First Commonwealth Announces Second Quarter 2016 Financial Results; Declares Quarterly Dividend
/EINPresswire.com/ -- INDIANA, PA --(Marketwired - July 27, 2016) - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the second quarter of 2016.
Second Quarter 2016 Highlights
Profitability
- The efficiency ratio improved to 57.1%, driven by lower operational expenses and higher revenue;
- Loans experienced solid growth from the prior quarter of 4.2% on an annualized basis;
- Deposits grew from the prior quarter at an annualized rate of 8.6%;
- The net interest margin remained relatively stable at 3.27%; and
- Noninterest income grew by 13.2% from the prior quarter.
Net Income
- Second quarter net income was $12.0 million, or $0.14 diluted earnings per share. Net income was impacted by the following items:
- Net interest income increased by $0.3 million to $50.0 million as compared to the prior quarter, primarily as a result of strong commercial loan growth;
- Noninterest income increased by $1.8 million, driven by mortgage gain on sale income and commercial swap income;
- Noninterest expense of $37.4 million decreased $0.7 million from the previous quarter and is now at the lowest level since the fourth quarter of 2007; and
- Provision for credit losses totaled $10.4 million, an increase of $3.8 million from the previous quarter, primarily due to a $7.5 million specific reserve set aside against an energy-related credit.
"While the additional credit expense due to the ongoing downturn in the energy sector is disappointing, we are pleased with the progression in our second quarter results, as evidenced by growth in loans and deposits and an efficiency ratio below 60%," stated T. Michael Price, President and Chief Executive Officer. "The acquisition of 13 branches in Ohio that we are announcing today is also encouraging, and should improve our financial performance. We must, however, continue to keep our shoulder to the wheel to organically grow revenue while at the same time improving credit costs and keeping operating expenses under control."
Financial Summary
For the Six
(dollars in thousands, For the Three Months Ended Months Ended
-------------------------- -----------------
March
except per share data) June 30, 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
-------------------------- -----------------
Net income $12,007 $12,473 $13,447 $24,480 $27,668
Diluted earnings per share $0.14 $0.14 $0.15 $0.28 $0.31
Return on average assets 0.72% 0.76% 0.85% 0.74% 0.88%
Return on average common equity 6.53% 6.87% 7.57% 6.70% 7.80%
Efficiency ratio (1) 57.06% 60.10% 63.96% 58.56% 64.08%
Core efficiency ratio (1) 57.24% 59.53% 63.25% 58.37% 63.04%
Net interest margin (FTE) 3.27% 3.29% 3.26% 3.28% 3.30%
(1) See Supplemental Information - Definitions and reconciliation of non-
GAAP financial measures
Financial Results Summary
For the three months ended June 30, 2016, net income was $12.0 million, or $0.14 diluted earnings per share, compared to net income of $12.5 million, or $0.14 diluted earnings per share, in the first quarter of 2016 and net income of $13.4 million, or $0.15 diluted earnings per share, in the second quarter of 2015. The decrease in net income compared to the first quarter of 2016 was driven by a $3.8 million increase in provision for credit losses, offset by a $1.8 million increase in noninterest income and a decrease of $0.7 million in noninterest expense from the first quarter of 2016. The decrease in net income compared to the second quarter of 2015 was primarily driven by an increase of $7.3 million in the provision for credit losses and a decrease in noninterest income of $0.8 million, offset by an increase of $2.8 million in net interest income and a decrease of $3.2 million in noninterest expense.
For the six months ended June 30, 2016, net income was $24.5 million, or $0.28 diluted earnings per share, compared to net income of $27.7 million, or $0.31 diluted earnings per share, for the comparable period in 2015. The decrease in net income compared to 2015 was primarily the result of a $12.7 million increase in the provision for credit losses and a decrease in noninterest income, excluding net securities gains, of $1.2 million, offset by an increase of $4.6 million in net interest income and a decrease in noninterest expense of $4.9 million.
