Growth in Loans and Low Cost Deposits Continues
INDIANA, Pa., April 23 /PRNewswire-FirstCall/ -- First Commonwealth Financial Corporation (NYSE: FCF), the holding company for First Commonwealth Bank, announced today financial results for the first quarter ended March 31, 2009.
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First Quarter Results
First Commonwealth reported first quarter 2009 core net income, or net income excluding impairment losses and securities gains and losses, of $8.1 million or $0.10 per diluted share. Core net income decreased $2.7 million, or 25.1%, from the first quarter of 2008 primarily due to the increase in the provision for credit losses and higher non-interest expenses, partly offset by an increase in net interest income and lower income taxes.
First quarter of 2009 annualized core return on average equity and average assets was 4.95% and 0.51%, respectively, compared to 7.50% and 0.72% for the same period last year.
Developments during the first quarter included:
- Total loans increased $39.0 million.
- Non-accrual loans decreased $26.9 million.
- Net charge-offs increased to $19.5 million.
- The company recorded impairment losses of $9.9 million ($6.4 million after tax) relating to trust preferred collateralized debt obligations and bank equity securities.
- First Commonwealth Bank opened a new community banking office in Butler and relocated its New Alexandria office to a more visible, high traffic location.
GAAP net income for the first quarter 2009 was $1.7 million or $0.02 per diluted share, as compared to $11.1 million or $0.15 per diluted share for the same period in 2008. The decrease in GAAP net income was primarily the result of non-cash charges of $9.9 million ($6.4 million after tax) for other-than-temporary impairment recorded on four trust preferred collateralized debt obligations and four bank equity securities in addition to the $5.1 million ($3.2 million after tax) increase in the provision for credit losses.
Average diluted shares in the first quarter 2009 were 16.6% greater than the comparable quarter in 2008 primarily due to the issuance of 11.5 million shares of common stock from our capital raise completed on November 5, 2008. First quarter 2009 annualized GAAP return on average equity and average assets was 1.03% and 0.11%, respectively, compared to 7.73% and 0.75% for the prior year period.
'We continue to experience growth in loans, low-cost deposits, and client households, although external factors have impeded our earnings. We are capitalizing on the opportunities that have arisen from the market disruptions within our competitive footprint,' said John J. Dolan, President and CEO. Dolan added 'We recognized $19.5 million in net charge-offs in the first quarter, which reduced non-accrual loans resulting in an improvement in credit quality. We also minimized some of the uncertainties in the loan portfolio by taking possession of properties securing two large credits. Our loan participation portfolio continues to perform well both in and out of Pennsylvania.'
Net Interest Income and Margin
Net interest income increased $9.5 million, or 23.2%, in the first quarter of 2009 from the first quarter of 2008. The increase was a result of both growth in earning assets and a decline in the cost of interest-bearing liabilities.
The net interest margin on a tax equivalent basis for the first quarter 2009 increased 44 basis points to 3.72% compared with 3.28% in the corresponding period last year. The increase in our net interest margin can be attributed to increased loan volume and declines in the cost of interest-bearing liabilities exceeding the declines in yields on total interest-earning assets. The decrease in the cost of interest-bearing liabilities can be attributed to lower interest rates, combined with a shift in the mix of our liabilities to low cost deposits and short-term borrowings from time deposits and long-term debt.
Management continued to supplement deposit growth with wholesale borrowing due to the significant spread between wholesale borrowing costs and rates paid on time deposits. In the first quarter of 2009 compared to the first quarter of 2008, average time deposits decreased $337.8 million or 15.6% which were mostly offset with increases in lower costing transaction and savings deposits. Average noninterest-bearing demand deposits increased $50.4 million, or 9.9%, average interest-bearing demand deposits increased $12.1 million, or 2.1%, and average savings deposits increased $226.3 million, or 20.8%.
Average interest-earning assets were $392.2 million, or 7.2%, higher in the first quarter of 2009 compared to the first quarter of 2008, driven by an increase in average loans of $624.8 million, or 16.3%. This loan growth was partially funded by investment run-off and short-term borrowings. Average investment securities decreased $232.8 million, and a portion of the increase in average short-term borrowings was also due to refinancing $190.0 million of longer term FHLB advances in the fourth quarter of 2008. These advances were due to mature in the first seven months of 2009 and were replaced with lower costing overnight borrowings.
Non-Interest Income
Core non-interest income, or non-interest income excluding impairment losses and securities gains and losses, decreased $373 thousand, or 2.9%, in the first quarter of 2009 compared to the same period last year. This decrease was primarily due to the decline in service charges on deposit accounts of $588 thousand as a result of lower overdraft activity. GAAP non-interest income for the first quarter of 2009 decreased $10.7 million from the first quarter of 2008 primarily due to credit related other-than-temporary impairment losses of $8.4 million on trust preferred collateralized debt obligations and $1.5 million on bank equity securities.
