INDIANA, Pa., Jan. 29, 2019 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year 2018.

Full Year 2018 Highlights

Franchise Growth

  • The company successfully completed its acquisition of Foundation Bank located in the Cincinnati, Ohio metropolitan area on May 1, 2018, which included $184 million in loans and $141 million in deposits at close.
  • Total loans grew $364 million, or 6.7% compared to the prior year including $180 million, or 3.3% in organic loan growth (excluding loans acquired from Foundation Bank).
  • Average deposits grew $441 million, or 8.2% compared to the prior year including $346 million, or 6.5% in organic deposit growth (excluding deposits acquired from Foundation Bank).
  • On May 21, 2018, the company’s banking subsidiary, First Commonwealth 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.
  • The Company repurchased 1.8 million shares, or 1.8% of common shares outstanding.
  • Tangible book value per share grew 10.1% year-over-year.

Earnings

  • For the year ended December 31, 2018, net income was $107.5 million (or $1.08 diluted earnings per share).  Core net income (non-GAAP), which excludes acquisition expenses, was $108.8 million, or $1.10 diluted earnings per share, all of which are record levels for First Commonwealth.
    -- Core earnings per share (non-GAAP) increased $0.28, or 34.1% from the previous year.
  • Total revenue (excluding net security gains) (non-GAAP) grew $26.4 million, or 8.6% from the prior year.
    -- Net interest income (on a fully tax-equivalent (FTE) basis) (non-GAAP) increased $21.2 million, or 9.1%, from the prior year.
    -- Noninterest income (excluding net security gains) (non-GAAP) grew $5.2 million, or 7.0%, from the prior year.
  • Total noninterest expense decreased $4.7 million, or 2.4% from the prior year.
    -- Noninterest expense (excluding acquisition expenses) (non-GAAP) increased $3.8 million, or 2.0%, from the prior year.
  • The return on average equity (ROE) for the year ended December 31, 2018 was 11.41%.  The core return on average tangible common equity (ROTCE) (non-GAAP) for the period was 16.87%, an increase of 349 basis points from the previous year.

Profitability

  • The net interest margin improved 14 basis points to 3.71% compared to the prior year.
  • The efficiency ratio improved 307 basis points to 57.15% compared to the prior year.
  • The return on average assets (ROA) for the year ended December 31, 2018 was 1.42%.  The Core ROA (non-GAAP) improved 35 basis points to 1.44% compared to the prior year.

Fourth Quarter 2018 Highlights

Franchise Growth

  • Total loans grew $115 million, or 8.1% (annualized) compared to the prior quarter.

Earnings

  • For the quarter ended December 31, 2018, net income was $27.0 million (or $0.27 diluted earnings per share), resulting in an ROA of 1.39% and an ROE of 11.06%.  Core net income (non-GAAP) was essentially the same as the company’s reported GAAP earnings.
  • Total revenue (excluding security gains) grew $5.1 million, or 6.2%, from the prior year quarter and $2.0 million, or 9.4% (annualized), from the third quarter of 2018.
    -- Net interest income (FTE) increased $1.2 million, or 7.5% (annualized), from the prior quarter.
    -- Noninterest income (excluding security gains) grew $0.8 million, or 15.6% (annualized), from the prior quarter.
  • Total noninterest expense decreased $1.9 million, or 3.6%, from the prior year quarter and increased $0.5 million from the third quarter of 2018.
    -- Noninterest expense (excluding acquisition expenses) decreased $2.1 million from the prior year quarter.
  • Provision for credit losses totaled $1.5 million, a decrease of $0.8 million and $1.5 million from the year ago and previous quarter, respectively, as all major asset quality metrics improved.

Profitability

  • The net interest margin expanded three basis points to 3.70% compared to the prior quarter and increased nine basis points from the prior year quarter as positive replacement yields on loans offset deposit rate increases.
    -- Deposit betas on non-maturity deposits remained well controlled at 20%.
  • The Core return on average assets (non-GAAP) was 1.39%.

