First Commonwealth Announces Third Quarter 2016 Financial Results; Declares Quarterly Dividend
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INDIANA, PA -- (Marketwired) -- 10/26/16 -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2016.
Third Quarter 2016 Highlights
Franchise Growth
- First Commonwealth announced the acquisition of DCB Financial Corp. with nine full-service branches, $397 million in loans and $467 million in deposits in the Greater Columbus, Ohio region; and
- First Commonwealth announced and received all regulatory approvals necessary to complete the acquisition of 13 FirstMerit branches in Canton and Ashtabula, Ohio.
Profitability
- Return on average assets improved to 1.02% and is at the highest level since the third quarter of 2013;
- The net interest margin improved two basis points to 3.29%; and
- The efficiency ratio was 57.3% (or 56.7% on a core basis), driven by higher revenue and well controlled operational expenses.
Net Income
- Third quarter net income was $17.2 million, or $0.19 diluted earnings per share and is at the highest level since the third quarter of 2006. Net income was impacted by the following items:
- Net interest income of $50.6 million increased by $0.5 million compared to the prior quarter, primarily as a result of strong commercial loan growth;
- Noninterest income of $17.0 million, excluding net securities gains, increased by $1.5 million compared to the prior quarter, driven by mortgage gain on sale income and a positive derivative mark-to-market of commercial loan interest rate swaps;
- Noninterest expense of $38.7 million increased $1.3 million from the previous quarter due to an increase in the reserve for unfunded loan commitments and higher benefits costs; and
- Provision for credit losses totaled $3.4 million, a decrease of $7.0 million from the previous quarter, primarily due to a $7.5 million specific reserve set aside against an energy-related credit in the second quarter of 2016.
"Our third quarter performance builds on the growing momentum of our core operating performance this year," stated T. Michael Price, President and Chief Executive Officer. "We are certainly encouraged by the achievement of an ROA of over 1.00% this quarter, but we remain focused on delivering on our long-term financial commitments, which include improving credit costs and controlling expenses. And in the near-term, it will be all hands on deck as we work to complete two previously announced acquisitions in our expanding Ohio market."
Financial Summary
For the Nine Months
(dollars in thousands, For the Three Months Ended Ended
----------------------------- -------------------
September September September September
except per share data) 30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
----------------------------- -------------------
Net income $17,196 $12,007 $12,414 $41,676 $40,082
Diluted earnings per share $0.19 $0.14 $0.14 $0.47 $0.45
Return on average assets 1.02% 0.72% 0.78% 0.83% 0.84%
Return on average equity 9.14% 6.53% 6.86% 7.53% 7.48%
Return on average tangible
common equity (1) 11.74% 8.41% 8.87% 9.70% 9.68%
Efficiency ratio (1) 57.27% 57.06% 63.83% 58.12% 63.99%
Core efficiency ratio (1) 56.65% 56.88% 61.65% 57.67% 62.57%
Net interest margin (FTE) 3.29% 3.27% 3.25% 3.28% 3.29%
(1) See Supplemental Information - Definitions and reconciliation of non-
GAAP financial measures
Financial Results Summary
For the three months ended September 30, 2016, net income was $17.2 million, or $0.19 diluted earnings per share, compared to net income of $12.0 million, or $0.14 diluted earnings per share, in the second quarter of 2016 and net income of $12.4 million, or $0.14 diluted earnings per share, in the third quarter of 2015. The increase in net income compared to the second quarter of 2016 was driven by a $7.0 million decrease in the provision for credit losses, a $1.5 million increase in noninterest income, and a $0.5 million increase in net interest income from the second quarter of 2016, offset by an increase of $1.3 million in noninterest expense. The increase in net income compared to the third quarter of 2015 was primarily driven by an increase of $3.0 million in net interest income, a $1.2 million decrease in the provision for credit losses, an increase in noninterest income of $1.5 million and a decrease of $1.6 million in noninterest expense.
