First Commonwealth Announces Third Quarter 2012 Financial Results and Declares Third Quarter Dividend

First Commonwealth Announces Third Quarter 2012 Financial Results and Declares
                            Third Quarter Dividend

PR Newswire

INDIANA, Pa., Oct. 24, 2012

INDIANA, Pa., Oct. 24, 2012 /PRNewswire/ --First Commonwealth Financial
Corporation (NYSE: FCF) today reported net income of $9.8 million, or $0.09
diluted earnings per share, for the third quarter ended September 30, 2012, as
compared to net income of $8.3 million, or $0.08 diluted earnings per share,
in the third quarter of 2011. The increase in net income was primarily the
result of higher noninterest income partially offset by decreased net interest
income and higher noninterest expense. For the nine months ended September 30,
2012, net income was $33.2 million, or $0.32 diluted earnings per share,
compared to net income of $21.0 million, or $0.20 diluted earnings per share,
for the comparable period in 2011. Contributing to the increase in net income
was a lower provision for credit losses and higher noninterest income,
partially offset by lower net interest income and increased noninterest
expense.

(Logo: http://photos.prnewswire.com/prnh/20030416/FIRSTLOGO)

T. Michael Price, President and Chief Executive Officer, stated, "While a
prolonged low interest rate environment continues to put pressure on the net
interest margin, trends in our credit quality, noninterest income and
noninterest expense indicate significant opportunities ahead. Importantly,
our team has achieved four consecutive quarters of loan growth, which is a
crucial counterbalance to the margin pressure facing the industry."

Net Interest Income and Net Interest Margin

Third quarter 2012 net interest income, on a fully taxable equivalent basis,
decreased $1.1 million to $47.7 million as compared to the third quarter of
2011. The decrease was the result of a 27 basis point decline in the net
interest margin. The net interest margin was 3.54%, 3.61% and 3.81% for the
three-month periods ended September 30, 2012, June 30, 2012 and September 30,
2011, respectively. For the nine months ended September 30, 2012 net interest
income, on a fully taxable equivalent basis, decreased $1.4 million to $145.1
million. The decrease was primarily due to a decline of 18 basis points in the
net interest margin. The net interest margin for the nine months ended
September 30, 2012 and 2011 was 3.63% and 3.81%, respectively. As the low
interest rate environment continues to cause net interest margin compression,
the impact of lower interest rates has been partially offset by loan growth of
$240.6 million, a 6% increase, over the twelve-month period.

Credit Quality

The provision for credit losses was $6.8 million and $14.8 million for the
three and nine months ended September 30, 2012, respectively, as compared to
$7.0 million and $29.9 million in the prior-year periods.

For the quarter ended September 30, 2012, nonperforming loans were $93.9
million, an increase of $9.0 million from June 30, 2012 and a $68.0 million
decrease from September 30, 2011. The $9.0 million increase for the third
quarter of 2012 is primarily related to two commercial credits totaling $9.5
million that were placed into nonperforming status and an increase of $4.8
millionfor residential mortgages previously classified as 90 days and still
accruing, partially offset by $5.3 million of commercial loans that were
resolved.

During the third quarter of 2012, net charge-offs were $4.3 million compared
to $10.0 million in the third quarter of 2011. For the nine months ended
September 30, 2012, net charge-offs were $12.0 million, or 0.38% of average
loans on an annualized basis, compared to $29.0 million, or 0.95% of average
loans on an annualized basis, for the same period in 2011.

The allowance for credit losses as a percentage of total loans outstanding was
1.52%, 1.48% and 1.81% for September 30, 2012, June 30, 2012 and September 30,
2011, respectively.

Other Real Estate Owned ("OREO") acquired through foreclosure was $16.0
million at September 30, 2012 and is primarily comprised of four properties,
including land and commercial buildings in Pennsylvania.

Noninterest Income

Noninterest income, excluding net security gains, increased $6.9 million in
the third quarter of 2012 compared to the same period last year. The increase
is primarily the result of a $1.9 million termination fee for a joint venture
with another financial institution, and a $3.8 million charge recorded in the
third quarter of 2011 for an adverse interest rate swap mark-to-market
adjustment due to the credit deterioration of a commercial customer. Also
affecting third quarter 2012 and 2011 comparisons is an additional $1.7
million related to improved credit risk on the overall commercial loan
interest rate swap portfolio.