“Our results in the fourth quarter were a strong finish to a very successful year for our organization,” stated T. Michael Price, President and Chief Executive Officer. “In 2018, we expanded our footprint into Cincinnati with the acquisition and integration of Foundation Bank, the buildout of our SBA team moved us to a number 2 ranking in our western Pennsylvania market from number 18 a year ago, and we produced record earnings of $107.5 million.  And we continue to make strategic investments in talent and technology to fulfill the needs of the businesses in our communities and help our customers improve their financial lives.  We have positive momentum heading into 2019 and are well-positioned to generate consistent and sustainable long-term performance.”

Financial Summary

(dollars in thousands,For the Three Months Ended For the Twelve Months Ended
except per share data)December 31, September 30, December 31, December 31, December 31,
  2018
  2018
  2017
  2018
  2017
Reported Results         
Net income$26,998 $25,149 $3,981 $107,498 $55,165
Diluted earnings per share$0.27 $0.25 $0.04 $1.08 $0.58
Return on average assets 1.39%  1.30%  0.21%  1.42%  0.77%
Return on average equity 11.06%  10.28%  1.75%  11.41%  6.45%
          
Operating Results (non-GAAP)(1)         
Core net income$27,000 $25,168 $20,561 $108,791 $78,512
Core diluted earnings per share$0.27 $0.25 $0.21 $1.10 $0.82
Core return on average assets 1.39%  1.30%  1.11%  1.44%  1.09%
Return on average tangible common equity 16.09%  15.01%  2.84%  16.67%  9.50%
Core return on average tangible common equity 16.09%  15.02%  13.29%  16.87%  13.38%
Core efficiency ratio 57.45%  57.82%  62.24%  57.15%  60.22%
Net interest margin (FTE) 3.70%  3.67%  3.61%  3.71%  3.57%
               


(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 fourth quarter of 2018 was $27.0 million, as compared to $4.0 million for the fourth quarter of 2017.  The prior year quarter’s results were impacted by a previously disclosed valuation adjustment to the company’s deferred tax asset following the passage of the Tax Cuts and Jobs Act, which resulted in a non-cash charge of $16.7 million.

Net income for the year ended December 31, 2018 was $107.5 million, as compared to $55.2 million for the same period in 2017, an increase of $52.3 million.  The results for the prior year were impacted by the aforementioned non-cash charge of $16.7 million as well as merger-related expenses of $10.2 million (pretax) in 2017 as compared to merger-related expenses of $1.6 million in 2018.  Excluding these expenses, core net income (non-GAAP) for the year ended December 31, 2018 was $108.8 million, an increase of $30.3 million, or 38.6%, from the previous year.

Net Interest Margin and Net Interest Income

The net interest margin for the fourth quarter of 2018 was 3.70%, an increase of three basis points from the previous quarter and an increase of nine basis points from the fourth quarter of 2017.

The total cost of interest-bearing demand and savings deposits increased five basis points from the previous quarter, compared to a 25 basis point increase in the Federal Funds Target Rate in the quarter.  This equates to an effective deposit beta of 20%, which is unchanged from the previous quarter.  The increased cost of interest-bearing deposits was partially offset by $9.0 million of growth in average noninterest-bearing deposits.

Loan yields increased 15 basis points from the previous quarter due to the repricing of variable and adjustable rate loans and higher replacement yields on new loans.

For the quarter ended December 31, 2018, total average earning assets grew $74 million and $367 million, respectively, from the prior quarter and prior year period.

The increase in the net interest margin from the prior year quarter was primarily due to a 44 basis point increase in the yield on loans, which was partially offset by higher short-term borrowing costs following the Federal Reserve’s decisions to raise short-term interest rates.

The net interest margin for the year ended December 31, 2018 was 3.71%, an increase of 14 basis points from the previous year.