During the first quarter, First Commonwealth early adopted FSP FAS 115-2 and FAS 124-2 which requires that $9.9 million in credit related other-than-temporary impairment be recognized in earnings while noncredit-related other-than-temporary impairment on securities not expected to be sold be recognized in other comprehensive income ('OCI').
In accordance with the new accounting guidance, the noncredit-related portion of other-than-temporary impairment losses previously recognized in earnings during 2008 was reclassified as a cumulative effect adjustment that increased retained earnings and decreased accumulated OCI. Of the $13.0 million in other-than-temporary impairment charges recognized in 2008, $6.5 million related to noncredit-related impairment. Therefore, the cumulative effect adjustment to retained earnings totaled $6.5 million or $4.2 million, net of tax.
Non-Interest Expense
Non-interest expense for the first quarter of 2009 increased $4.5 million, or 11.6%, from the first quarter of 2008 primarily due to higher FDIC costs, employee benefits and salaries. FDIC insurance costs rose $1.4 million primarily from premium increases. Employee benefits increased $1.2 million due to higher health and 401(k) expenses. Salaries increased $924 thousand, or 6.1%, as a result of annual merit increases and a 3.9% increase in the number of employees. The increase in the number of employees was due to new branch offices and enhancing the consumer infrastructure for small business banking and retail brokerage.
'We have started an initiative to hold our non-interest expenses flat compared to 2008, excluding the impact of increased FDIC deposit insurance premiums and special assessments,' said Mr. Dolan. 'We expect that this initiative will save us approximately $3.0 million in 2009. We are employing a disciplined approach to cost management that will not impede our ability to grow.'
Income Tax
The provision for income taxes for the first quarter of 2009 decreased $1.3 million from the same period in 2008 primarily due to the decrease in income before taxes offset by a decline in nontaxable income and tax credits. First Commonwealth's effective tax rate was 3.5% in the first quarter of 2009 compared to 11.1% in the comparable quarter in 2008. Nontaxable income and tax credits had a greater impact on the effective tax rate during the first quarter of 2009 due to lower pretax income compared to the first quarter of 2008.
Credit Quality and Provision for Credit Losses
For the quarter ending March 31, 2009, nonperforming loans decreased $26.9 million, or 47.9%, to $29.2 million from December 31, 2008. Net charge-offs were $19.5 million in the first quarter 2009, primarily due to three commercial credit relationships totaling $39.5 million. These relationships were mainly collateralized by equipment and real estate. Two properties were transferred to Other Real Estate Owned (OREO). We believe that the two properties transferred to OREO have strong market interest and expect a favorable outcome. The aforementioned three loans accounted for $16.3 million, or 84%, of the net credit losses in the first quarter of 2009. These three loans had $14.8 million allocated to the allowance for credit losses at December 31, 2008. Nonperforming loans as a percent of total loans decreased from 1.27% at December 31, 2008 to 0.65% at March 31, 2009 primarily as a result of these transfers. Net credit losses for the first quarter of 2008, totaled $4.0 million.
Loans past due in excess of 90 days and still accruing at March 31, 2009 increased $1.3 million to $17.5 million compared to December 31, 2008 primarily due to an increase in commercial loans.
The provision for credit losses for the first quarter of 2009 increased $5.1 million compared to the first quarter of 2008. The year over year increase is attributed to loan growth, trends in losses and increased allocations for new nonperforming loans.
Participation loans outside of Pennsylvania totaled $376.4 million at March 31, 2009, an increase of $3.1 million, or 0.8%, compared to December 31, 2008. Nonperforming participation loans outside of Pennsylvania totaled $8.9 million with a reserve allocation of approximately $4.5 million. The allocation remained unchanged from December 31, 2008 for these credits. There were no participation loans past due in excess of 90 days at March 31, 2009.
Single Issue Trust Preferred Securities and Trust Preferred Collateralized Debt Obligations
First Commonwealth's portfolio of single issue trust preferred securities and trust preferred collateralized debt obligations consists of 15 pooled issues and 21 single-issue securities. The single issues are primarily from money center and large regional banks. The pooled instruments consist of securities issued by 376 banks and other financial institutions. Two of our pooled securities are senior tranches and the remainder are mezzanine tranches. The senior and mezzanine tranches of trust preferred collateralized debt obligations generally are protected from defaults by over-collateralization and cash flow default protection provided by subordinated tranches, with senior tranches having the greatest protection and mezzanine tranches subordinated to the senior tranches. At the time of initial issue, the tranches subordinated to our senior and mezzanine tranches ranged in size from approximately 7.3% to 35.4% of the total principal amount of the respective securities, and no single issuer comprised more than 5.0% of the total principal of the pool.