For the nine months ended September 30, 2012, noninterest income, excluding
net security gains, increased $11.2 million when compared to the same period
of 2011, primarily attributable to the aforementioned $1.9 million termination
fee for a discontinued joint venture, $2.9 million in gains on loans
held-for-sale which were sold in the first and second quarters of 2012, the
aforementioned swap charge on a troubled commercial loan relationship in 2011
and $0.8 million in card-related income. Also affecting the year-over-year
comparisons were a $1.1 million gain on the exiting of a private equity
investment in 2011, a $0.7 million decrease in letter of credit fees, a
decrease of $0.3 million of revenue from an OREO property that was sold in the
first quarter of 2012 and a $0.2 million decline in revenue from wealth
management. The swap-related increase was comprised of $0.5 million of
increased fees and $6.8 million due to an improved swap portfolio credit
profile that was primarily related to the aforementioned commercial credit
relationship.

There were $0.2 million of net security gains for the three and nine months
ending September 30, 2012 compared to $2.2 million for the nine-month period
ending September 30, 2011. The 2011 gains were primarily the result of a $1.5
million realized gain from the sale of an equity security.

Noninterest Expense

Noninterest expense increased $3.6 million, or 9%, in the third quarter of
2012 from the third quarter of 2011. The increase is primarily related to a
$3.5 million charge recorded in connection with a loss pertaining to an
external fraud. Collection efforts related to the fraud are ongoing and the
charge represents the full amount of the loss and does not include the impact
of any recovery. Recoveries, if they were to occur, would be recorded in the
period when the recovery is received.

Staff expense increased $0.9 million due to higher incentives on new business
and normal merit increases. Data processing costs pertaining to the
development of new systems increased $0.5 million. Loan collection and
repossession expense decreased $0.7 million and professional consulting
expense decreased $0.7 million during the period.

For the nine months ended September 30, 2012, as compared to the same period
last year, noninterest expense increased $5.1 million, or 4%. The increase
was primarily attributable to the aforementioned fraud of $3.5 million, an
increase of $2.3 million in salaries and employee benefits primarily a result
of increasing the number of positions within business development areas and
expanded incentive programs to encourage new business production, which were
partially offset by efficiencies and refinements in our support and retail
distribution areas, a $1.2 million increase in the expense for unfunded
commitments and a $0.9 million increase in data processing for the development
of new systems. Also affecting the year-over-year comparisons were decreases
of $0.8 million in professional consulting, $0.4 million in collection and
repossession expense, $0.5 million in FDIC insurance and $0.8 million in
occupancy expense.

Full-time equivalent staff was 1,412 and 1,479 for the periods ended September
30, 2012 and 2011, respectively. The efficiency ratio, calculated as 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 security gains),
was 68% for the nine months ended September 30, 2012 as compared to 69% during
the same period in 2011. 

Dividend/Buybacks

First Commonwealth Financial Corporation declared a common stock quarterly
dividend of $0.05 per share on October 24, 2012 which is payable on November
16, 2012 to shareholders of record as of November 5, 2012. This dividend
represents a 3% projected annual yield utilizing the September 30, 2012
closing market price of $7.05 and a 67% increase from last year.

On June 19, 2012, First Commonwealth announced a $50.0 million common stock
repurchase program effective until December 31, 2012. As of September 30,
2012, First Commonwealth has purchased 1,341,900 shares at an average price of
$6.79 per share.

First Commonwealth's capital ratios for leverage, Total and Tier I were 11.7%,
14.9% and 13.7%, respectively on September 30, 2012.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its
financial results for the third quarter of 2012 on Wednesday, October 24, 2012
at 2:00 PM (ET). The call can be accessed by dialing (toll free)
1-877-317-6789 or through First Commonwealth's web page,
http://www.fcbanking.com via the "Investor Relations" link. A replay of the
call will be available approximately one hour following the conclusion of the
conference. A link to the call replay will be accessible at this web page for
30 days.

About First Commonwealth Financial Corporation

First Commonwealth Financial Corporation is a $6.0 billion financial holding
company headquartered in Indiana, Pennsylvania. It operates 112 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 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 and may cause actual
results, performance or achievements to differ materially from the results,
performance or achievements contemplated by the forward-looking statements.
These risks and uncertainties include, among other things, the following:
continued deterioration in general business and economic conditions; changes
in interest rates; deterioration in the credit quality of our loan portfolios
or in the value of the collateral securing those loans; deterioration in the
value of securities held in our investment securities portfolio; the impact of
the Dodd-Frank Wall Street Reform and Consumer Protection Law and other legal
and regulatory changes; increased competition from both banks and non-banks;
changes in customer behavior and preferences; effects of mergers and
acquisitions and related integration; effects of critical accounting policies
and judgments; management's ability to effectively manage credit risk, market
risk, operational risk, legal risk, and regulatory and compliance risk; and
other risks and uncertainties described in our reports filed with the
Securities and Exchange Commission, including our most recent Annual Report on
Form 10-K. Forward-looking statements speak only as of the date on which they
are made. First Commonwealth undertakes no obligation to update any
forward-looking statements to reflect circumstances or events that occur after
the date the forward-looking statements are made.



FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
                           For the Three Months Ended      For the Nine Months
                                                           Ended
                           September  June 30,  September  September September
                           30,                  30,        30,       30,
                           2012       2012      2011       2012      2011
SUMMARY RESULTS OF
OPERATIONS
Net interest income        $47,704    $48,008   $48,768    $145,099  $146,461
(FTE)^(1)
Provision for credit       6,754      4,297     6,975      14,838    29,904
losses
Noninterest income         17,855     16,096    10,799     51,331    42,191
Noninterest expense        44,765     41,848    41,121     133,365   128,250
Net income                 9,847      12,321    8,326      33,219    20,991
Earnings per common share  $0.09      $0.12     $0.08      $0.32     $0.20
(diluted)
KEY FINANCIAL RATIOS
Return on average assets   0.66%      0.83%     0.58%      0.75%     0.49%
Return on average          5.07%      6.41%     4.29%      5.76%     3.69%
shareholders' equity
Efficiency ratio^(2)       68.45%     65.28%    69.03%     67.95%    68.78%
Net interest margin        3.54%      3.61%     3.81%      3.63%     3.81%
(FTE)^(1)
Book value per common      $7.45      $7.38     $7.33
share
Tangible book value per    5.88       5.82      5.77
common share^(4)
Market value per common    7.05       6.73      3.70
share
Cash dividends declared    0.05       0.05      0.03       $0.13     $0.09
per common share
ASSET QUALITY RATIOS
Allowance for credit
losses as a percent of     1.52%      1.48%     1.81%
end-of-period loans
Allowance for credit
losses as a percent of     68.27%     72.61%    44.55%
nonperforming loans
Nonperforming loans as a
percent of end-of-period   2.23%      2.04%     4.07%
loans
Nonperforming assets as a  1.85%      1.76%     3.47%
percent of total assets
Net charge-offs as a
percent of average loans   0.41%      0.33%     1.00%
(annualized)
CAPITAL RATIOS
Shareholders' equity as a  12.98%     12.99%    13.59%
percent of total assets
Tangible common equity as
a percent of tangible      10.54%     10.54%    11.01%
assets^(3)
Leverage Ratio             11.69%     11.76%    12.18%
Risk Based Capital - Tier  13.68%     13.91%    13.85%
I
Risk Based Capital -       14.93%     15.16%    15.11%
Total



FIRST
COMMONWEALTH
FINANCIAL
CORPORATION
CONSOLIDATED
FINANCIAL
DATA
Unaudited
(dollars in
thousands,
except share
data)
                For the Three Months Ended             For the Nine Months
                                                       Ended
                September    June 30,     September    September   September
                30,                       30,          30,         30,
                2012         2012         2011         2012        2011
INCOME
STATEMENT
 Interest     $53,880      $54,712      $57,600      $165,208    $175,058
income
 Interest     7,230        7,794        10,120       23,470      32,824
expense
 Net
Interest        46,650       46,918       47,480       141,738     142,234
Income
Taxable
equivalent      1,054        1,090        1,288        3,361       4,227
adjustment^(1)
 Net
Interest        47,704       48,008       48,768       145,099     146,461
Income (FTE)
Provision for   6,754        4,297        6,975        14,838      29,904
credit losses
 Net
Interest
Income after    40,950       43,711       41,793       130,261     116,557
Provision for
Credit Losses
(FTE)
Changes in
fair value on   1,374        (1,323)      (2,535)      1,549       (218)
impaired
securities
Non-credit
related
(gains) losses
on securities
not expected
to
be sold
(recognized in
other           (1,374)      1,323        2,535        (1,549)     218
comprehensive
income)
Net Impairment  0            0            0            0           0
Losses
Net securities  163          0            0            163         2,185
gains
Trust income    1,631        1,607        1,603        4,780       5,085
Service
charges on      3,736        3,737        3,836        10,975      11,010
deposit
accounts
Insurance and
retail          1,844        1,670        1,698        4,938       4,876
brokerage
commissions
Income from
bank owned      1,465        1,459        1,411        4,369       4,158
life insurance
Gain on sale    757          1,444        790          4,316       2,272
of assets
Card related
interchange     3,260        3,285        3,053        9,659       8,895
income
Other income    4,999        2,894        (1,592)      12,131      3,710
Total
Noninterest     17,855       16,096       10,799       51,331      42,191
Income
Salaries and
employee        21,280       22,363       20,418       65,401      63,092
benefits
Net occupancy   3,235        3,303        3,506        9,942       10,733
expense
Furniture and
equipment       3,118        3,024        3,092        9,326       9,407
expense
Data
processing      1,987        1,796        1,533        5,346       4,482
expense
Pennsylvania
shares tax      1,510        1,510        1,434        4,203       4,046
expense
Intangible      367          371          384          1,109       1,163
amortization
Collection and
repossession    1,281        670          1,961        4,650       5,003
expense
Other
professional    1,028        940          1,706        3,167       3,930
fees and
services
FDIC insurance  1,258        1,262        1,177        3,757       4,260
Loss on sale
or write-down   426          500          159          4,215       4,674
of assets
Operational     3,657        250          186          4,033       408
losses
Other
operating       5,618        5,859        5,565        18,216      17,052
expenses
Total
Noninterest     44,765       41,848       41,121       133,365     128,250
Expense
Income before   14,040       17,959       11,471       48,227      30,498
Income Taxes
Taxable
equivalent      1,054        1,090        1,288        3,361       4,227
adjustment^(1)
Income tax      3,139        4,548        1,857        11,647      5,280
provision
Net Income      $9,847       $12,321      $8,326       $33,219     $20,991
Shares
Outstanding at  103,890,029  104,728,846  104,906,994  103,890,029 104,906,994
End of Period
Average Shares
Outstanding     104,098,383  104,901,239  104,728,915  104,595,396 104,678,436
Assuming
Dilution



FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
                                  September 30,  June 30,    September 30,
                                  2012           2012        2011
BALANCE SHEET (Period End)
Assets
Cash and due from banks           $85,183        $82,659     $84,810
Interest-bearing bank deposits    3,881          3,839       5,036
Securities                        1,163,301      1,195,118   1,077,091
Loans                             4,214,299      4,159,531   3,973,723
Allowance for credit losses       (64,114)       (61,676)    (72,117)
Net loans                         4,150,185      4,097,855   3,901,606
Goodwill and other intangibles    162,690        163,057     164,170
Other assets                      398,398        404,288     425,349
Total Assets                      $5,963,638     $5,946,816  $5,658,062
Liabilities and Shareholders'
Equity
Noninterest-bearing demand        $858,003       $823,880    $769,178
deposits
Interest-bearing demand deposits  97,834         98,937      96,122
Savings deposits                  2,433,065      2,415,860   2,383,288
Time deposits                     1,105,532      1,123,285   1,236,290
Total interest-bearing deposits   3,636,431      3,638,082   3,715,700
Total deposits                    4,494,434      4,461,962   4,484,878
Short-term borrowings             461,770        474,264     173,779
Long-term borrowings              180,471        181,120     178,459
Total borrowings                  642,241        655,384     352,238
Other liabilities                 53,072         56,980      51,954
Shareholders' equity              773,891        772,490     768,992
Total Liabilities and             $5,963,638     $5,946,816  $5,658,062
Shareholders' Equity