The increase from the prior year was due primarily to a 40 basis point increase in the yield on interest earning assets partially offset by a 26 basis point increase in funding costs.  These increases were primarily due to improved yields on variable and adjustable loan portfolios following the Federal Reserve’s decision to increase short-term rates 200 basis points since December 2016, along with the funding costs increasing less than asset yields.

For the year ended December 31, 2018, total average earning assets grew $319 million, or 4.9% from the prior year.  Average loans grew by 5.8%, while average deposits grew by 8.2%.

Credit Quality

At December 31, 2018, nonperforming loans were $32.0 million, a decrease of $7.8 million from September 30, 2018 and a decrease of $10.2 million from December 31, 2017.  Nonperforming loans as a percentage of total loans were 0.55%, 0.70% and 0.78% for the periods ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

Subsequent to December 31, 2018, a $6.0 million nonperforming loan was paid off in full, resulting in the release of $1.7 million of excess reserves in the fourth quarter of 2018.

The provision for credit losses totaled $12.5 million for the year ended December 31, 2018, an increase of $7.4 million as compared to the prior year.  The increase from the prior year is primarily the result of one commercial real estate relationship which was resolved during the year and the recognition of $3.1 million of recoveries on two commercial relationships during the prior year.

For the year ended December 31, 2018, net charge-offs were $13.1 million, or 0.23% of average loans, compared to $7.0 million in the prior year period, an increase of $6.1 million.  The increase from the prior year is primarily the result of the aforementioned commercial real estate relationship, which deteriorated and was resolved during the year, as well as recoveries for two large commercial credits totaling $3.1 million in the prior year.

During the fourth quarter of 2018, net charge-offs were $4.5 million, or 0.31% of average loans (annualized), compared to $3.5 million in the prior quarter and $2.1 million in the fourth quarter of 2017.  Net charge-offs in the fourth quarter were the result of the successful resolution of several problem credits during the quarter.

For the originated loan portfolio at December 31, 2018, the general allowance for credit losses to total originated loans was 0.87%, compared to 0.89% at September 30, 2018 and 0.90% at December 31, 2017.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $20.5 million for the fourth quarter of 2018 as compared to $19.8 million for the third quarter of 2018 and $20.4 million for the fourth quarter of 2017.  Gain on sale of other loans and assets increased $1.1 million and $1.2 million from the prior quarter and the year ago quarter, respectively, due to a $0.6 million gain on the sale of a nonperforming loan and a $0.4 million insurance recovery during the fourth quarter of 2018, as well as the company’s recent emphasis on Small Business Administration (SBA) qualified lending.  This was partially offset by a decrease of $0.4 million and $0.5 million from the prior quarter and year ago quarter, respectively, in gain on sale of mortgage loans.  Trust fee income decreased $0.3 million from the prior quarter due to seasonally higher tax advisory services in the third quarter.

There were no security gains during the fourth and third quarters of 2018; however, the company recognized a $4.3 million gain during the fourth quarter of 2017 following the successful auction call of a single pooled trust preferred security.

Noninterest expense (excluding merger-related expenses) totaled $50.0 million for the fourth quarter of 2018, as compared to $49.5 million for the third quarter of 2018 and $52.1 million for the fourth quarter of 2017.  The $0.5 million increase from the previous quarter was primarily the result of a $1.0 million increase in salaries and benefits (due to a $1.3 million increase in hospitalization costs) and a $0.5 million increase in other professional fees.  This was partially offset by a $0.4 million decrease in advertising and promotion, a $0.3 million decrease in appraisal fees, and a $0.3 million decrease in unfunded commitment reserves on construction loans.

The $2.1 million decrease from the prior year quarter was primarily due to $2.5 million of expense for a bonus paid to all employees following the passage of the Tax Cuts and Jobs Act in the fourth quarter of 2017.

