
(7) Core Return on Average Assets 1.77  % 1.14  % 0.23  %


  For the Three Months Ended
  March 31, December 31, March 31,
  2021 2020 2020
Core Efficiency Ratio:      
Total Noninterest Expense $ 51,859     $ 54,552     $ 50,271    
Adjustments to Noninterest Expense:      
Unfunded commitment reserve         (2,539 )  
Intangible amortization 866     897     934    
COVID-19 related 74     307     23    
Early retirement related     118        
Branch consolidation related 40     128        
Noninterest Expense - Core $ 50,879     $ 53,102     $ 51,853     
       
Net interest income, (FTE) $ 69,751     $ 67,825     $ 68,121    
Total noninterest income 27,355     26,622     19,273    
Net securities gains (6 )   (23 )   (19 )  
Total Revenue 97,100     94,424     87,375    
       
Adjustments to Revenue:      
Derivative mark-to-market 1,430     (399 )   (1,741 )  
Total Revenue - Core $ 95,670     $ 94,823     $ 89,116    
       
(10)Core Efficiency Ratio 53.18   % 56.00   % 58.19   %


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)


DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES    
       
  March 31, December 31, March 31,
  2021 2020 2020
Tangible Equity:      
Total shareholders' equity $ 1,087,480    $ 1,068,617    $ 1,057,924   
Less: intangible assets 316,148    316,820    318,891   
Tangible Equity 771,332    751,797    739,033   
Less: preferred stock —    —    —   
Tangible Common Equity $ 771,332    $ 751,797    $ 739,033   
       
Tangible Assets:      
Total assets $ 9,416,989    $ 9,068,104    $ 8,515,105   
Less: intangible assets 316,148    316,820    318,891   
Tangible Assets $ 9,100,841    $ 8,751,284    $ 8,196,214   
Less: PPP loans 478,453    478,854    —   
Tangible Assets, excluding PPP loans $ 8,622,388    $ 8,272,430    $ 8,196,214   
       
(12)Tangible Common Equity as a percentage of Tangible Assets 8.48  % 8.59  % 9.02  %
(12)Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans 8.95  % 9.09  % 9.02  %
       
Shares Outstanding at End of Period 96,248,476    96,130,751    98,015,396   
(11)Tangible Book Value Per Common Share $ 8.01    $ 7.82    $ 7.54   
       
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.


  For the Three Months Ended
  March 31, December 31, March 31,
    2021     2020     2020  
Pre-tax pre-provision income:      
Net interest income $69,442   $67,492   $67,724  
Noninterest income   27,355     26,622     19,273  
Noninterest expense   51,859     54,552     50,271  
Pre-tax pre-provision income $44,938   $39,562   $36,726  
       
Net securities gains ($6 ) ($23 ) ($19 )
COVID-19 related   74     307     23  
Voluntary early retirement       118      
Branch consolidation   40     128      
Core pre-tax pre-provision income $45,046   $40,092   $36,730  
       
Net charge-offs $3,270   $4,825   $3,529  


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