For the nine months ended September 30, 2016, net income was $41.7 million, or $0.47 diluted earnings per share, compared to net income of $40.1 million, or $0.45 diluted earnings per share, for the comparable period in 2015. The increase in net income compared to 2015 was primarily the result of an increase of $7.6 million in net interest income and a decrease in noninterest expense of $6.5 million, offset by an $11.5 million increase in the provision for credit losses.
For the nine months ended September 30, 2016, return on average assets and return on average equity were 0.83% and 7.53%, respectively, as compared to 0.84% and 7.48% in the first nine months of 2015. Return on average tangible common equity was 9.70% for the first nine months of 2016 and 9.68% for the first nine months of 2015.
Net Interest Income and Net Interest Margin
Third quarter 2016 net interest income, on a fully taxable-equivalent basis, increased by $0.5 million to $50.6 million compared to the second quarter of 2016. The increase from the prior quarter was primarily the result of favorable replacement rates on commercial and consumer loan yields. The yield on interest-earning assets increased by two basis points and funding costs remained relatively stable during the quarter.
As compared to the third quarter of 2015, net interest income, on a fully taxable-equivalent basis, increased by $3.0 million, driven largely by a $324.3 million, or 5.6%, increase in average interest-earning assets. The net interest margin of 3.29% in the third quarter of 2016 was four basis points higher than in the third quarter of 2015. The increase came despite a seven basis point increase in funding costs that was offset by an eight basis point increase in the yield on interest-earning assets between the periods, and benefited from an increase of $88.7 million in average noninterest-bearing deposits.
For the nine months ended September 30, 2016, net interest income, on a fully taxable-equivalent basis, increased $7.6 million to $150.4 million as compared to the same period of 2015. The increase in net interest income was a result of a $310.2 million increase in the volume of average interest-earning assets and a four basis point increase in the yield on interest-earning assets, offset by a six basis point increase in funding costs.
Total deposits grew by $64.5 million in the third quarter of 2016, or 5.9% annualized. Average deposits increased by $15.9 million in the third quarter of 2016 from the prior quarter. Average deposits increased $163.8 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 $11.5 million in time deposits and $61.5 million in brokered deposits, offset by $148.0 million of core deposit growth in savings deposits and $88.7 million of core deposit growth in noninterest-bearing deposits.
Average short-term borrowings decreased $55.7 million from the prior quarter as securities maturities were not replaced due to unfavorable replacement yields, but increased $159.0 million over the year-ago period, partly due to the aforementioned runoff in time and brokered deposits compared to the prior year period. Average noninterest-bearing demand deposits increased $16.3 million as compared to the prior quarter and increased $88.7 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 27.8% of total deposits. Average interest-bearing demand and savings deposits decreased $8.4 million from the prior quarter and increased $148.0 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 $3.4 million for the quarter ended September 30, 2016, a decrease of $7.0 million as compared to the prior quarter and a decrease of $1.2 million from the same quarter last year. The decrease from the prior quarter is primarily attributable to a $7.5 million reserve which was established for a credit related to the manufacturing of safety products for the mining industry in the second quarter of 2016.
At September 30, 2016, nonperforming loans were $54.8 million, a decrease of $9.6 million from June 30, 2016 and an increase of $14.0 million from September 30, 2015. The decrease from the second quarter of 2016 was related to the charge-off of the aforementioned energy credit that was placed into nonperforming status in the second quarter of 2016. Nonperforming loans as a percentage of total loans were 1.13%, 1.33% and 0.89% for the periods ended September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
During the third quarter of 2016, net charge-offs were $8.5 million, compared to $5.8 million in the prior quarter and $1.4 million in the third quarter of 2015. Of the $8.5 million in net charge-offs in the third quarter, $6.5 million represented charge-offs related to the aforementioned energy credit that was placed into nonaccrual in the second quarter of 2016.