Full time equivalent staff was 1,426 at December 31, 2018 as compared to 1,417 at September 30, 2018 and 1,372 at December 31, 2017.  The increase from the prior year is the result of the addition of employees from acquisitions and the continued expansion of the mortgage, SBA and commercial banking businesses.

Dividends and Capital

First Commonwealth Financial Corporation declared a quarterly common stock dividend of $0.10 per share, which is payable on February 22, 2019 to shareholders of record as of February 8, 2019.  This dividend represents an 11.1% increase over the previous quarter and a 3.0% projected annual yield utilizing the January 28, 2019 closing market price of $13.42.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2018 were 14.7%, 12.3%, 10.3% and 11.1%, 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 quarter and year ended December 31, 2018 on Wednesday, January 30, 2019 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 #10127627.  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 137 community banking offices in 22 counties throughout western and central Pennsylvania and central and northeastern 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 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) 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.

Media Relations:
Jonathan E. Longwill
Vice President / Communications and Media Relations
Phone: 724-463-6806
E-mail: JLongwill@fcbanking.com

Investor Relations:
Ryan M. Thomas
Vice President / Finance and Investor Relations
Phone: 724-463-1690
E-mail: RThomas1@fcbanking.com

       
FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands, except per share data) 
 For the Three Months Ended For the Twelve Months Ended
 December 31, September 30, December 31, December 31, December 31,
 2018 2018 2017 2018 2017
SUMMARY RESULTS OF OPERATIONS         
Net interest income (FTE) (1)$65,514  $64,311  $60,624  $254,196  $233,005 
Provision for credit losses1,499  2,961  2,253  12,531  5,087 
Noninterest income20,529  19,757  24,705  88,637  80,331 
Noninterest expense50,024  49,530  51,909  195,556  200,298 
Net income26,998  25,149  3,981  107,498  55,165 
Core net income (5)27,000  25,168  20,561  108,791  78,512 
          
Earnings per common share (diluted)$0.27  $0.25  $0.04  $1.08  $0.58 
Core earnings per common share (diluted) (6)$0.27  $0.25  $0.21  $1.10  $0.82 
          
KEY FINANCIAL RATIOS         
          
Return on average assets1.39% 1.30% 0.21% 1.42% 0.77%
Core return on average assets (7)1.39% 1.30% 1.11% 1.44% 1.09%
Return on average shareholders' equity11.06% 10.28% 1.75% 11.41% 6.45%
Return on average tangible common equity (8)16.09% 15.01% 2.84% 16.67% 9.50%
Core return on average tangible common equity (9)16.09% 15.02% 13.29% 16.87% 13.38%
Core efficiency ratio (2)(10)57.45% 57.82% 62.24% 57.15% 60.22%
Net interest margin (FTE) (1)3.70% 3.67% 3.61% 3.71% 3.57%
          
Book value per common share$9.90  $9.69  $9.11     
Tangible book value per common share (11)6.98  6.82  6.34     
Market value per common share12.08  16.14  14.32     
Cash dividends declared per common share0.09  0.09  0.08  $0.35  $0.32 
          
ASSET QUALITY RATIOS         
Nonperforming loans as a percent of end-of-period loans (3)0.55% 0.70% 0.78%    
Nonperforming assets as a percent of total assets (3)0.46% 0.57% 0.62%    
Net charge-offs as a percent of average loans (annualized) (4)0.31% 0.25% 0.16%    
Allowance for credit losses as a percent of nonperforming loans (4)149.14% 127.35% 114.34%    
Allowance for credit losses as a percent of end-of-period loans (4)0.83% 0.90% 0.89%    
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases0.90% 0.98% 0.96%    
          
CAPITAL RATIOS         
Shareholders' equity as a percent of total assets12.5% 12.7% 12.2%    
Tangible common equity as a percent of tangible assets (12)9.1% 9.3% 8.8%    
Leverage Ratio10.3% 10.5% 9.7%    
Risk Based Capital - Tier I12.3% 12.6% 11.5%    
Risk Based Capital - Total14.7% 15.1% 12.3%    
Common Equity - Tier I11.1% 11.4% 10.3%    
             