As of March 31, 2009, our single issue securities had a book value of $24.0 million and an estimated fair value of $14.2 million, while the book value of the pooled securities totaled $95.0 million with an estimated fair value of $36.7 million. Additional detail related to our pooled trust preferred securities is provided in the Consolidated Selected Financial Data portion of this press release. During the first quarter, all of the pooled instruments were downgraded by Moody's Investor Services. Two of the fifteen pooled issues, representing $12.5 million of the $95.0 million book value, remain above investment grade. In the first quarter of 2009, an $8.4 million other-than-temporary impairment charge was recorded on four trust preferred collateralized debt obligations that are expected to experience a principal shortfall. These obligations include Pre TSL VI, Pre TSL VII, Pre TSL VIII and MM Comm IX. The amount of impairment charge recognized represents the expected credit loss on these securities. Based on management's analysis as of March 31, 2009, all of the single issues and the remainder of the trust preferred collateralized debt obligations are expected to return 100% of their principal and interest.
Use of Non-GAAP Financial Measure
This release includes core net income, core non-interest income and core non-interest expense which are non-GAAP (Generally Accepted Accounting Principles) financial measures that are calculated by excluding impairment losses, securities gains and losses and asset impairment charges from GAAP net income, GAAP non-interest income and GAAP non-interest expenses. Management believes that these core measures are useful to the investment community in analyzing financial results and trends of First Commonwealth. This information facilitates comparisons with prior periods and reflects the principal basis on which our management internally monitors financial performance. The table in the financial section reconciles GAAP financial measures to non-GAAP financial measures for the periods presented.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation is a $6.4 billion bank holding company headquartered in Indiana, Pennsylvania. It operates 115 retail branch offices in 15 counties in western and central Pennsylvania through First Commonwealth Bank, a Pennsylvania chartered bank and trust company. Financial services and insurance products are also provided through First Commonwealth Insurance Agency and First Commonwealth Financial Advisors, Inc.
Forward-Looking Statements
This release contains 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the adequacy of First Commonwealth's allowance for credit losses, liquidity and capital; expectations regarding the sale of properties held as other real estate owned, and expected future cash flows from investments in trust preferred collateralized debt obligations. Forward-looking 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.' Forward-looking statements describe First Commonwealth's future plans, strategies and expectations. These plans, strategies and expectations are based on assumptions and involve risks and uncertainties, many of which are beyond the control of First Commonwealth and which may cause actual results, performance or achievements to differ materially from the results, performance or achievements contemplated by the forward-looking statements. Such risks and uncertainties include, among other things:
- Deepened or prolonged weakness in economic and business conditions, nationally and in First Commonwealth's market areas, which could increase credit-related losses and expenses and limit growth;
- Further declines in the market value of investment securities that are considered to be other-than-temporary, which would negatively impact First Commonwealth's earnings and capital levels;
- Increases in defaults by borrowers and other delinquencies, which could result in an increased provision for credit losses on loans and related expenses;
- Reduced wholesale funding capacity or higher borrowing costs due to capital constraints at the Federal Home Loan Bank, which would reduce First Commonwealth's liquidity and negatively impact earnings and net interest margin;
- Fluctuations in interest rates and market prices, which could reduce net interest margin and asset valuations and increase expenses;
- Changes in legislative or regulatory requirements applicable to First Commonwealth and its subsidiaries, which could increase costs, limit certain operations and adversely affect results of operations;