The allowance for credit losses was $54.7 million at September 30, 2016, and as a percentage of total loans outstanding was 1.13%, 1.24% and 1.06% for September 30, 2016, June 30, 2016 and September 30, 2015, respectively. General reserves as a percentage of non-impaired loans were 0.97%, 0.93% and 0.97% for September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
Other real estate owned (OREO) acquired through foreclosure was $7.7 million at September 30, 2016 and $8.6 million at June 30, 2016 and $10.5 million at September 30, 2015. There were no significant additions to OREO in the third quarter of 2016.
Noninterest Income
Noninterest income, excluding net securities gains, increased $1.5 million in the third quarter of 2016 as compared to the prior quarter and $1.5 million compared to the same quarter last year. The increase from the prior quarter is primarily the result of a $1.0 million positive variance from the prior quarter in the adjustment for the derivative mark-to-market of commercial loan interest rate swaps, an increase of $0.3 million from the gain on sale of mortgage loans and an increase of $0.2 million in trust income.
The increase in noninterest income from the prior-year period of $1.5 million is primarily related to a positive variance of $1.3 million in the adjustment for the derivative mark-to-market of commercial loan interest rate swaps, as well as a $0.6 million increase in swap income, a $0.4 million increase in gain on sale of mortgage loans, offset by $0.4 million lower gains on sale of other assets.
For the nine months ended September 30, 2016, noninterest income, excluding net securities gains, remained relatively flat at $46.3 million as compared to the same period of 2015. Changes in the composition of noninterest income included increases of $1.0 million in gain on sale of mortgage loans, $1.3 million in swap fee income and $0.3 million in card-related interchange income, offset by a $0.7 million negative variance from prior year in the adjustment for the derivative mark-to-market of commercial loan interest rate swaps, a decrease of $0.4 million in trust income, a decrease of $0.5 million in insurance and retail brokerage commissions and $0.4 million in lower gains on sale of other assets.
Noninterest Expense
Noninterest expense increased $1.3 million to $38.7 million in the third quarter of 2016 as compared to the prior quarter and decreased $1.6 million as compared to the third quarter of 2015. Salaries and benefits increased $0.8 million as compared to the prior quarter primarily due to continued realignment of the staffing levels of our consumer banking businesses and from higher hospitalization costs. Also impacting noninterest expense as compared to the prior quarter was an increase in the reserve for unfunded loan commitments of $1.0 million (which is included in other operating expenses) and an increase of $0.3 million in other professional fees, offset by $0.3 million of lower operational losses.
Noninterest expense decreased $1.6 million in the third quarter of 2016 as compared to the third quarter of 2015, primarily attributable to decreases in salaries and benefits of $1.8 million as compared to the prior year due to the aforementioned realignment of our consumer banking businesses, lower benefits costs and a decline of $0.8 million in Pennsylvania shares tax expense due to a disputed assessment that was settled during the third quarter of 2015. These items were offset by an increase of $0.5 million in the reserve for unfunded loan commitments (which is included in other operating expenses) and $0.3 million increase in data processing costs.
For the nine months ending September 30, 2016, noninterest expense decreased $6.5 million, or 5.4%, as compared to the same period of 2015, driven by a decline in salaries and benefits of $4.1 million due to the previously mentioned realignment of our consumer businesses and lower benefits costs, a $0.9 million decrease in Pennsylvania shares tax expense, $0.4 million of decreased collection and repossession expenses, $0.5 million of lower operational losses, a $1.4 million decrease in loss on sale or write-down of assets and lower provision expense of $1.2 million associated with the reserve for unfunded loan commitments (which is included in other operating expenses). These decreases were offset by an increase of $0.9 million in data processing expense due to the issuance of chip debit cards during the first nine months of 2016.