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands, except per share data) 
 For the Three Months Ended For the Twelve Months Ended
 December 31,September 30,December 31, December 31,December 31,
 201820182017 20182017
INCOME STATEMENT      
  Interest income$77,945 $74,873 $65,840  $292,257 $250,550 
  Interest expense12,896 11,060 6,270  40,035 21,770 
Net Interest Income65,049 63,813 59,570  252,222 228,780 
  Taxable equivalent adjustment (1)465 498 1,054  1,974 4,225 
Net Interest Income  (FTE)65,514 64,311 60,624  254,196 233,005 
  Provision for credit losses1,499 2,961 2,253  12,531 5,087 
Net Interest Income after Provision for Credit Losses (FTE)64,015 61,350 58,371  241,665 227,918 
       
  Net securities gains  4,345  8,102 5,040 
  Trust income1,887 2,206 1,823  7,901 7,098 
  Service charges on deposit accounts4,757 4,589 4,721  18,175 18,579 
  Insurance and retail brokerage commissions1,866 1,872 2,155  7,426 8,807 
  Income from bank owned life insurance1,445 1,579 1,486  6,686 5,699 
  Gain on sale of mortgage loans1,169 1,542 1,656  5,436 5,366 
  Gain on sale of other loans and assets1,725 643 486  5,273 1,753 
  Card-related interchange income5,258 5,044 4,907  20,187 18,780 
Derivative mark-to-market(2) (424) 787 (473)
Swap fee income759 528 1,547  1,874 2,005 
  Other income1,665 1,754 2,003  6,790 7,677 
Total Noninterest Income20,529 19,757 24,705  88,637 80,331 
       
  Salaries and employee benefits27,535 26,553 28,781  105,115 103,714 
  Net occupancy4,287 4,341 4,051  17,219 15,648 
  Furniture and equipment3,636 3,424 3,755  14,247 13,508 
  Data processing2,706 2,853 2,431  10,470 9,090 
  Pennsylvania shares tax1,477 1,248 1,139  4,875 4,209 
  Advertising and promotion771 1,200 1,051  3,956 3,786 
  Intangible amortization787 817 819  3,217 3,081 
  Collection and repossession702 630 563  2,762 1,905 
  Other professional fees and services1,473 962 1,406  4,473 4,761 
  FDIC insurance417 217 744  2,007 3,210 
  Litigation and operational losses351 435 943  1,162 2,050 
  Loss on sale or write-down of assets205 181 348  1,080 1,834 
  Merger and acquisition related3 24 (199) 1,637 10,213 
  Other operating expenses5,674 6,645 6,077  23,336 23,289 
Total Noninterest Expense50,024 49,530 51,909  195,556 200,298 
       
Income before Income Taxes34,520 31,577 31,167  134,746 107,951 
  Taxable equivalent adjustment (1)465 498 1,054  1,974 4,225 
  Income tax provision7,057 5,930 26,132  25,274 48,561 
Net Income$26,998 $25,149 $3,981  $107,498 $55,165 
       
Shares Outstanding at End of Period 98,518,668  100,361,434  97,456,478   98,518,668  97,456,478 
Average Shares Outstanding Assuming Dilution 99,358,759  100,490,812  97,507,465   99,223,513  95,331,037 
       


FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA 
Unaudited 
(dollars in thousands) 
      
 December 31, September 30, December 31,
 2018 2018 2017
BALANCE SHEET (Period End)     
Assets     
  Cash and due from banks$95,934  $93,162  $98,624 
  Interest-bearing bank deposits3,013  3,022  8,668 
  Securities available for sale, at fair value941,373  914,085  761,195 
  Securities held to maturity, at amortized cost393,855  389,621  422,096 
  Loans held for sale11,881  8,287  14,850 
      