For the six months ended June 30, 2016, return on average assets and return on average equity were 0.74% and 6.70%, respectively, as compared to 0.88% and 7.80% in the first half of 2015. Return on average tangible common equity was 8.7% in the first half of 2016, as compared to 10.1% for the first half of 2015.
Net Interest Income and Net Interest Margin
Second quarter 2016 net interest income, on a fully taxable-equivalent basis, increased by $0.3 million to $50.0 million compared to the first quarter of 2016. The increase from the prior quarter was primarily the result of strong commercial loan growth. The yield on interest-earning assets and funding costs remained relatively stable during the quarter. A $77.9 million increase in average interest-earning assets contributed to the improvement in net interest income.
As compared to the second quarter of 2015, net interest income, on a fully taxable-equivalent basis, increased by $2.8 million, driven largely by a $347.4 million, or 6.0%, increase in average interest-earning assets. The net interest margin of 3.27% in the second quarter of 2016 was one basis point higher than in the second quarter of 2015. The increase came despite a seven basis point increase in funding costs that more than offset a six basis point increase in the yield on interest-earning assets between the periods, and benefited from an increase of $92.0 million in average non-interest bearing deposits.
For the six months ended June 30, 2016, net interest income, on a fully taxable-equivalent basis, increased $4.6 million to $99.8 million as compared to the same period of 2015. The increase in net interest income was a result of a $303.0 million increase in average interest-earning assets and a two basis point increase in the yield on interest-earning assets, offset by a five basis point increase in funding costs.
Total deposits grew by $92.9 million in the second quarter of 2016, or 8.6% annualized. Average deposits increased $131.6 million in the second quarter of 2016 from the prior quarter. Average deposits increased $110.0 million from the year-ago quarter, which includes the addition of $89.9 million in deposits acquired as part of the First Community acquisition. The year over year comparison is driven by decreases of $46.5 million in time deposits and $69.7 million in brokered deposits, offset by $134.2 million of core deposit growth in savings deposits and $92.0 million of core deposit growth in noninterest-bearing deposits.
Average short-term borrowings decreased $55.6 million from the prior quarter as deposit growth outpaced loan growth in the second quarter, but increased $243.0 million over the year-ago period, partly due to the aforementioned runoff in time and brokered deposits compared to a year ago. Average noninterest-bearing demand deposits increased $40.9 million as compared to the prior quarter and increased $92.0 million from the year-ago quarter, due in part to the addition of $11.6 million related to the First Community acquisition.
Noninterest-bearing demand deposits currently comprise 25.9% of total deposits. Average interest-bearing demand and savings deposits increased $107.0 million from the prior quarter and $134.2 million from the year-ago period, which includes the addition of $36.1 million related to the First Community acquisition.
Credit Quality
The provision for credit losses totaled $10.4 million for the quarter ended June 30, 2016, an increase of $3.8 million as compared to the prior quarter and an increase of $7.3 million from the same quarter last year. The second quarter 2016 provision for credit losses included a $7.5 million specific reserve for a credit related to the manufacturing of safety products for the mining industry.
At June 30, 2016, nonperforming loans were $64.4 million, an increase of $2.6 million from March 31, 2016 and an increase of $19.3 million from June 30, 2015. The increase from the first quarter of 2016 was related to the aforementioned commercial credit placed into nonperforming status in the second quarter of 2016. Nonperforming loans as a percentage of total loans were 1.33%, 1.29% and 1.00% for the periods ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.
During the second quarter of 2016, net charge-offs were $5.8 million, compared to $2.1 million in the prior quarter and $4.4 million in the second quarter of 2015. Of the $5.8 million in net charge-offs in the second quarter, $3.3 million represented charge-offs of previously established reserves.
The allowance for credit losses was $59.8 million at June 30, 2016, and as a percentage of total loans outstanding was 1.24%, 1.15% and 1.01% for June 30, 2016, March 31, 2016 and June 30, 2015, respectively. General reserves as a percentage of non-impaired loans were 0.93%, 0.88% and 0.98% for June 30, 2016, March 31, 2016 and June 30, 2015, respectively.