- The inability to successfully execute First Commonwealth's strategic growth initiatives, which could limit future revenue and earnings growth; and
- Other risks and uncertainties described in First Commonwealth's reports filed 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 SELECTED FINANCIAL DATA
(dollars in thousands, except share data)
For the Quarter Ended
March 31, December 31, September 30,
2009 2008 2008
---- ---- ----
Interest Income
Interest and fees on loans $58,275 $64,580 $62,285
Interest and dividends
on investments:
Taxable interest 13,708 14,434 15,013
Interest exempt from
Federal income taxes 2,894 3,025 3,176
Dividends 63 389 663
Interest on Federal funds sold 0 0 0
Interest on bank deposits 1 1 2
----- ----- -----
Total interest income 74,941 82,429 81,139
Interest Expense
Interest on deposits 19,576 22,045 23,069
Interest on short-term
borrowings 1,890 2,238 4,634
Interest on subordinated
debentures 1,766 1,908 1,870
Interest on other long-term
debt 1,110 3,582 3,639
----- ----- -----
Total interest on long-term
debt 2,876 5,490 5,509
----- ----- -----
Total interest expense 24,342 29,773 33,212
------ ------ ------
Net Interest Income 50,599 52,656 47,927
Provision for credit losses 8,242 10,642 3,913
----- ------ -----
Net Interest Income after
provision for credit losses 42,357 42,014 44,014
Non-Interest Income
Impairment (losses) on securities (28,589) (3,850) (8,619)
Noncredit-related losses on
securities not expected to
be sold (recognized in other
comprehensive income) 18,723 0 0
------ ----- -----
Net impairment (losses) (a) (9,866) (3,850) (8,619)
Net securities gains 24 15 910
Trust income 1,087 1,125 1,444
Service charges on
deposit accounts 3,837 4,555 4,792
Insurance and retail
brokerage commissions 1,616 1,236 1,390
Income from bank owned
life insurance 1,138 1,155 1,435
Card related interchange
income 1,896 1,956 1,950
Other operating income 3,008 3,820 2,972
----- ----- -----
Total non-interest income 2,740 10,012 6,274
Non-Interest Expense
Salaries and employee benefits 22,500 21,658 21,091
Net occupancy expense 4,000 3,807 3,613
Furniture and equipment expense 2,975 2,845 2,995
Data processing expense 1,132 1,161 1,075
Pennsylvania shares tax expense 1,331 1,357 1,342
Intangible amortization 743 743 802
FDIC insurance 1,521 182 179
Other operating expenses 9,146 10,124 7,900
----- ----- -----
Total non-interest expense 43,348 41,877 38,997
------ ------ ------
Income before income taxes 1,749 10,149 11,291
Provision for income taxes 62 1,260 1,127
----- ----- -----
Net Income $1,687 $8,889 $10,164
====== ====== =======
Average Shares Outstanding 84,521,266 80,076,383 72,715,709
Average Shares Outstanding
Assuming Dilution 84,594,211 80,179,260 72,817,216
Per Share Data:
Basic Earnings Per Share $0.02 $0.11 $0.14
Diluted Earnings Per Share $0.02 $0.11 $0.14
Cash Dividends Declared
per Common Share $0.12 $0.17 $0.17
For the Quarter Ended
June 30, March 31,
2008 2008
---- ----
Interest Income
Interest and fees on loans $62,614 $62,067
Interest and dividends
on investments:
Taxable interest 15,578 15,531
Interest exempt from
Federal income taxes 3,347 3,595
Dividends 678 609
Interest on Federal funds sold 2 0
Interest on bank deposits 2 5
------ ------
Total interest income 82,221 81,807
Interest Expense
Interest on deposits 25,370 31,033
Interest on short-term
borrowings 4,251 3,705
Interest on subordinated
debentures 1,878 1,911
Interest on other long-term
debt 3,791 4,074
----- -----
Total interest on long-term
debt 5,669 5,985
----- -----
Total interest expense 35,290 40,723
------ ------
Net Interest Income 46,931 41,084
Provision for credit losses 5,361 3,179
----- -----
Net Interest Income after
provision for credit losses 41,570 37,905
Non-Interest Income
Impairment (losses) on securities (541) 0
Noncredit-related losses on
securities not expected to
be sold (recognized in other
comprehensive income) 0 0
-- --
Net impairment (losses) (a) (541) 0
Net securities gains 90 501
Trust income 1,538 1,532
Service charges on
deposit accounts 4,786 4,425
Insurance and retail
brokerage commissions 1,394 1,277
Income from bank owned
life insurance 1,446 1,487
Card related interchange
income 1,950 1,753
Other operating income 2,426 2,481
----- -----
Total non-interest income 13,089 13,456
Non-Interest Expense
Salaries and employee benefits 20,428 20,330
Net occupancy expense 3,728 3,907
Furniture and equipment expense 3,058 3,078
Data processing expense 996 1,051
Pennsylvania shares tax expense 1,339 1,271
Intangible amortization 832 831
FDIC insurance 125 123
Other operating expenses 8,379 8,265
----- -----