  Loans5,774,139  5,662,782  5,407,376 
  Allowance for credit losses(47,764) (50,746) (48,298)
  Net loans5,726,375  5,612,036  5,359,078 
      
  Goodwill and other intangibles287,240  288,028  270,360 
  Other assets368,584  378,104  373,668 
Total Assets$7,828,255  $7,686,345  $7,308,539 
      
Liabilities and Shareholders' Equity     
  Noninterest-bearing demand deposits$1,466,213  $1,451,284  $1,416,771 
      
  Interest-bearing demand deposits180,209  181,504  187,281 
  Savings deposits3,401,354  3,453,461  3,361,840 
  Time deposits850,216  808,894  614,813 
  Total interest-bearing deposits4,431,779  4,443,859  4,163,934 
      
  Total deposits5,897,992  5,895,143  5,580,705 
      
  Short-term borrowings721,823  587,806  707,466 
  Long-term borrowings185,056  185,266  87,918 
  Total borrowings906,879  773,072  795,384 
      
  Other liabilities47,995  45,199  44,323 
  Shareholders' equity975,389  972,931  888,127 
Total Liabilities and Shareholders' Equity$7,828,255  $7,686,345  $7,308,539 


 
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 For the Three Months Ended For the Twelve Months Ended
 December 31,Yield/September 30,Yield/December 31,Yield/ December 31,Yield/December 31,Yield/
 2018Rate2018Rate2017Rate 2018Rate2017Rate
NET INTEREST MARGIN         
            
Assets           
Loans (FTE)(1)(3)$5,704,468 4.81%$5,657,390 4.66%$5,433,384 4.29% $5,582,651 4.64%$5,278,511 4.20%
Securities and interest bearing bank deposits (FTE) (1)1,316,488 2.79%1,289,178 2.73%1,220,469 2.63% 1,267,471 2.79%1,252,739 2.63%
Total Interest-Earning Assets (FTE) (1)7,020,956 4.43%6,946,568 4.30%6,653,853 3.99% 6,850,122 4.30%6,531,250 3.90%
Noninterest-earning assets712,047  715,461  710,946   705,234  679,212  
Total Assets$7,733,003  $7,662,029  $7,364,799   $7,555,356  $7,210,462  
            
Liabilities and Shareholders' Equity           
Interest-bearing demand and savings deposits$3,601,354 0.45%$3,657,439 0.40%$3,521,485 0.20% $3,620,766 0.37%$3,429,445 0.17%
Time deposits842,123 1.40%786,912 1.18%596,051 0.73% 749,408 1.13%578,158 0.65%
Short-term borrowings633,363 2.10%569,666 1.81%807,831 1.19% 618,957 1.74%867,391 1.01%
Long-term borrowings185,144 5.29%185,401 5.24%88,019 4.24% 147,915 5.13%86,391 4.12%
Total Interest-Bearing Liabilities5,261,984 0.97%5,199,418 0.84%5,013,386 0.50% 5,137,046 0.78%4,961,385 0.44%
Noninterest-bearing deposits1,456,983  1,447,948  1,411,902   1,434,233  1,356,125  
Other liabilities45,445  44,261  39,011   41,740  37,818  
Shareholders' equity968,591  970,402  900,500   942,337  855,134  
Total Noninterest-Bearing Funding Sources2,471,019  2,462,611  2,351,413   2,418,310  2,249,077  
Total Liabilities and Shareholders' Equity$7,733,003  $7,662,029  $7,364,799   $7,555,356  $7,210,462  
            
Net Interest Margin (FTE) (annualized)(1) 3.70% 3.67% 3.61%  3.71% 3.57%
                 


FIRST COMMONWEALTH FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL DATA   
Unaudited   
(dollars in thousands)   
 December 31,September 30,December 31,
 201820182017
Loan Portfolio Detail   
Commercial Loan Portfolio:   
Commercial, financial, agricultural and other$1,138,473 $1,116,204 $1,163,383 
Commercial real estate2,123,544 2,136,431 2,019,096 
Real estate construction358,978 298,395 248,868 
Total Commercial3,620,995 3,551,030 3,431,347 
    