Other real estate owned (OREO) acquired through foreclosure was $8.6 million at June 30, 2016 and March 31, 2016 and $6.5 million at June 30, 2015. There were no significant additions to OREO in the second quarter of 2016.
Noninterest Income
Noninterest income, excluding net securities gains, increased $1.8 million in the second quarter of 2016 as compared to the prior quarter and decreased $0.8 million compared to the same quarter last year. The increase from the prior quarter is primarily the result of a $0.5 million positive variance from prior quarter in the adjustment for the fair market value of commercial loan interest rate swaps, as well as a $0.3 million increase in swap income, an increase of $0.2 million in card-related interchange income and an increase of $0.2 million from the gain on sale of mortgage loans.
The decrease in noninterest income from the prior-year period of $0.8 million is primarily related to a negative variance of $1.1 million in the adjustment for the fair market value of commercial loan interest rate swaps and a decline of $0.4 million in trust, insurance and retail brokerage commissions, offset by a $0.5 million increase in swap income and a $0.3 million increase in gain on the sale of mortgage loans.
For the six months ended June 30, 2016, noninterest income, excluding net securities gains, decreased $1.2 million, or 3.8%, as compared to the same period of 2015, primarily attributable to a negative variance of $1.9 million in the adjustment for the fair market value of commercial loan interest rate swaps and a decline of $0.8 million in trust, insurance and retail brokerage commissions, offset by a $0.6 million increase in swap income, an increase of $0.6 million from the gain on sale of mortgage loans, an increase of $0.4 million in service charges on deposit accounts, and an increase of $0.2 million in card-related interchange income.
Noninterest Expense
Noninterest expense decreased $0.7 million to $37.4 million in the second quarter of 2016 as compared to the prior quarter and decreased $3.2 million as compared to the second quarter of 2015. Salaries and benefits decreased $1.8 million as compared to the prior quarter primarily due to the realignment of the staffing and capabilities of our consumer banking businesses and from relatively low benefits costs. Also impacting noninterest expense was lower occupancy costs from the prior quarter, offset by higher operational losses, Pennsylvania shares tax expense and the write-down of three OREO properties in the second quarter of 2016.
Noninterest expense decreased $3.2 million in the second quarter of 2016 as compared to the second quarter of 2015, primarily attributable to decreases in salaries and benefits of $2.1 million as compared to the prior year due to the aforementioned realignment of our consumer banking businesses and relatively low benefits costs, decreased collection and repossession expenses, lower write-downs on assets of $1.3 million (primarily due to write-downs of three OREO properties and a loss on the write-down of a building in the second quarter of 2015) and a decline of $0.8 million in the reserve for unfunded loan commitments, included in other operating expenses. These items were offset by higher data processing costs and operational losses during the second quarter of 2016.
For the six months ending June 30, 2016, noninterest expense decreased $4.9 million, or 6.1%, as compared to the same period of 2015, driven by a decline in salaries and benefits of $2.3 million due to the previously mentioned realignment of our consumer businesses and relatively low benefits costs, and a decline of $1.7 million in provision expense associated with the reserve for unfunded loan commitments, included in other operating expenses. The aforementioned lower write-downs on assets of $1.5 million, $0.4 million of decreased collection and repossession expenses and $0.4 million of lower operational losses also contributed to the positive variance. These decreases were offset by higher data processing expense of $0.6 million due to the issuance of chip debit cards during the first six months of 2016.
Full time equivalent staff declined to 1,168 at June 30, 2016 from 1,216 and 1,289 at March 31, 2016 and June 30, 2015, respectively. The decrease is primarily attributable to staff reductions as a result of the realignment of our consumer banking businesses, offset by the recent expansion of mortgage and commercial banking businesses in our Ohio market.
The efficiency ratio, calculated as total noninterest expense as a percentage of total revenue (which consists of net interest income on a fully taxable equivalent basis plus total noninterest income, excluding net securities gains), was 57.06% and 58.56% for the three and six months ended June 30, 2016 as compared to 63.96% and 64.08% for the three and six months ended June 30, 2015. The core efficiency ratio, which excludes securities gains and losses, amortization of intangible assets and other nonrecurring items, was 57.24% and 58.37% for the three and six months ended June 30, 2016 as compared to 63.25% and 63.04% for the three and six months ended June 30, 2015. The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported amounts, including a reconciliation of the core efficiency ratio.