Full time equivalent staff increased slightly to 1,179 at September 30, 2016 from 1,168 at June 30, 2016 and declined from 1,263 at September 30, 2015, respectively. The slight increase from June 30, 2016 is the result of the continued realignment of our consumer banking businesses. The decrease from September 30, 2015 is primarily attributable to staff reductions due to the realignment of our consumer banking businesses, offset by the recent expansion of our 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 57.27% and 58.12% for the three and nine months ended September 30, 2016 as compared to 63.83% and 63.99% for the three and nine months ended September 30, 2015. The core efficiency ratio, which excludes securities gains and losses, amortization of intangible assets and other nonrecurring items, was 56.65% and 57.67% for the three and nine months ended September 30, 2016 as compared to 61.65% and 62.57% for the three and nine months ended September 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 November 18, 2016 to shareholders of record as of November 7, 2016. This dividend represents a 2.8% projected annual yield utilizing the October 25, 2016 closing market price of $9.98.
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 during 2016, totaling $0.4 million. This repurchase program was suspended in July as a result of the pending acquisition of 13 branches in Ohio. Management believes that the acquisition of these branches and of DCB Financial Corp. represents a better use of capital for shareholders in the near-term.
First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2016 were 12.6%, 11.6%, 10.0% and 10.3%, respectively. Our current capital levels exceed 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 third quarter 2016 on Wednesday, October 26, 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 by dialing 1-877-344-7529 and entering the access code #10093909. 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 $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 Nine Months
For the Three Months Ended Ended
----------------------------- -------------------
September September September September
30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
----------------------------- -------------------
SUMMARY RESULTS OF
OPERATIONS
Net interest income (FTE)
(1) $ 50,569 $ 50,034 $ 47,568 $150,352 $142,763
Provision for credit
losses 3,408 10,372 4,621 20,306 8,818
Noninterest income 16,994 15,558 15,505 46,267 46,043
Noninterest expense 38,696 37,410 40,257 114,250 120,745
Net income 17,196 12,007 12,414 41,676 40,082
Earnings per common share
(diluted) $ 0.19 $ 0.14 $ 0.14 $ 0.47 $ 0.45
KEY FINANCIAL RATIOS
Return on average assets 1.02% 0.72% 0.78% 0.83% 0.84%
Return on average
shareholders' equity 9.14% 6.53% 6.86% 7.53% 7.48%
Return on average tangible
common equity (8) 11.74% 8.41% 8.87% 9.70% 9.68%
Efficiency ratio (2) 57.27% 57.06% 63.83% 58.12% 63.99%
Core efficiency ratio (3) 56.65% 56.88% 61.65% 57.67% 62.57%
Net interest margin (FTE)
(1) 3.29% 3.27% 3.25% 3.28% 3.29%
Book value per common
share $ 8.45 $ 8.34 $ 8.12
Tangible book value per
common share (7) 6.59 6.48 6.30
Market value per common
share 10.09 9.20 9.09
Cash dividends declared
per common share 0.07 0.07 0.07 $ 0.21 $ 0.21
ASSET QUALITY RATIOS
Nonperforming loans as a
percent of end-of-period
loans (4) 1.13% 1.33% 0.89%
Nonperforming assets as a
percent of total assets
(4) 0.94% 1.09% 0.81%
Net charge-offs as a
percent of average loans
(annualized) 0.70% 0.48% 0.13%
Allowance for credit
losses as a percent of
nonperforming loans (5) 99.83% 92.88% 118.84%
Allowance for credit