Consumer Loan Portfolio:   
Closed-end mortgages1,037,124 1,008,411 897,284 
Home equity lines of credit525,281 524,927 529,086 
Total Real Estate - Consumer1,562,405 1,533,338 1,426,370 
    
Auto loans481,954 476,536 454,932 
Direct installment37,454 33,415 24,560 
Personal lines of credit63,131 59,927 60,023 
Student loans8,200 8,536 10,144 
Total Other Consumer590,739 578,414 549,659 
Total Consumer Portfolio2,153,144 2,111,752 1,976,029 
Total Portfolio Loans5,774,139 5,662,782 5,407,376 
Loans held for sale11,881 8,287 14,850 
Total Loans$5,786,020 $5,671,069 $5,422,226 
    
    
 December 31,September 30,December 31,
 201820182017
ASSET QUALITY DETAIL   
Nonperforming Loans:   
Loans on nonaccrual basis$11,509 $17,921 $19,455 
Troubled debt restructured loans on nonaccrual basis11,761 13,876 11,222 
Troubled debt restructured loans on accrual basis8,757 8,052 11,563 
  Total Nonperforming Loans$32,027 $39,849 $42,240 
Other real estate owned ("OREO")3,935 3,874 2,765 
Repossessions ("Repos")266 135 292 
  Total Nonperforming Assets$36,228 $43,858 $45,297 
Loans past due in excess of 90 days and still accruing1,582 1,647 1,854 
Classified loans40,241 50,079 73,017 
Criticized loans127,235 141,591 124,417 
    
Nonperforming assets as a percentage of total loans, plus OREO and Repos0.63%0.77%0.83%
Allowance for credit losses$47,764 $50,746 $48,298 
    


FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
 For the Three Months Ended For the Twelve Months Ended
 December 31,September 30,December 31, December 31,December 31,
 201820182017 20182017
Net Charge-offs (Recoveries):      
  Commercial, financial, agricultural and other$1,672 $2,516 $777  $4,506 $2,733 
  Real estate construction(42)(92)  (141)(470)
  Commercial real estate1,489 (36)177  3,777 62 
  Residential real estate243 226 240  952 916 
  Loans to individuals1,119 915 937  3,971 3,733 
Net Charge-offs$4,481 $3,529 $2,131  $13,065 $6,974 
       
Net charge-offs as a percentage of average loans outstanding (annualized) (4)0.31%0.25%0.16% 0.23%0.13%
Provision for credit losses as a percentage of net charge-offs33.45%83.90%105.73% 95.91%72.94%
Provision for credit losses$1,499 $2,961 $2,253  $12,531 $5,087 


DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES   
       
(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the federal income tax statutory rate of 21% for 2018 and 35% for 2017.
(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 Twelve Months Ended
 December 31,September 30,December 31, December 31,December 31,
 201820182017 20182017
       
Net Income$26,998 $25,149 $3,981  $107,498 $55,165 
Intangible amortization787 817 819  3,217 3,081 
Tax benefit of amortization of intangibles(165)(172)(287) (676)(1,078)
Net Income, adjusted for tax affected amortization of intangibles27,620 25,794 4,513  110,039 57,168 
       
Average Tangible Equity:      
  Total shareholders' equity$968,591 $970,402 $900,500  $942,337 $855,134 
  Less: intangible assets287,610 288,570 270,906  282,281 253,533 
  Tangible Equity680,981 681,832 629,594  660,056 601,601 
  Less: preferred stock      
  Tangible Common Equity$680,981 $681,832 $629,594  $660,056 $601,601 
       