Dividends and Capital
First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.07 per share, which is payable on August 19, 2016 to shareholders of record as of August 8, 2016. This dividend represents a 3.0% projected annual yield utilizing the July 26, 2016 closing market price of $9.49.
On January 27, 2016, First Commonwealth's Board of Directors authorized an additional $25.0 million common stock repurchase program, under which the corporation repurchased 45,612 shares at an average price of $8.44 per share in the first six months of 2016, totaling $0.4 million. This repurchase program was suspended in July as a result of the acquisition of 13 branches in Ohio which management believes represents a better use of capital for shareholders.
First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at June 30, 2016 were 12.2%, 11.1%, 9.8% and 9.9%, respectively. Our current capital levels meet the fully-phased in Basel III capital requirements issued by the U.S. bank regulators.
Conference Call
First Commonwealth will host a quarterly conference call to discuss its financial results for the second quarter 2016 on Wednesday, July 27, 2016 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. A link to the call replay will be accessible at this 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 $6.7 billion in total assets and 109 banking offices in 17 counties throughout western and central Pennsylvania and central Ohio, as well as a Corporate Banking Center in northeast Ohio and mortgage offices in Stow 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 our 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) with which First Commonwealth 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 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 Six Months
For the Three Months Ended Ended
-------------------------------- ---------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
-------------------------------- ---------------------
SUMMARY RESULTS OF
OPERATIONS
Net interest income
(FTE) (1) $ 50,034 $ 49,749 $ 47,205 $ 99,783 $ 95,195
Provision for credit
losses 10,372 6,526 3,038 16,898 4,197
Noninterest income 15,558 13,715 16,347 29,273 30,538
Noninterest expense 37,410 38,144 40,634 75,554 80,488
Net income 12,007 12,473 13,447 24,480 27,668
Earnings per common
share (diluted) $ 0.14 $ 0.14 $ 0.15 $ 0.28 $ 0.31
KEY FINANCIAL RATIOS
Return on average
assets 0.72% 0.76% 0.85% 0.74% 0.88%
Return on average
shareholders' equity 6.53% 6.87% 7.57% 6.70% 7.80%
Return on average
tangible common
equity (8) 8.41% 8.88% 9.82% 8.65% 10.10%
Efficiency ratio (2) 57.06% 60.10% 63.96% 58.56% 64.08%
Core efficiency ratio
(3) 57.24% 59.53% 63.25% 58.37% 63.04%
Net interest margin
(FTE) (1) 3.27% 3.29% 3.26% 3.28% 3.30%
Book value per common
share $ 8.34 $ 8.24 $ 7.99
Tangible book value
per common share (7) 6.48 6.38 6.16
Market value per
common share 9.20 8.86 9.59
Cash dividends
declared per common
share 0.07 0.07 0.07 $ 0.14 $ 0.14
ASSET QUALITY RATIOS
Nonperforming loans
as a percent of end-
of-period loans (4) 1.33% 1.29% 1.00%
Nonperforming assets
as a percent of
total assets (4) 1.09% 1.06% 0.82%
Net charge-offs as a
percent of average
loans (annualized) 0.48% 0.18% 0.39%
Allowance for credit
losses as a percent
of nonperforming
loans (5) 92.88% 89.33% 106.26%
Allowance for credit
losses as a percent
of end-of-period
loans (5) 1.24% 1.15% 1.01%
CAPITAL RATIOS
Shareholders' equity
as a percent of
total assets 11.0% 10.9% 11.3%
Tangible common
equity as a percent
of tangible assets
(6) 8.8% 8.7% 8.9%
Leverage Ratio 9.8% 9.8% 10.0%