losses as a percent of
end-of-period loans (5) 1.13% 1.24% 1.06%
CAPITAL RATIOS
Shareholders' equity as a
percent of total assets 11.3% 11.0% 11.3%
Tangible common equity as
a percent of tangible
assets (6) 9.0% 8.8% 9.0%
Leverage Ratio 10.0% 9.8% 10.1%
Risk Based Capital - Tier
I 11.6% 11.1% 11.5%
Risk Based Capital - Total 12.6% 12.2% 12.5%
Common Equity - Tier I 10.3% 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 Nine Months Ended
------------------------------------- -------------------------
September September September September
30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
---------------------------------------------------------------
INCOME STATEMENT
Interest income $ 54,479 $ 53,850 $ 50,501 $ 161,682 $ 151,736
Interest expense 4,861 4,759 3,816 14,166 11,509
---------------------------------------------------------------
Net Interest Income 49,618 49,091 46,685 147,516 140,227
Taxable equivalent adjustment (1) 951 943 883 2,836 2,536
---------------------------------------------------------------
Net Interest Income (FTE) 50,569 50,034 47,568 150,352 142,763
Provision for credit losses 3,408 10,372 4,621 20,306 8,818
---------------------------------------------------------------
Net Interest Income after Provision
for Credit Losses (FTE) 47,161 39,662 42,947 130,046 133,945
Net securities (losses) gains - 28 - 28 125
Trust income 1,523 1,320 1,614 4,098 4,511
Service charges on deposit accounts 3,975 3,845 4,081 11,528 11,271
Insurance and retail brokerage
commissions 2,104 1,985 2,163 6,048 6,536
Income from bank owned life
insurance 1,350 1,311 1,357 3,957 4,089
Gain on sale of mortgage loans 1,235 932 832 2,850 1,856
Gain on sale of other loans and
assets 387 466 808 1,048 1,428
Card-related interchange income 3,698 3,784 3,637 11,039 10,784
Derivative mark-to-market 470 (531) (783) (1,075) (420)
Swap fee income 725 800 84 1,985 727
Other income 1,527 1,618 1,712 4,761 5,136
---------------------------------------------------------------
Total Noninterest Income 16,994 15,558 15,505 46,267 46,043
Salaries and employee benefits 20,647 19,888 22,446 62,212 66,339
Net occupancy 3,176 3,186 3,291 9,843 10,518
Furniture and equipment 2,847 2,882 2,670 8,596 7,980
Data processing 1,832 1,788 1,558 5,379 4,505
Pennsylvania shares tax 914 1,092 1,713 2,764 3,617
Advertising and promotion 750 664 789 1,940 1,946
Intangible amortization 67 114 157 318 469
Collection and repossession 760 474 801 1,803 2,229
Other professional fees and services 1,202 873 1,002 2,866 2,877
FDIC insurance 1,105 1,062 963 3,205 3,047
Litigation and operational losses 295 635 314 1,174 1,637
Loss on sale or write-down of assets 188 345 140 629 2,037
Merger and acquisition related 118 240 28 358 28
Other operating expenses 4,795 4,167 4,385 13,163 13,516
---------------------------------------------------------------
Total Noninterest Expense 38,696 37,410 40,257 114,250 120,745
Income before Income Taxes 25,459 17,810 18,195 62,063 59,243
Taxable equivalent adjustment (1) 951 943 883 2,836 2,536
Income tax provision 7,312 4,860 4,898 17,551 16,625
---------------------------------------------------------------
Net Income $ 17,196 $ 12,007 $ 12,414 $ 41,676 $ 40,082
===============================================================
Shares Outstanding at End of Period 88,992,007 88,949,995 88,961,268 88,992,007 88,961,268
Average Shares Outstanding Assuming
Dilution 88,858,204 88,838,614 88,813,746 88,843,939 89,531,498
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
September September
30, June 30, 30,
2016 2016 2015
-----------------------------------
BALANCE SHEET (Period End)