Total non-interest expense 38,885 38,856
------ ------
Income before income taxes 15,774 12,505
Provision for income taxes 2,861 1,384
----- -----
Net Income $12,913 $11,121
======= =======
Average Shares Outstanding 72,624,053 72,452,875
Average Shares Outstanding
Assuming Dilution 72,734,711 72,559,668
Per Share Data:
Basic Earnings Per Share $0.18 $0.15
Diluted Earnings Per Share $0.18 $0.15
Cash Dividends Declared
per Common Share $0.17 $0.17
(a) In accordance with early adoption of FSP FAS 115-2 and FAS 124-2,
Recognition and Presentation of Other-than-Temporary Impairment, as of
January 1, 2009, prior period net impairment losses are not restated;
but rather reflect both credit and non-credit impairment.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
(dollars in thousands, except share data)
March 31, December 31, September 30,
2009 2008 2008
---- ---- ----
Assets
Cash and due from banks $93,259 $88,277 $93,327
Interest-bearing bank
deposits 392 289 267
Securities available for
sale, at market value 1,271,925 1,349,920 1,349,561
Securities held to maturity,
at amortized cost,
(Market value $46,951
at March 31, 2009 and
$50,558 at December 31,
2008) 46,433 50,840 56,839
Other Investments 51,431 51,431 52,967
Loans:
Portfolio loans, net of
unearned income 4,457,358 4,418,377 4,184,600
Allowance for credit
losses (41,549) (52,759) (45,482)
------- ------- -------
Net loans 4,415,809 4,365,618 4,139,118
Premises and equipment, net 73,376 72,636 71,141
Other real estate owned 25,936 3,262 3,718
Goodwill 159,956 159,956 159,956
Amortizing intangibles, net 9,490 10,233 10,976
Other assets 274,567 273,418 265,920
------- ------- -------
Total assets $6,422,574 $6,425,880 $6,203,790
========== ========== ==========
Liabilities
Deposits (all domestic):
Noninterest-bearing $573,573 $566,845 $564,443
Interest-bearing 3,744,855 3,713,498 3,696,687
--------- --------- ---------
Total deposits 4,318,428 4,280,343 4,261,130
Short-term borrowings 1,172,104 1,152,700 875,424
Other liabilities 56,255 63,778 43,385
Subordinated debentures 105,750 105,750 105,750
Other long-term debt 122,537 170,530 386,288
------- ------- -------
Total long-term debt 228,287 276,280 492,038
------- ------- -------
Total liabilities 5,775,074 5,773,101 5,671,977
Shareholders' Equity
Preferred stock, $1 par
value per share, 3,000,000
shares authorized,
none issued 0 0 0
Common stock, $1 par value
per share, 200,000,000 shares
authorized;
86,600,461 shares issued
and 85,055,220 shares
outstanding
at March 31, 2009;
86,600,431 shares issued
and 85,050,744 shares
outstanding
at December 31, 2008 86,600 86,600 75,100
Additional paid-in capital 302,862 303,008 205,953
Retained earnings 305,712 309,947 315,404
Accumulated other
comprehensive
(loss) income, net (22,763) (21,269) (38,133)
Treasury stock (1,545,211
and 1,549,687 shares at
March 31, 2009 and
December 31, 2008,
respectively,
at cost) (17,811) (17,907) (18,411)
Unearned ESOP shares (7,100) (7,600) (8,100)
------ ------ ------
Total shareholders'
equity 647,500 652,779 531,813
------- ------- -------
Total liabilities
and shareholders'
equity $6,422,574 $6,425,880 $6,203,790
========== ========== ==========
Book value per share $7.61 $7.68 $7.23
Market value per share $8.87 $12.38 $13.47
June 30, March 31,
2008 2008
---- ----
Assets
Cash and due from banks $101,860 $92,554
Interest-bearing bank
deposits 347 219
Securities available for
sale, at market value 1,476,994 1,576,934
Securities held to maturity,
at amortized cost,
(Market value $46,951
at March 31, 2009 and
$50,558 at December 31,
2008) 59,200 65,935
Other Investments 47,112 46,854
Loans:
Portfolio loans, net of
unearned income 4,113,423 3,893,183
Allowance for credit
losses (44,505) (41,613)
------- -------
Net loans 4,068,918 3,851,570
Premises and equipment, net 69,890 69,191
Other real estate owned 3,271 3,280
Goodwill 159,956 159,956
Amortizing intangibles, net 11,778 12,609
Other assets 252,086 239,877
------- -------
Total assets $6,251,412 $6,118,979
========== ==========
Liabilities
Deposits (all domestic):
Noninterest-bearing $568,158 $542,331
Interest-bearing 3,744,311 3,778,337
--------- ---------
Total deposits 4,312,469 4,320,668
Short-term borrowings 834,226 642,869
Other liabilities 47,805 48,259
Subordinated debentures 105,750 105,750
Other long-term debt 404,464 426,955
------- -------
Total long-term debt 510,214 532,705
------- -------
Total liabilities 5,704,714 5,544,501
Shareholders' Equity
Preferred stock, $1 par
value per share,
3,000,000 shares
authorized, none issued 0 0
Common stock, $1 par value