Risk Based Capital -
Tier I 11.1% 11.1% 11.5%
Risk Based Capital -
Total 12.2% 12.1% 12.4%
Common Equity - Tier
I 9.9% 9.9% 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,
2016 2016 2016 2016 2016
------------ ------------ ----------- ------------ -----------
INCOME
STATEMENT
Interest
income $ 53,850 $ 53,353 $ 50,150 $ 107,203 $ 101,235
Interest
expense 4,759 4,546 3,780 9,305 7,693
------------ ------------ ----------- ------------ -----------
Net Interest
Income 49,091 48,807 46,370 97,898 93,542
Taxable
equivalent
adjustment
(1) 943 942 835 1,885 1,653
------------ ------------ ----------- ------------ -----------
Net Interest
Income (FTE) 50,034 49,749 47,205 99,783 95,195
Provision
for credit
losses 10,372 6,526 3,038 16,898 4,197
------------ ------------ ----------- ------------ -----------
Net Interest
Income after
Provision
for Credit
Losses (FTE) 39,662 43,223 44,167 82,885 90,998
Net
securities
(losses)
gains 28 - 20 28 125
Trust
income 1,320 1,255 1,476 2,575 2,897
Service
charges on
deposit
accounts 3,845 3,708 3,872 7,553 7,190
Insurance
and retail
brokerage
commissions 1,985 1,959 2,178 3,944 4,373
Income from
bank owned
life
insurance 1,311 1,296 1,378 2,607 2,732
Gain on
sale of
mortgage
loans 932 683 585 1,615 1,024
Gain on
sale of
other
loans and
assets 466 195 396 661 620
Card-
related
interchange
income 3,784 3,557 3,729 7,341 7,147
Derivative
mark-to-
market (531) (1,014) 593 (1,545) 363
Swap fee
income 800 460 283 1,260 643
------------ ------------ ----------- ------------ -----------
Other
income 1,618 1,616 1,837 3,234 3,424
------------ ------------ ----------- ------------ -----------
Total
Noninterest
Income 15,558 13,715 16,347 29,273 30,538
Salaries
and
employee
benefits 19,888 21,677 22,001 41,565 43,893
Net
occupancy 3,186 3,481 3,316 6,667 7,227
Furniture
and
equipment 2,882 2,867 2,630 5,749 5,310
Data
processing 1,788 1,759 1,509 3,547 2,947
Pennsylvania
shares
tax 1,092 758 1,110 1,850 1,904
Intangible
amortiz-
ation 114 137 156 251 312
Collection
and
repossess-
ion 474 569 917 1,043 1,428
Other
profess-
ional fees
and
services 913 791 945 1,704 1,875
FDIC
insurance 1,062 1,038 1,025 2,100 2,084
Litigation
and
operational
losses 635 244 323 879 1,323
Loss on
sale or
write-down
of assets 345 96 1,635 441 1,897
Merger and
acquisition
related - - - - -
Other
operating
expenses 5,031 4,727 5,067 9,758 10,288
------------ ------------ ----------- ------------ -----------
Total
Noninterest
Expense 37,410 38,144 40,634 75,554 80,488
Income before
Income Taxes 17,810 18,794 19,880 36,604 41,048
Taxable
equivalent
adjustment
(1) 943 942 835 1,885 1,653
Income tax
provision 4,860 5,379 5,598 10,239 11,727
------------ ------------ ----------- ------------ -----------
Net Income $ 12,007 $ 12,473 $ 13,447 $ 24,480 $ 27,668
============ ============ =========== ============ ===========
Shares
Outstanding
at End of
Period 88,949,995 88,959,315 88,960,268 88,949,995 88,960,268
Average
Shares
Outstanding
Assuming
Dilution 88,838,614 88,845,201 88,939,003 88,840,683 89,903,550
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
June 30, March 31, June 30,
2016 2016 2015
-----------------------------------
BALANCE SHEET (Period End)
Assets
Cash and due from banks $ 68,163 $ 62,141 $ 64,321
Interest-bearing bank deposits 30,457 11,024 3,120
Securities available for sale, at fair
value 913,420 950,795 1,143,072
Securities held to maturity, at
amortized cost 405,976 396,444 131,780
Loans held for sale 11,613 5,849 9,817
Loans 4,843,776 4,798,755 4,490,854
Allowance for credit losses (59,821) (55,222) (45,344)