Assets
Cash and due from banks $ 76,456 $ 68,163 $ 69,235
Interest-bearing bank deposits 5,097 30,457 3,529
Securities available for sale, at fair
value 867,725 913,420 1,104,709
Securities held to maturity, at
amortized cost 389,513 405,976 154,035
Loans held for sale 7,855 11,613 4,986
Loans 4,860,652 4,843,776 4,575,735
Allowance for credit losses (54,734) (59,821) (48,518)
---------- ---------- ----------
Net loans 4,805,918 4,783,955 4,527,217
Goodwill and other intangibles 165,349 165,481 162,625
Other assets 348,570 370,756 358,413
---------- ---------- ----------
Total Assets $6,666,483 $6,749,821 $6,384,749
========== ========== ==========
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits $1,241,627 $1,136,629 $1,077,234
Interest-bearing demand deposits 87,507 88,777 70,662
Savings deposits 2,552,754 2,582,709 2,427,326
Time deposits 577,092 586,405 586,268
---------- ---------- ----------
Total interest-bearing deposits 3,217,353 3,257,891 3,084,256
Total deposits 4,458,980 4,394,520 4,161,490
Short-term borrowings 1,330,327 1,464,687 1,329,794
Long-term borrowings 81,059 81,201 111,219
---------- ---------- ----------
Total borrowings 1,411,386 1,545,888 1,441,013
Other liabilities 44,330 67,627 59,478
Shareholders' equity 751,787 741,786 722,768
---------- ---------- ----------
Total Liabilities and Shareholders'
Equity $6,666,483 $6,749,821 $6,384,749
========== ========== ==========
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
For the Three Months Ended
-------------------------------------------------------
September September
30, Yield/ June 30, Yield/ 30, Yield/
2016 Rate 2016 Rate 2015 Rate
--------------------------------------------------------
NET INTEREST MARGIN
Assets
Loans (FTE)(1)(4) $4,839,206 3.90% $4,833,360 3.86% $4,550,882 3.82%
Securities and
interest bearing
bank deposits
(FTE) (1) 1,284,493 2.49% 1,321,018 2.54% 1,248,495 2.40%
---------- ---------- ----------
Total Interest-
Earning Assets
(FTE) (1) 6,123,699 3.60% 6,154,378 3.58% 5,799,377 3.52%
Noninterest-
earning assets 555,977 552,754 543,632
---------- ---------- ----------
Total Assets $6,679,676 $6,707,132 $6,343,009
========== ========== ==========
Liabilities and
Shareholders'
Equity
Interest-bearing
demand and
savings deposits $2,652,562 0.18% $2,660,934 0.16% $2,504,516 0.11%
Time deposits 586,470 0.65% 578,518 0.62% 659,445 0.63%
Short-term
borrowings 1,391,766 0.57% 1,447,452 0.58% 1,232,795 0.41%
Long-term
borrowings 81,128 3.67% 81,268 3.62% 111,285 2.78%
---------- ---------- ----------
Total Interest-
Bearing
Liabilities 4,711,926 0.41% 4,768,172 0.40% 4,508,041 0.34%
Noninterest-
bearing deposits 1,153,945 1,137,626 1,065,204
Other liabilities 65,727 61,821 51,586
Shareholders'
equity 748,078 739,513 718,178
---------- ---------- ----------
Total
Noninterest-
Bearing
Funding
Sources 1,967,750 1,938,960 1,834,968
---------- ---------- ----------
Total Liabilities
and Shareholders'
Equity $6,679,676 $6,707,132 $6,343,009
========== ========== ==========
Net Interest Margin
(FTE)
(annualized)(1) 3.29% 3.27% 3.25%
For the Nine Months Ended
------------------------------------
September September
30, Yield/ 30, Yield/
2016 Rate 2015 Rate
------------------------------ ------
NET INTEREST MARGIN
Assets
Loans (FTE)(1)(4) $4,806,061 3.88% $4,509,628 3.87%
Securities and
interest bearing
bank deposits
(FTE) (1) 1,312,146 2.53% 1,298,397 2.45%
---------- ----------
Total Interest-
Earning Assets
(FTE) (1) 6,118,207 3.59% 5,808,025 3.55%
Noninterest-
earning assets 549,969 546,103
---------- ----------
Total Assets $6,668,176 $6,354,128
========== ==========
Liabilities and