per share, 200,000,000
shares authorized;
86,600,461 shares issued
and 85,055,220 shares
outstanding
at March 31, 2009;
86,600,431 shares issued
and 85,050,744 shares
outstanding
at December 31, 2008 75,100 75,100
Additional paid-in capital 206,245 206,498
Retained earnings 317,611 317,058
Accumulated other
comprehensive
(loss) income, net (22,604) 7,215
Treasury stock (1,545,211
and 1,549,687 shares at
March 31, 2009 and
December 31, 2008,
respectively, at cost) (21,054) (22,293)
Unearned ESOP shares (8,600) (9,100)
------ ------
Total shareholders'
equity 546,698 574,478
------- -------
Total liabilities
and shareholders'
equity $6,251,412 $6,118,979
========== ==========
Book value per share $7.46 $7.85
Market value per share $9.33 $11.59
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Loans by Categories
(dollars in thousands)
March December September June March
31, 31, 30, 30, 31,
2009 2008 2008 2008 2008
---- ---- ---- ---- ----
Commercial,
financial,
agricultural
and other $1,259,597 $1,272,094 $1,148,666 $1,115,536 $1,052,971
Real estate -
construction 402,569 418,639 338,303 307,278 241,114
Real estate -
residential 1,203,917 1,215,193 1,227,225 1,235,334 1,230,928
Real estate -
commercial 1,089,989 1,016,651 978,287 988,186 909,613
Loans to
individuals 501,286 495,800 492,119 467,089 458,557
--------- --------- --------- --------- ---------
Total loans
and leases, net
of unearned
income $4,457,358 $4,418,377 $4,184,600 $4,113,423 $3,893,183
========== ========== ========== ========== ==========
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Quarter To Date Average Balance Sheets and
Net Interest Analysis at March 31,
(dollars in thousands)
2009
-------- ---- --------
Average Income/ Yield or
Balance Expense Rate (a)
-------- ------- ---------
Assets
Interest-earning assets:
Interest-bearing deposits with banks $813 $1 0.50%
Tax-free investment securities 258,227 2,894 6.99%
Taxable investment securities 1,150,320 13,771 4.86%
Federal funds sold 0 0 0.00%
Loans, net of unearned
income (b)(c) 4,460,337 58,275 5.45%
--------- ------
Total interest-earning assets 5,869,697 74,941 5.40%
--------- ------
Noninterest-earning assets:
Cash 74,117
Allowance for credit losses (53,392)
Other assets 528,270
-------
Total noninterest-earning assets 548,995
-------
Total Assets $6,418,692
==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits (d) $585,270 $549 0.38%
Savings deposits (d) 1,315,349 4,411 1.36%
Time deposits 1,826,609 14,616 3.25%
Short-term borrowings 1,192,817 1,890 0.64%
Long-term debt 230,693 2,876 5.06%
------- -----
Total interest-bearing
liabilities 5,150,738 24,342 1.92%
--------- ------
Noninterest-bearing liabilities
and capital:
Noninterest-bearing demand
deposits (d) 560,577
Other liabilities 45,381
Shareholders' equity 661,996
-------
Total noninterest-bearing
funding sources 1,267,954
---------
Total Liabilities and
Shareholders' Equity $6,418,692
==========
Net Interest Income and Net Yield on
Interest-Earning Assets $50,599 3.72%
=======
Quarter To Date Average Balance Sheets and
Net Interest Analysis at March 31,
(dollars in thousands)
2008
-------- ---- --------
Average Income/ Yield or
Balance Expense Rate (a)
-------- ------- ---------
Assets
Interest-earning assets:
Interest-bearing deposits with banks $546 $5 3.71%
Tax-free investment securities 320,191 3,595 6.95%
Taxable investment securities 1,321,117 16,140 4.91%
Federal funds sold 43 0 2.86%
Loans, net of unearned income (b)(c) 3,835,587 62,067 6.69%
--------- ------
Total interest-earning assets 5,477,484 81,807 6.27%
--------- ------
Noninterest-earning assets:
Cash 73,860
Allowance for credit losses (42,358)
Other assets 487,546
-------
Total noninterest-earning assets 519,048
-------
Total Assets $5,996,532
==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits (d) $573,121 $1,747 1.23%
Savings deposits (d) 1,089,059 5,348 1.98%
Time deposits 2,164,394 23,938 4.45%
Short-term borrowings 493,776 3,705 3.02%
Long-term debt 549,016 5,985 4.38%
------- -----
Total interest-bearing liabilities 4,869,366 40,723 3.36%
--------- ------
Noninterest-bearing liabilities
and capital:
Noninterest-bearing demand
deposits (d) 510,150
Other liabilities 38,054
Shareholders' equity 578,962
-------
Total noninterest-bearing
funding sources 1,127,166
---------
Total Liabilities and
Shareholders' Equity $5,996,532
==========
Net Interest Income and Net Yield on
Interest-Earning Assets $41,084 3.28%
=======
(a) Yields on interest-earning assets have been computed on a tax
equivalent basis using the 35% Federal income tax statutory rate.