(8)Return on Average Tangible Common Equity16.09%15.01%2.84% 16.67%9.50%
       


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 Twelve Months Ended
 December 31,September 30,December 31, December 31,December 31,
 201820182017 20182017
       
Core Net Income:      
Total Net Income$26,998 $25,149 $3,981  $107,498 $55,165 
Deferred tax asset writedown  16,709   16,709 
Merger & Acquisition related expenses3 24 (199) 1,637 10,213 
Tax benefit of merger & acquisition related expenses(1)(5)70  (344)(3,575)
(5) Core net income27,000 25,168 20,561  108,791 78,512 
Average Shares Outstanding Assuming Dilution 99,358,759  100,490,812  97,507,465   99,223,513  95,331,037 
(6) Core Earnings per common share (diluted)$0.27 $0.25 $0.21  $1.10 $0.82 
       
Intangible amortization787 817 819  3,217 3,081 
Tax benefit of amortization of intangibles(165)(172)(287) (676)(1,078)
Core Net Income, adjusted for tax affected amortization of intangibles$27,622 $25,813 $21,093  $111,332 $80,515 
       
(9) Core Return on Average Tangible Common Equity16.09%15.02%13.29% 16.87%13.38%
       
       
 For the Three Months Ended For the Twelve Months Ended
 December 31,September 30,December 31, December 31,December 31,
 201820182017 20182017
Core Return on Average Assets:      
Total Net Income$26,998 $25,149 $3,981  $107,498 $55,165 
Total Average Assets7,733,003 7,662,029 7,364,799  7,555,356 7,210,462 
Return on Average Assets1.39%1.30%0.21% 1.42%0.77%
       
Core Net Income (5)$27,000 $25,168 $20,561  $108,791 $78,512 
Total Average Assets7,733,003 7,662,029 7,364,799  7,555,356 7,210,462 
(7) Core Return on Average Assets1.39%1.30%1.11% 1.44%1.09%
            


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 Twelve Months Ended
 December 31,September 30,December 31, December 31,December 31,
 201820182017 20182017
Core Efficiency Ratio:      
Total Noninterest Expense$50,024 $49,530 $51,909  $195,556 $200,298 
Adjustments to Noninterest Expense:      
Unfunded commitment reserve(203)82 624  (162)1,075 
Intangible amortization787 817 819  3,217 3,081 
Merger and acquisition related3 24 (199) 1,637 10,213 
Noninterest Expense - Core$49,437 $48,607 $50,665  $190,864 $185,929 
       
Net interest income, fully tax equivalent$65,514 $64,311 $60,624  $254,196 $233,005 
Total noninterest income20,529 19,757 24,705  88,637 80,331 
Net securities gains  (4,345) (8,102)(5,040)
Total Revenue$86,043 $84,068 $80,984  $334,731 $308,296 
       
Adjustments to Revenue:      
Derivative mark-to-market(2) (424) 787 (473)
Total Revenue - Core$86,045 $84,068 $81,408  $333,944 $308,769 
       
(10)Core Efficiency Ratio57.45%57.82%62.24% 57.15%60.22%
       
       
 December 31,September 30,December 31,   
 201820182017   
Tangible Equity:      
  Total shareholders' equity$975,389 $972,931 $888,127    
  Less: intangible assets287,240 288,028 270,360    
  Tangible Equity688,149 684,903 617,767    
  Less: preferred stock      
  Tangible Common Equity$688,149 $684,903 $617,767    
       
Tangible Assets:      
  Total assets$7,828,255 $7,686,345 $7,308,539    
  Less: intangible assets287,240 288,028 270,360    
  Tangible Assets$7,541,015 $7,398,317 $7,038,179    
       
(12)Tangible Common Equity as a percentage of Tangible Assets9.13%9.26%8.78%   
       
  Shares Outstanding at End of Period98,518,668 100,361,434 97,456,478    
(11)Tangible Book Value Per Common Share$6.98 $6.82 $6.34    
       
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.