Shareholders'
Equity
Interest-bearing
demand and
savings deposits $2,622,574 0.15% $2,510,814 0.11%
Time deposits 586,638 0.63% 714,005 0.70%
Short-term
borrowings 1,447,207 0.58% 1,193,122 0.38%
Long-term
borrowings 81,268 3.62% 126,896 2.50%
---------- ----------
Total Interest-
Bearing
Liabilities 4,737,687 0.40% 4,544,837 0.34%
Noninterest-
bearing deposits 1,129,511 1,038,016
Other liabilities 61,631 55,075
Shareholders'
equity 739,347 716,200
---------- ----------
Total
Noninterest-
Bearing
Funding
Sources 1,930,489 1,809,291
---------- ----------
Total Liabilities
and Shareholders'
Equity $6,668,176 $6,354,128
========== ==========
Net Interest Margin
(FTE)
(annualized)(1) 3.28% 3.29%
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
September September
30, June 30, 30,
2016 2016 2015
-----------------------------------
Loan Portfolio Detail
Commercial Loan Portfolio:
Commercial, financial, agricultural
and other $1,207,447 $1,185,062 $1,126,881
Commercial real estate 1,683,015 1,648,222 1,435,954
Real estate construction 229,375 242,132 179,710
-----------------------------------
Total Commercial 3,119,837 3,075,416 2,742,545
Consumer Loan Portfolio:
Closed-end mortgages 719,049 732,394 737,916
Home equity lines of credit 466,710 466,611 466,304
-----------------------------------
Total Real Estate - Consumer 1,185,759 1,199,005 1,204,220
Auto loans 467,222 481,887 540,915
Direct installment 24,578 25,160 26,234
Personal lines of credit 50,086 48,358 45,527
Student loans 13,170 13,950 16,294
-----------------------------------
Total Other Consumer 555,056 569,355 628,970
-----------------------------------
Total Consumer Portfolio 1,740,815 1,768,360 1,833,190
-----------------------------------
Total Portfolio Loans 4,860,652 4,843,776 4,575,735
Loans held for sale 7,855 11,613 4,986
-----------------------------------
Total Loans $4,868,507 $4,855,389 $4,580,721
===================================
September September
30, June 30, 30,
2016 2016 2015
-----------------------------------
ASSET QUALITY DETAIL
Nonperforming Loans:
Loans on nonaccrual basis $ 27,817 $ 38,404 $ 20,220
Troubled debt restructured loans held
for sale on nonaccrual basis - - -
Troubled debt restructured loans on
nonaccrual basis 12,723 9,672 8,583
Troubled debt restructured loans on
accrual basis 14,286 16,332 12,024
-----------------------------------
Total Nonperforming Loans $ 54,826 $ 64,408 $ 40,827
Other real estate owned ("OREO") 7,686 8,604 10,542
Repossessions ("Repos") 310 291 357
-----------------------------------
Total Nonperforming Assets $ 62,822 $ 73,303 $ 51,726
Loans past due in excess of 90 days and
still accruing 2,343 1,384 2,054
Classified loans 97,259 101,998 81,723
Criticized loans 137,264 128,280 136,919
Nonperforming assets as a percentage of
total loans, plus OREO and Repos 1.29% 1.51% 1.13%
Allowance for credit losses $ 54,734 $ 59,821 $ 48,518
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands)
For the Nine Months
For the Three Months Ended Ended
----------------------------- -------------------
September September September September
30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
----------------------------- -------------------
Net Charge-offs
(Recoveries):
Commercial, financial,
agricultural and other $ 7,100 $ 4,689 $ 75 $ 13,047 $ 7,657
Real estate construction - (4) - (227) (84)
Commercial real estate (10) 116 528 (385) 1,063
Residential real estate 227 78 123 569 934
Loans to individuals 1,178 894 721 3,380 2,781
----------------------------- -------------------
Net Charge-offs $ 8,495 $ 5,773 $ 1,447 $ 16,384 $ 12,351
Net charge-offs as a