(b) Income on nonaccrual loans is accounted for on the cash basis, and
the loan balances are included in interest-earning assets.
(c) Loan income includes loan fees.
(d) Average balances do not include reallocations from noninterest-
bearing demand deposits and interest-bearing demand deposits into
savings deposits which were made for regulatory purposes.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Asset Quality Data
(dollars in thousands)
March December September June March
31, 31, 30, 30, 31,
2009 2008 2008 2008 2008
---- ---- ---- ---- ----
Loans on non-
accrual basis $29,049 $55,922 $49,692 $50,910 $48,799
Troubled debt
restructured loans 128 132 135 139 143
--- --- --- --- ---
Total nonperforming
loans $29,177 $56,054 $49,827 $51,049 $48,942
Loans past due in
excess of
90 days and
still accruing $17,532 $16,189 $13,719 $14,210 $20,066
Loans outstanding
at end
of period $4,457,358 $4,418,377 $4,184,600 $4,113,423 $3,893,183
Average loans
outstanding $4,460,337 $4,084,506 $4,011,476 $3,941,864 $3,835,587
Allowance for
credit losses $41,549 $52,759 $45,482 $44,505 $41,613
Nonperforming loans
as a percentage
of total loans 0.65% 1.27% 1.19% 1.24% 1.26%
Provision for
credit losses $8,242 $23,095 $12,453 $8,540 $3,179
Net credit losses $19,451 $12,732 $9,367 $6,431 $3,962
Net credit losses
as a percentage
of average loans
outstanding
(annualized) 1.77% 0.31% 0.31% 0.33% 0.42%
Allowance for credit
losses as a
percentage of
average loans
outstanding 0.93% 1.29% 1.13% 1.13% 1.08%
Allowance for
credit losses
as a percentage of
nonperforming loans 142.40% 94.12% 91.28% 87.18% 85.03%
Other real
estate owned $25,936 $3,262 $3,718 $3,271 $3,280
Profitability Ratios
(dollars in thousands)
For the Quarter Ended
---------------------
March December September June March
31, 31, 30, 30, 31,
2009 2008 2008 2008 2008
---- ---- ---- ---- ----
Return on average
assets 0.11% 0.56% 0.65% 0.84% 0.75%
Return on average
equity 1.03% 5.79% 7.38% 9.03% 7.73%
Net interest
margin (a) 3.72% 3.87% 3.58% 3.54% 3.28%
Efficiency ratio (b) 65.29% 60.10% 59.07% 61.10% 66.78%
Fully tax equivalent
adjustment $3,185 $3,166 $3,202 $3,078 $3,648
(a) Net interest margin has been computed on a tax equivalent basis using
the 35% Federal income tax statutory rate.
(b) Efficiency ratio is 'total non-interest expense' as a percentage of
total revenue. Total revenue consists of 'net interest income, on a
fully tax-equivalent basis,' plus 'total non-interest income,'
excluding 'net impairment losses.'