----------- ----------- -----------
Net loans 4,783,955 4,743,533 4,445,510
Goodwill and other intangibles 165,481 165,594 162,781
Other assets 370,756 363,774 356,327
----------- ----------- -----------
Total Assets $6,749,821 $6,699,154 $6,316,728
=========== =========== ===========
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits $1,136,629 $1,155,795 $1,068,230
Interest-bearing demand deposits 88,777 92,125 76,865
Savings deposits 2,582,709 2,467,978 2,441,888
Time deposits 586,405 585,757 623,124
----------- ----------- -----------
Total interest-bearing deposits 3,257,891 3,145,860 3,141,877
Total deposits 4,394,520 4,301,655 4,210,107
Short-term borrowings 1,464,687 1,518,742 1,231,917
Long-term borrowings 81,201 81,342 111,356
----------- ----------- -----------
Total borrowings 1,545,888 1,600,084 1,343,273
Other liabilities 67,627 64,101 52,142
Shareholders' equity 741,786 733,314 711,206
----------- ----------- -----------
Total Liabilities and Shareholders'
Equity $6,749,821 $6,699,154 $6,316,728
=========== =========== ===========
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands)
For the Three Months Ended
-----------------------------------------------------
June 30, Yield/ March 31, Yield/ June 30, Yield/
2016 Rate 2016 Rate 2015 Rate
-----------------------------------------------------
NET INTEREST MARGIN
Assets
Loans (FTE)(1)(4) $4,833,360 3.86% $4,745,252 3.88% $4,498,965 3.87%
Securities and
interest bearing
bank deposits (FTE)
(1) 1,321,018 2.54% 1,331,233 2.57% 1,308,016 2.33%
---------- ---------- ----------
Total Interest-
Earning Assets
(FTE) (1) 6,154,378 3.58% 6,076,485 3.59% 5,806,981 3.52%
Noninterest-earning
assets 552,754 541,109 554,175
---------- ---------- ----------
Total Assets $6,707,132 $6,617,594 $6,361,156
========== ========== ==========
Liabilities and
Shareholders' Equity
Interest-bearing
demand and savings
deposits $2,660,934 0.16% $2,553,896 0.11% $2,526,744 0.11%
Time deposits 578,518 0.62% 594,929 0.62% 694,725 0.69%
Short-term
borrowings 1,447,452 0.58% 1,503,013 0.60% 1,204,466 0.37%
Long-term borrowings 81,268 3.62% 81,409 3.57% 122,410 2.57%
---------- ---------- ----------
Total Interest-
Bearing
Liabilities 4,768,172 0.40% 4,733,247 0.39% 4,548,345 0.33%
Noninterest-bearing
deposits 1,137,626 1,096,692 1,045,659
Other liabilities 61,821 57,301 55,042
Shareholders' equity 739,513 730,354 712,110
---------- ---------- ----------
Total Noninterest-
Bearing Funding
Sources 1,938,960 1,884,347 1,812,811
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $6,707,132 $6,617,594 $6,361,156
========== ========== ==========
Net Interest Margin
(FTE) (annualized)(1) 3.27% 3.29% 3.26%
For the Six Months Ended
-----------------------------------
June 30, Yield/ June 30, Yield/
2016 Rate 2015 Rate
------------------------------------
NET INTEREST MARGIN
Assets
Loans (FTE)(1)(4) $4,789,306 3.87% $4,488,660 3.89%
Securities and
interest bearing
bank deposits (FTE)
(1) 1,326,125 2.56% 1,323,762 2.47%
---------- ----------
Total Interest-
Earning Assets
(FTE) (1) 6,115,431 3.59% 5,812,422 3.57%
Noninterest-earning
assets 546,932 547,359
---------- ----------
Total Assets $6,662,363 $6,359,781
========== ==========
Liabilities and
Shareholders' Equity
Interest-bearing
demand and savings
deposits $2,607,415 0.13% $2,514,015 0.11%
Time deposits 586,723 0.62% 741,738 0.73%
Short-term
borrowings 1,475,233 0.59% 1,172,957 0.36%
Long-term borrowings 81,339 3.59% 134,831 2.38%
---------- ----------
Total Interest-
Bearing
Liabilities 4,750,710 0.39% 4,563,541 0.34%
Noninterest-bearing
deposits 1,117,159 1,024,197
