First Commonwealth Announces Second Quarter 2018 Earnings; Declares Quarterly Dividend


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 assets1.71% 1.29% 0.76% 1.51% 0.86%
Return on average equity13.74% 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 assets1.76% 1.31% 1.11% 1.54% 1.05%
Return on average tangible common equity20.08% 15.56% 9.74% 17.89% 10.73%
Core return on average tangible common equity20.70% 15.73% 14.03% 18.29% 13.10%
Core efficiency ratio55.23% 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 losses1,168  6,903  (1,609) 8,071  1,620 
Noninterest income26,308  22,043  18,904  48,351  35,836 
Noninterest expense49,129  46,873  58,263  96,002  101,028 
Net income32,081  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 assets1.71% 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' equity13.74% 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 share15.51  14.13  12.68     
Cash dividends declared per common share0.09  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 leases1.01% 1.07% 0.98%    
          
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets12.6% 12.3% 11.9%    
Tangible common equity as a percent of tangible assets (12)9.1% 8.9% 8.5%    
Leverage Ratio10.4% 10.1% 9.6%    
Risk Based Capital - Tier I12.3% 11.9% 11.3%    
Risk Based Capital - Total14.8% 12.9% 12.2%    
Common Equity - Tier I11.2% 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,
 201820182017 20182017
INCOME STATEMENT      
Interest income$72,940 $66,499 $63,120  $139,439 $119,299 
Interest expense9,265 6,814 5,303  16,079 9,652 
Net Interest Income63,675 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 losses1,168 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 income1,880 1,928 1,711  3,808 3,128 
Service charges on deposit accounts4,423 4,406 4,736  8,829 9,055 
Insurance and retail brokerage commissions1,820 1,868 2,442  3,688 4,524 
Income from bank owned life insurance2,168 1,494 1,449  3,662 2,741 
Gain on sale of mortgage loans1,241 1,484 1,315  2,725 2,292 
Gain on sale of other loans and assets2,331 574 457  2,905 764 
Card-related interchange income5,143 4,742 4,842  9,885 9,093 
Derivative mark-to-market 789 (37) 789 (35)
Swap fee income297 290 314  587 241 
Other income1,743 1,628 1,724  3,371 3,430 
Total Noninterest Income26,308 22,043 18,904  48,351 35,836 
       
Salaries and employee benefits26,154 24,873 25,298  51,027 48,764 
Net occupancy4,222 4,369 4,121  8,591 7,882 
Furniture and equipment3,647 3,540 3,323  7,187 6,411 
Data processing2,478 2,433 2,345  4,911 4,430 
Pennsylvania shares tax1,247 903 1,161  2,150 1,977 
Advertising and promotion1,176 809 988  1,985 1,794 
Intangible amortization829 784 846  1,613 1,418 
Collection and repossession607 823 443  1,430 940 
Other professional fees and services1,031 1,007 1,096  2,038 2,055 
FDIC insurance597 776 977  1,373 1,770 
Litigation and operational losses197 179 277  376 509 
Loss on sale or write-down of assets497 197 1,220  694 1,319 
Merger and acquisition related1,273 337 9,870  1,610 10,481 
Other operating expenses5,174 5,843 6,298  11,017 11,278 
Total Noninterest Expense49,129 46,873 58,263  96,002 101,028 
       
Income before Income Taxes40,203 28,445 21,146  68,649 44,902 
Taxable equivalent adjustment (1)517 493 1,079  1,011 2,067 
Income tax provision7,605 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 Period100,364,567 97,603,151 97,483,067  100,364,567 97,483,067 
Average Shares Outstanding Assuming Dilution99,504,409 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 deposits2,237  9,736  12,310 
Securities available for sale, at fair value876,570  837,277  820,586 
Securities held to maturity, at amortized cost403,019  410,430  450,886 
Loans held for sale7,038  9,759  9,785 
      
Loans5,640,106  5,381,305  5,374,782 
Allowance for credit losses(51,314) (53,732) (48,067)
Net loans5,588,792  5,327,573  5,326,715 
      
Goodwill and other intangibles289,051  269,403  272,030 
Other assets380,304  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 deposits126,296  187,286  237,801 
Savings deposits3,516,714  3,428,967  3,330,351 
Time deposits781,506  643,522  560,902 
Total interest-bearing deposits4,424,516  4,259,775  4,129,054 
      
Total deposits5,913,574  5,703,522  5,533,135 
      
Short-term borrowings545,187  588,016  846,137 
Long-term borrowings185,568  87,676  88,389 
Total borrowings730,755  675,692  934,526 
      
