First Commonwealth Announces Third Quarter 2021 Earnings; Declares Quarterly Dividend and Authorization of a $25 Million Share Repurchase Program
10/26/2021 - 05:00 PM
INDIANA, Pa., Oct. 26, 2021 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2021.
Financial Summary
(dollars in thousands, For the Three Months Ended For the Nine Months Ended except per share data) September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Reported Results Net income $34,092 $29,619 $19,186 $103,481 $47,764 Diluted earnings per share $ 0.36 $ 0.31 $ 0.20 $ 1.08 $ 0.49 Return on average assets 1.42 % 1.26 % 0.81 % 1.48 % 0.71 % Return on average equity 12.14 % 10.82 % 7.01 % 12.62 % 5.92 % Operating Results (non-GAAP) (1) Core net income $34,131 $29,777 $23,889 $103,764 $52,795 Core diluted earnings per share $ 0.36 $ 0.31 $ 0.24 $ 1.08 $ 0.54 Core pre-tax pre-provision net revenue $42,913 $42,943 $40,844 $130,903 $113,727 Provision expense $330 $5,413 $11,212 $1,353 $49,038 Net charge-offs $2,277 $3,927 $4,346 $9,474 $12,368 Reserve build/(release)(2) ($2,853 ) $275 $6,866 ($7,124 ) $36,670 Core return on average assets (ROAA) 1.43 % 1.26 % 1.01 % 1.48 % 0.79 % Core pre-tax pre-provision ROAA 1.79 % 1.82 % 1.73 % 1.87 % 1.70 % Return on average tangible common equity 17.28 % 15.54 % 10.29 % 18.08 % 8.80 % Core return on average tangible common equity 17.30 % 15.62 % 12.72 % 18.13 % 9.69 % Core efficiency ratio 55.27 % 53.21 % 54.31 % 53.90 % 56.37 % Net interest margin (FTE) 3.23 % 3.17 % 3.11 % 3.27 % 3.34 %
(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. A full reconciliation of non-GAAP financial measures can be found at the end of the financial statements which accompany this release. Reserve build/(release) represents the net change in the Company's allowance for credit losses (ACL) from the prior period.
Third Quarter 2021 Highlights
Net income of $34.1 million and diluted earnings per share totaled $0.36 , an increase of $4.5 million , or $0.05 from the previous quarter and an increase of $14.9 million , or $0.16 per share from the third quarter of 2020 Core pre-tax pre-provision net revenue (PPNR)(1) totaled $42.9 million , which was unchanged from the prior quarter but was an increase of $2.1 million from the third quarter of 2020 Operating leverage was positive during the first nine months of 2021 Core revenue(1) grew $16.6 million , or 6.1% , from the prior year Core noninterest expense(1) increased $2.2 million , or 1.4% , from the prior year Portfolio loans (excluding Paycheck Protection Program (PPP) loans) increased $132.3 million , or 8.2% annualized from the previous quarter, driven by strong consumer loan growth and improved commercial loan production Year-to-date loan growth (excluding PPP loans) was $298.1 million , or 6.3% annualized Average loans (excluding PPP loans) increased $196.7 million , or 12.4% annualized, from the previous quarter Total PPP loans decreased $140.3 million from the previous quarter resulting in a total PPP loan balance at September 30, 2021 of $152.1 million Net interest income (FTE) of $70.9 million increased $2.4 million from the previous quarter due primarily to a $196.7 million increase in average loans (excluding PPP loans) Noninterest income of $27.2 million (excluding net security gains) increased $1.2 million from the previous quarter and increased $0.5 million from the third quarter of 2020 Noninterest expense (excluding branch consolidation, early retirement and COVID-19 related expenses) of $55.0 million increased $3.7 million from the previous quarter and increased $2.6 million from the third quarter of 2020 Average deposits increased $41.8 million , or 2.1% annualized compared to the prior quarter, despite $41.4 million in intentional time deposit runoff End of period deposits grew $51.5 million , or 2.6% annualized, from the previous quarter Average noninterest-bearing deposits grew $42.4 million , or 6.5% annualized, compared to the prior quarter Tangible book value per share grew 7.8% annualized compared to the prior quarter and 7.6% year-over-year First Commonwealth Bank (the Bank) has been recognized for the third consecutive year by Forbes as one of the World’s Best Banks for 2021 The Bank was recently named the #1 Small Business Association (SBA) lender in the SBA’s designated Pittsburgh District for the fiscal year ending September 30, 2021 Profitability
Core return on average assets (ROAA) improved 17 basis points to 1.43% compared to the previous quarter and increased 42 basis points compared to the third quarter of 2020 Core pre-tax pre-provision ROA(1) for the quarter ended September 30, 2021 was 1.79% as compared to 1.82% in the prior quarter and 1.73% in the third quarter of 2020 The net interest margin of 3.23% increased six basis points compared to the prior quarter and increased 12 basis points as compared to third quarter of 2020 The core efficiency ratio(1) of 55.27% increased 206 basis points from the previous quarter Strong capital position
Bank-level Tier 1 Capital ratio of 11.9% , which represents $278.4 million in excess capital above the regulatory “well capitalized” requirement of 8.0% A total of 997,517 shares at a weighted average price of $13.35 were purchased during the third quarter of 2021 under the company’s previously authorized share repurchase program. The remaining repurchase capacity under the current program was $10.3 million as of September 30, 2021 On October 26, 2021, the Board of Directors authorized an additional $25 million share repurchase program Asset quality
The provision for credit losses was $0.3 million , a decrease of $5.1 million compared to the previous quarter and a decrease of $10.9 million from the third quarter of 2020 The allowance for credit losses as a percentage of end-of-period loans (excluding PPP loans) was 1.43% compared to 1.50% in the previous quarter Total criticized loans decreased $52.0 million from the previous quarter Total nonperforming assets decreased $14.6 million from the previous quarter Net charge-offs on loans totaled $2.3 million , a decrease of $1.7 million from the previous quarter Net charge-offs as a percentage of average loans outstanding (excluding PPP loans, annualized) was 0.14% in the third quarter of 2021 as compared to 0.25% in the previous quarter “Our third quarter results reflect good momentum in our fundamental performance. Excluding PPP forgiveness, loans grew at an 8.2% annualized rate and was broad-based across nearly all of our consumer and commercial categories,” stated T. Michael Price, President and Chief Executive Officer. “Our quarterly results were also supported by diversified revenue sources with strong contributions coming from mortgage banking, SBA lending, wealth management and insurance revenues. Our SBA team has produced a particularly strong year, climbing to the #1 ranking in the SBA’s Pittsburgh District.” Price continued, “I am genuinely excited about the progress we have made with our traditional lending engines as well as our investments and progress on the digital front. I believe these efforts, along with our new investment into equipment finance, have positioned First Commonwealth to continue to be a leading financial services company for the businesses and communities we serve.”