                    For the Three Months Ended                             For the Nine Months Ended
                    September  Yield/ June 30,   Yield/ September  Yield/  September  Yield/ September  Yield/
                    30,                                 30,                30,               30,
                    2012       Rate   2012       Rate   2011       Rate    2012       Rate   2011       Rate
NET INTEREST MARGIN
(Quarterly and
Year-to-Date
Averages)
Assets
Loans (FTE)^(1)     $4,186,446 4.50%  $4,144,470 4.61%  $3,993,225 5.01%   $4,148,937 4.64%  $4,073,871 5.04%
Securities and
interest bearing    1,175,476  2.55%  1,210,889  2.76%  1,079,761  3.12%   1,189,739  2.74%  1,062,186  3.25%
bank deposits
(FTE)^(1)
Total
Interest-Earning    5,361,922  4.08%  5,355,359  4.19%  5,072,986  4.61%   5,338,676  4.22%  5,136,057  4.67%
Assets (FTE)^(1)
Noninterest-earning 588,954           589,888           598,314            593,883           588,971
assets
Total Assets        $5,950,876        $5,945,247        $5,671,300         $5,932,559        $5,725,028
Liabilities and
Shareholders'
Equity
Interest-bearing
demand and savings  $2,530,100 0.16%  $2,553,412 0.17%  $2,479,455 0.31%   $2,553,173 0.18%  $2,471,953 0.33%
deposits
Time deposits       1,101,991  1.45%  1,165,009  1.58%  1,296,831  1.89%   1,156,689  1.55%  1,385,857  1.99%
Short-term          485,754    0.25%  422,361    0.27%  167,969    0.44%   414,451    0.26%  166,094    0.44%
borrowings
Long-term           181,038    4.10%  183,890    4.09%  179,033    4.07%   190,720    4.00%  181,261    4.09%
borrowings
Total
Interest-Bearing    4,298,883  0.67%  4,324,672  0.72%  4,123,288  0.97%   4,315,033  0.73%  4,205,165  1.04%
Liabilities
Noninterest-bearing 824,784           796,555           726,895            795,443           709,536
deposits
Other liabilities   53,823            50,724            51,667             51,627            48,775
Shareholders'       773,386           773,296           769,450            770,456           761,552
equity
Total
Noninterest-Bearing 1,651,993         1,620,575         1,548,012          1,617,526         1,519,863
Funding Sources
Total Liabilities
and Shareholders'   $5,950,876        $5,945,247        $5,671,300         $5,932,559        $5,725,028
Equity
Net Interest Margin
(FTE)                          3.54%             3.61%             3.81%              3.63%             3.81%
(annualized)^(1)



FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
                   September     June 30,     September
                   30,                        30,
                   2012          2012         2011
ASSET QUALITY
DETAIL
Nonperforming
Loans:
Loans on           $40,704       $33,457      $105,721
nonaccrual basis
Troubled debt
restructured       46,026        45,235       21,663
loans on
nonaccrual basis
Troubled debt
restructured       7,176         6,251        34,500
loans on accrual
basis
Total
Nonperforming      $93,906       $84,943      $161,884
Loans
Other real
estate owned       16,016        19,140       33,254
("OREO")
Repossessions      617           663          1,109
("Repo")
Total
Nonperforming      $110,539      $104,746     $196,247
Assets
Loans past due
in excess of 90    $2,998        $10,587      $12,566
days and still
accruing
Criticized loans   269,041       272,517      400,063
Nonperforming
assets as a
percentage
of total loans,
plus OREO and      2.61%         2.51%        4.90%
Repos
Allowance for      $64,114       $61,676      $72,117
credit losses
                   For the Three Months Ended              For the Nine Months
                                                           Ended
                   September     June 30,     September    September September
                   30,                        30,          30,       30,
                   2012          2012         2011         2012      2011
Net Charge-offs:
 Commercial,
financial,         $1,197        $1,717       $611         $4,590    $3,307
agricultural and
other
 Real estate      1,987         114          6,522        2,235     14,570
construction
 Commercial       27            278          1,268        382       6,679
real estate
 Residential      481           593          964          2,653     2,568
real estate
 Loans to         624           651          659          2,098     1,892
individuals
Net Charge-offs    $4,316        $3,353       $10,024      $11,958   $29,016
Net charge-offs
as a percentage
of average
loans
outstanding        0.41%         0.33%        1.00%        0.38%     0.95%
(annualized)
Provision for
credit losses as   156.49%       128.15%      69.58%       124.08%   103.06%
a percentage of
net charge-offs
Provision for      $6,754        $4,297       $6,975       $14,838   $29,904
credit losses
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."
                   September     June 30,     September
                   30,                        30,
                   2012          2012         2011
Tangible Equity:
 Total
shareholders'      $773,891      $772,490     $768,992
equity
 Less:
intangible         162,690       163,057      164,170
assets
Tangible Equity    611,201       609,433      604,822
 Less:            0             0            0
preferred stock
Tangible Common    $611,201      $609,433     $604,822
Equity
Tangible Assets:
 Total assets     $5,963,638    $5,946,816   $5,658,062
 Less:
intangible         162,690       163,057      164,170
assets
Tangible Assets    $5,800,948    $5,783,759   $5,493,892
^(3)Tangible
Common Equity as   10.54%        10.54%       11.01%
a percentage of
Tangible Assets
Shares
Outstanding at     103,890,029   104,728,846  104,906,994
End of Period
^(4)Tangible
Book Value Per     $5.88         $5.82        $5.77
Common Share
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.



SOURCE First Commonwealth Financial Corporation

Website: http://www.fcbanking.com
Contact: Media, Susie Barbour, Media Relations Supervisor, +1-724-463-5618, or
Investor Relations, Robert E. Rout, Executive Vice President and Chief
Financial Officer, +1-724-349-7220
 
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