percentage of average
loans outstanding
(annualized) 0.70% 0.48% 0.13% 0.46% 0.37%
Provision for credit
losses as a percentage of
net charge-offs 40.12% 179.66% 319.35% 123.94% 71.40%
Provision for credit
losses $ 3,408 $ 10,372 $ 4,621 $ 20,306 $ 8,818
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 Nine Months
For the Three Months Ended Ended
----------------------------- -------------------
September September September September
30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
-------------------------------------------------
Core Efficiency Ratio:
Total Noninterest
Expense $ 38,696 $ 37,410 $ 40,257 $114,250 $120,745
Adjustments to
Noninterest Expense:
Unfunded commitment
reserve 503 (540) (3) (412) 738
Pennsylvania shares
tax dispute - - 709 - 709
Intangible
amortization 67 114 157 318 469
Severance - - - - -
Merger and
acquisition related 118 240 28 358 28
Loss on sale or
writedown of assets - - - - 486
-------------------------------------------------
Noninterest
Expense - Core $ 38,008 $ 37,596 $ 39,366 $113,986 $118,315
Net interest income,
fully tax equivalent $ 50,569 $ 50,034 $ 47,568 $150,352 $142,763
Total noninterest
income 16,994 15,558 15,505 46,267 46,043
Net securities
(losses) gains - 28 - 28 125
-------------------------------------------------
Total Revenue $ 67,563 $ 65,564 $ 63,073 $196,591 $188,681
Adjustments to
Revenue:
Derivative mark-to-
market 470 (531) (783) (1,075) (420)
-------------------------------------------------
Total Revenue -
Core $ 67,093 $ 66,095 $ 63,856 $197,666 $189,101
(3)Core Efficiency Ratio 56.65% 56.88% 61.65% 57.67% 62.57%
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
September September
30, June 30, 30,
2016 2016 2015
--------------------------------------
Tangible Equity:
Total
shareholders'
equity $ 751,787 $ 741,786 $ 722,768
Less:
intangible
assets 165,349 165,481 162,625
--------------------------------------
Tangible
Equity 586,438 576,305 560,143
Less: preferred
stock - - -
--------------------------------------
Tangible
Common
Equity $ 586,438 $ 576,305 $ 560,143
Tangible Assets:
Total assets $ 6,666,483 $ 6,749,821 $ 6,384,749
Less:
intangible
assets 165,349 165,481 162,625
--------------------------------------
Tangible
Assets $ 6,501,134 $ 6,584,340 $ 6,222,124
(6)Tangible
Common Equity as
a percentage of
Tangible Assets 9.02% 8.75% 9.00%
Shares
Outstanding at
End of Period 88,992,007 88,949,995 88,961,268
(7)Tangible Book
Value Per Common
Share $ 6.59 $ 6.48 $ 6.30
For the Nine Months
For the Three Months Ended Ended
-------------------------------------- -------------------
September September September September
30, June 30, 30, 30, 30,
2016 2016 2015 2016 2015
-------------------------------------- -------------------
Average Tangible
Equity:
Total
shareholders'
equity $ 748,078 $ 739,513 $ 718,178 $739,347 $716,200
Less:
intangible
assets 165,449 165,527 162,709 165,547 162,864
----------------------------------------------------------
Tangible
Equity 582,629 573,986 555,469 573,800 553,336
Less: preferred
stock - - - - -
----------------------------------------------------------
Tangible
Common
Equity $ 582,629 $ 573,986 $ 555,469 $573,800 $553,336
(8)Return on
Average Tangible
Common Equity 11.74% 8.41% 8.87% 9.70% 9.68%
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.
Media Relations:Amy JeffordsAssistant Vice President / Communications and Community RelationsPhone: 724-463-6806E-mail: [email protected] Relations:Ryan M. ThomasVice President / Finance and Investor [email protected]
Source: First Commonwealth Financial Corporation
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