Other liabilities 59,561 56,848
Shareholders' equity 734,933 715,195
---------- ----------
Total Noninterest-
Bearing Funding
Sources 1,911,653 1,796,240
---------- ----------
Total Liabilities and
Shareholders' Equity $6,662,363 $6,359,781
========== ==========
Net Interest Margin
(FTE) (annualized)(1) 3.28% 3.30%
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
June 30, March 31, June 30,
2016 2016 2015
-----------------------------------
Loan Portfolio Detail
Commercial Loan Portfolio:
Commercial, financial, agricultural
and other $1,185,062 $1,190,384 $1,098,019
Commercial real estate 1,648,222 1,552,904 1,416,841
Real estate construction 242,132 256,856 125,010
-----------------------------------
Total Commercial 3,075,416 3,000,144 2,639,870
Consumer Loan Portfolio:
Closed-end mortgages 732,394 745,924 746,554
Home equity lines of credit 466,611 467,038 457,945
-----------------------------------
Total Real Estate - Consumer 1,199,005 1,212,962 1,204,499
Auto loans 481,887 499,897 559,438
Direct installment 25,160 25,126 26,095
Personal lines of credit 48,358 45,905 43,877
Student loans 13,950 14,721 17,075
-----------------------------------
Total Other Consumer 569,355 585,649 646,485
-----------------------------------
Total Consumer Portfolio 1,768,360 1,798,611 1,850,984
-----------------------------------
Total Portfolio Loans 4,843,776 4,798,755 4,490,854
Loans held for sale 11,613 5,849 9,817
-----------------------------------
Total Loans $4,855,389 $4,804,604 $4,500,671
===================================
June 30, March 31, June 30,
2016 2016 2015
-----------------------------------
ASSET QUALITY DETAIL
Nonperforming Loans:
Loans on nonaccrual basis $ 38,404 $ 33,470 $ 21,776
Troubled debt restructured loans held
for sale on nonaccrual basis - - 2,432
Troubled debt restructured loans on
nonaccrual basis 9,672 13,366 8,619
Troubled debt restructured loans on
accrual basis 16,332 14,979 12,276
-----------------------------------
Total Nonperforming Loans $ 64,408 $ 61,815 $ 45,103
Other real estate owned ("OREO") 8,604 8,636 6,539
Repossessions ("Repos") 291 345 348
-----------------------------------
Total Nonperforming Assets $ 73,303 $ 70,796 $ 51,990
Loans past due in excess of 90 days and
still accruing 1,384 1,330 1,592
Classified loans 101,998 110,816 79,924
Criticized loans 128,280 142,625 120,506
Nonperforming assets as a percentage of
total loans, plus OREO and Repos 1.51% 1.47% 1.16%
Allowance for credit losses $ 59,821 $ 55,222 $ 45,344
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
For the Six Months
For the Three Months Ended Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
-------------------------------- -------------------
Net Charge-offs
(Recoveries):
Commercial,
financial,
agricultural and
other $ 4,689 $ 1,258 $ 2,702 $ 5,947 $ 7,582
Real estate
construction (4) (223) (84) (227) (84)
Commercial real
estate 116 (491) 471 (375) 535
Residential real
estate 78 264 341 342 811
Loans to individuals 894 1,308 961 2,202 2,060
-------------------------------- -------------------
Net Charge-offs
$ 5,773 $ 2,116 $ 4,391 $ 7,889 $ 10,904
Net charge-offs as a
percentage of average
loans outstanding
(annualized) 0.48% 0.18% 0.39% 0.33% 0.49%
Provision for credit
losses as a percentage
of net charge-offs 179.66% 308.41% 69.19% 214.20% 38.49%
Provision for credit
losses $ 10,372 $ 6,526 $ 3,038 $ 16,898 $ 4,197
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
(1) Net interest income has been computed on a fully taxable equivalent
basis ("FTE") using the 35% federal income tax statutory rate.