Other liabilities43,641  42,204  36,260 
Shareholders' equity960,785  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/
 2018Rate2018Rate2017Rate 2018Rate2017Rate
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 assets705,076  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 deposits732,677 1.02%633,214 0.83%580,874 0.60% 683,220 0.93%576,834 0.61%
Short-term borrowings601,633 1.66%672,135 1.38%902,547 0.98% 636,689 1.52%916,694 0.87%
Long-term borrowings131,851 5.12%87,780 4.52%88,351 4.08% 109,937 4.88%84,616 4.02%
Total Interest-Bearing Liabilities5,116,567 0.73%4,966,282 0.56%5,085,251 0.42% 5,041,839 0.64%4,886,129 0.40%
Noninterest-bearing deposits1,431,007  1,400,218  1,386,240   1,415,698  1,309,019  
Other liabilities35,918  41,264  38,092   38,576  37,055  
Shareholders' equity936,593  892,618  872,233   914,727  814,973  
Total Noninterest-Bearing Funding Sources2,403,518  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,
 201820182017
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,130,638 $1,131,594 $1,199,800 
Commercial real estate2,172,615 2,027,072 1,963,001 
Real estate construction259,825 246,961 249,255 
Total Commercial3,563,078 3,405,627 3,412,056 
    
Consumer Loan Portfolio:   
Closed-end mortgages996,324 916,130 886,335 
Home equity lines of credit522,526 518,493 530,591 
Total Real Estate - Consumer1,518,850 1,434,623 1,416,926 
    
Auto loans459,333 451,445 450,561 
Direct installment31,915 23,820 24,501 
Personal lines of credit57,789 56,145 59,450 
Student loans9,141 9,645 11,288 
Total Other Consumer558,178 541,055 545,800 
Total Consumer Portfolio2,077,028 1,975,678 1,962,726 
Total Portfolio Loans5,640,106 5,381,305 5,374,782 
Loans held for sale7,038 9,759 9,785 
Total Loans$5,647,144 $5,391,064 $5,384,567 
    
    
 June 30,March 31,June 30,
 201820182017
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 basis18,573 10,233 11,868 
Troubled debt restructured loans on accrual basis11,162 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 accruing1,725 1,955 1,898 
Classified loans60,511 78,154 69,748 
Criticized loans142,145 126,438 160,220 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos0.88%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,
 201820182017 20182017
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 estate2,225 99 (4) 2,324 (90)
Residential real estate104 379 55  483 400 
Loans to individuals966 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-offs32.57%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,
 201820182017 20182017
       
Net Income$32,081 $23,270 $14,013  $55,351 $29,901 
Intangible amortization829 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 intangibles32,736 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 assets282,734 269,947 272,488  276,376 235,484 
Tangible Equity653,859 622,671 599,745  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 Equity20.08%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,
 201820182017 20182017
       
Core Net Income:      
Total Net Income$32,081 $23,270 $14,013  $55,351 $29,901 
Merger & Acquisition related expenses1,273 337 9,870  1,610 10,481 
Tax benefit of merger & acquisition related expenses(267)(71)(3,455) (338)(3,668)
(5) Core net income33,087 23,536 20,428  56,623 36,714 
Average Shares Outstanding Assuming Dilution99,504,409 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 amortization829 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 Equity20.70%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,
 201820182017 20182017
Core Return on Average Assets:      
Total Net Income$32,081 $23,270 $14,013  $55,351 $29,901 
Total Average Assets7,520,085 7,300,382 7,381,816  7,410,840 7,047,176 
Return on Average Assets1.71%1.29%0.76% 1.51%0.86%
       
Core Net Income (5)$33,087 $23,536 $20,428  $56,623 $36,714 
Total Average Assets7,520,085 7,300,382 7,381,816  7,410,840 7,047,176 
(7) Core Return on Average Assets1.76%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,
 201820182017 20182017
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 amortization829 784 846  1,613 1,418 
Merger and acquisition related1,273 337 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 income26,308 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 Ratio55.23%58.21%60.19% 56.66%60.33%
       
       
 June 30,March 31,June 30,   
 201820182017   
Tangible Equity:      
Total shareholders' equity$960,785 $899,349 $879,465    
Less: intangible assets289,051 269,403 272,030    
Tangible Equity671,734 629,946 607,435    
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 assets289,051 269,403 272,030    
Tangible Assets$7,359,704 $7,051,364 $7,111,356    
       
(12)Tangible Common Equity as a percentage of Tangible Assets9.13%8.93%8.54%   
       
Shares Outstanding at End of Period100,364,567 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