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Reconciliation of GAAP to Non-GAAP (a)
(dollars in thousands, except share data)
For the Quarter Ended
March 31, December 31, March 31,
2009 2008 2008
---- ---- ----
GAAP non-interest income $2,740 $10,012 $13,456
Less: net securities (losses) gains (9,842) (3,835) 501
------ ------ ---
Core non-interest income $12,582 $13,847 $12,955
======= ======= =======
GAAP non-interest expense $43,348 $41,877 $38,856
Less: low income housing
partnership impairment 0 1,206 0
------ ------ ------
Core non-interest expense $43,348 $40,671 $38,856
======= ======= =======
GAAP net income $1,687 $8,889 $11,121
Less: net securities (losses)
gains, net of tax (6,397) (2,493) 326
Plus: low income housing
partnership impairment,
net of tax 0 784 0
----- ------ ------
Core net income $8,084 $12,166 $10,795
====== ======= =======
GAAP diluted earnings per share $0.02 $0.11 $0.15
Less: net securities (losses)
gains per diluted share ($0.08) ($0.03) $0.00
Plus: low income housing
partnership impairment
per diluted share $0.00 $0.01 $0.00
----- ----- -----
Core diluted earnings per share $0.10 $0.15 $0.15
===== ===== =====
GAAP return on average assets 0.11% 0.56% 0.75%
Less: net securities (losses) gains
as a percentage of average assets -0.40% -0.16% 0.03%
Plus: low income housing
partnership impairment as a
percentage of average assets 0.00% 0.05% 0.00%
---- ---- ----
Core return on average assets 0.51% 0.77% 0.72%
GAAP return on average equity 1.03% 5.79% 7.73%
Less: net securities (losses)
gains as a percentage
of average equity -3.92% -1.62% 0.23%
Plus: low income housing
partnership impairment
as a percentage
of average equity 0.00% 0.52% 0.00%
---- ---- ----
Core return on average equity 4.95% 7.93% 7.50%
(a) This release includes core net income, core non-interest income and
core non-interest expense which are non-GAAP (Generally Accepted
Accounting Principles) financial measures that are calculated by
excluding impairment losses, securities gains and losses and asset
impairment charges from GAAP net income, GAAP non-interest income and
GAAP non-interest expenses. Management believes that these
core measures are useful to the investment community in analyzing
financial results and trends of First Commonwealth. This information
facilitates comparisons with prior periods and reflects the
principal basis on which our management internally monitors
financial performance.
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Pooled Trust Preferred Security Detail
(dollars in thousands)
Unrealized
Book Fair Gain
Deal Class Value Value (Loss)
---- ----- ----- ----- ------
Pre TSL I Senior $3,706 $3,009 $(697)
Pre TSL IV Mezzanine 1,830 730 (1,100)
Pre TSL V Mezzanine 620 242 (378)
Pre TSL VI Mezzanine 369 175 (194)
Pre TSL VII Mezzanine 7,856 2,465 (5,391)
Pre TSL VIII Mezzanine 3,723 1,237 (2,486)
Pre TSL IX Mezzanine 3,000 932 (2,068)
Pre TSL X Mezzanine 4,000 1,218 (2,782)
Pre TSL XII Mezzanine 10,000 3,133 (6,867)
Pre TSL XIII Mezzanine 17,500 5,357 (12,143)
Pre TSL XIV Mezzanine 16,023 5,112 (10,911)
MMCap I Senior 8,838 6,703 (2,135)
MMCap I Mezzanine 1,063 508 (555)
MM Comm IX Mezzanine 16,510 5,858 (10,652)
------ ----- -------
Total $95,038 $36,679 $(58,359)
Deferrals Excess
and Subordination
Defaults as a % of
Moody's/ Number as a % of Current
Fitch of Current Performing
Ratings Banks Collateral Collateral
------- ----- ---------- -----------
A1/A 32 15.86% 116.27%
Ca/B 6 18.05% 51.03%
Ba3/A 4 0.00% 73.54%
Caa1/CCC 5 61.35% 0.00%
Ca/CC 20 46.89% 0.00%
Ca/CC 36 28.01% 0.00%
Ca/CC 49 12.85% 11.19%
Ca/CC 58 17.92% 4.28%
Ca/CC 79 9.06% 12.43%
Ca/CC 65 12.11% 12.36%
Ca/CC 64 9.01% 19.67%
A3/A 29 9.15% 96.39%
Ca/CCC 29 9.15% 12.05%
Caa3/CC 34 16.65% 0.00%
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED SELECTED FINANCIAL DATA
Participation Loans
(dollars in thousands)
Commercial,
Financial
Agricultural Real Estate Real Estate
And Other Construction Commercial
-------------------------------------------
Pennsylvania $343,663 $36,595 $7,676
Ohio 58,844 8,489 29,696
Maryland 57,966 0 0
West Virginia 27,455 0 0
Virginia 16,965 0 0
New York 3,521 7,027 1,831
---------------------------------------------
Subtotal 508,414 52,111 39,203
Florida 18,868 43,552 0
Utah 0 5,015 0
Oregon 0 1,471 0
Other 66,093 29,597 0
---------------------------------------------
Total $593,375 $131,746 $39,203
============================================
Loans Past Due
90 Days and
Total Still Accruing Nonaccrual
--------------------------------------
Pennsylvania $387,934 $0 $0
Ohio 97,029 0 0
Maryland 57,966 0 0
West Virginia 27,455 0 0
Virginia 16,965 0 0
New York 12,379 0 0
----------------------------------------
Subtotal 599,728 0 0
Florida 62,420 0 2,500
Utah 5,015 0 5,015
Oregon 1,471 0 1,471
Other 95,690 0 0
----------------------------------------
Total $764,324 $0 $8,986
======================================
SOURCE First Commonwealth Financial Corporation