(2) Efficiency ratio is "total noninterest expense" as a percentage of total
revenue. Total revenue consists of "net interest income, on a fully taxable
equivalent basis," plus "total noninterest income," excluding "net
impairment losses" and "net securities gains."
(3) 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.
(4) Includes held for sale loans.
(5) Excludes held for sale loans.
For the Six Months
For the Three Months Ended Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
------------------------------------------------------
Core Efficiency
Ratio:
Total Noninterest
Expense $ 37,410 $ 38,144 $ 40,634 $ 75,554 $ 80,488
Adjustments to
Noninterest
Expense:
Unfunded
commitment
reserve (540) (375) 235 (915) 741
Intangible
amortization 114 137 156 251 312
Severance - - - - -
Merger and
acquisition
related - - - - -
Loss on sale or
writedown of
assets - - 436 - 486
-------------------------------- ---------------------
Noninterest
Expense -
Core $ 37,836 $ 38,382 $ 39,807 $ 76,218 $ 78,949
Net interest
income, fully
tax equivalent $ 50,034 $ 49,749 $ 47,205 $ 99,783 $ 95,195
Total noninterest
income 15,558 13,715 16,347 29,273 30,538
Net securities
(losses) gains 28 - 20 28 125
-------------------------------- ---------------------
Total Revenue
$ 65,564 $ 63,464 $ 63,532 $ 129,028 $ 125,608
Adjustments to
Revenue:
Derivative
mark-to-market (531) (1,014) 593 (1,545) 363
-------------------------------- ---------------------
Total Revenue
- Core $ 66,095 $ 64,478 $ 62,939 $ 130,573 $ 125,245
(3)Core Efficiency
Ratio 57.24% 59.53% 63.25% 58.37% 63.04%
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data)
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
June 30, March 31, June 30,
2016 2016 2015
--------------------------------------
Tangible Equity:
Total
shareholders'
equity $ 741,786 $ 733,314 $ 711,206
Less:
intangible
assets 165,481 165,594 162,781
--------------------------------------
Tangible
Equity 576,305 567,720 548,425
Less: preferred
stock - - -
--------------------------------------
Tangible
Common
Equity $ 576,305 $ 567,720 $ 548,425
Tangible Assets:
Total assets $ 6,749,821 $ 6,699,154 $ 6,316,728
Less:
intangible
assets 165,481 165,594 162,781
--------------------------------------
Tangible
Assets $ 6,584,340 $ 6,533,560 $ 6,153,947
(6)Tangible
Common Equity as
a percentage of
Tangible Assets 8.75% 8.69% 8.91%
Shares
Outstanding at
End of Period 88,949,995 88,959,315 88,960,268
(7)Tangible Book
Value Per Common
Share $ 6.48 $ 6.38 $ 6.16
For the Six Months
For the Three Months Ended Ended
-------------------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
-------------------------------------- -------------------
Average Tangible
Equity:
Total
shareholders'
equity $ 739,513 $ 730,354 $ 712,110 $734,933 $715,195
Less:
intangible
assets 165,527 165,666 162,865 165,597 162,942
----------------------------------------------------------
Tangible
Equity 573,986 564,688 549,245 569,336 552,253
Less: preferred
stock - - - - -
----------------------------------------------------------
Tangible
Common
Equity $ 573,986 $ 564,688 $ 549,245 $569,336 $552,253
(8)Return on
Average Tangible
Common Equity 8.41% 8.88% 9.82% 8.65% 10.10%
Note: Management believes that it is a 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.
Contact:
Investor Relations:
Ryan M. Thomas
Vice President / Finance and Investor Relations
724-463-1690
RThomas1@fcbanking.com
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