Earnings
Net income for the third quarter of 2021 was $34.1 million , or $0.36 per share, compared to $29.6 million , or $0.31 per share in the second quarter of 2021 and $19.2 million , or $0.20 per share for the third quarter of 2020.
Net Interest Income and Net Interest Margin
Net interest income (FTE) of $70.9 million increased $2.4 million from the previous quarter and increased $4.1 million from the prior year quarter. The increase from the previous quarter was primarily due to a $196.7 million increase in average loans (excluding PPP loans) and a $1.2 million increase in fees on PPP loans, partially offset by a $204.7 million decrease in PPP loans. Interest and fee income recognized on PPP loans totaled $5.7 million in the third quarter of 2021 as compared to $5.5 million in the prior quarter.
The net interest margin for the third quarter of 2021 was 3.23% , an increase of six basis points from the previous quarter and an increase of 12 basis points from the third quarter of 2020. The increase from the previous quarter was due primarily to the recognition of fees on PPP loans and a two basis point decrease in the cost of funds.
Total average deposits grew $41.8 million in the third quarter of 2021 as compared to the previous quarter. Average noninterest bearing deposits grew $42.4 million and offset a $41.4 million decrease in average time deposits.
Total end-of-period deposits grew $51.5 million from the previous quarter.
Asset Quality
The Company adopted CECL on December 31, 2020, effective January 1, 2020.
Provision expense in the third quarter of 2021 totaled $0.3 million as compared to $5.4 million in the previous quarter. The provision expense during the quarter reflected a $2.4 million decrease in qualitative reserves due to improved economic forecasts and a $2.0 million decrease in specific reserves, partially offset by a $1.4 million increase in reserves for strong end-of-period loan growth and a $0.9 million expense for unfunded commitment reserves.
At September 30, 2021, nonperforming loans totaled $38.1 million , a decrease of $14.7 million from the previous quarter and a decrease of $11.6 million from the third quarter of 2020. Nonperforming loans represented 0.58% of total loans (excluding PPP loans) as compared to 0.82% and 0.78% for the periods ended June 30, 2021 and September 30, 2020, respectively. Subsequent to September 30, 2021, a $6.9 million nonperforming loan (equal to 0.10% of total loans) was sold at par.
At September 30, 2021, criticized loans totaled $198.5 million , a decrease of $52.0 million from the previous quarter.
During the third quarter of 2021, net charge-offs were $2.3 million as compared to $3.9 million in the previous quarter and $4.3 million in the third quarter of 2020. Net charge-offs in the second quarter of 2021 were negatively impacted by a $3.6 million charge-off related to an individual commercial borrower.
Net charge-offs as a percentage of average loans (excluding PPP, annualized) were 0.14% , 0.25% and 0.27% for the periods ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
Noninterest Income and Noninterest Expense
Noninterest income (excluding net security gains) totaled $27.2 million for the third quarter of 2021, as compared to $26.1 million for the second quarter of 2021 and $26.7 million for the third quarter of 2020.
The $1.1 million increase from the previous quarter was primarily due to a $0.7 million increase in gain on sale of SBA loans, a $0.5 million increase in service charges on deposit accounts, a $0.4 million increase in gain on sale of mortgage loans and a $0.4 million increase in Trust revenue due primarily to annual tax preparation fees. These increases were partially offset by $0.9 million decrease in swap fee income and a $0.4 million decrease in card-related interchange income.
Noninterest expense (excluding branch consolidation, early retirement and COVID-19 related expenses) totaled $55.0 million for the third quarter of 2021, as compared to $51.3 million for the second quarter of 2021 and $52.4 million for the third quarter of 2020. The $3.7 million increase from the previous quarter was primarily the result of a $2.7 million increase in salaries and employee benefits driven by a $1.2 million increase in incentives due to improved financial performance, a $0.5 million increase in salaries due in part to the company’s previously announced entry into the equipment finance business, $0.5 million reduction in deferred FAS-91 expenses and a $0.4 million increase in hospitalization expense. The increase in the quarter was also impacted by a $0.4 million increase in FDIC insurance expense.
The core efficiency ratio was 55.27% during the third quarter of 2021 as compared to 53.21% in the previous quarter and 54.31% in the third quarter of 2020.
Full time equivalent staff was 1,409 at September 30, 2021, 1,392 at June 30, 2021, and 1,399 at September 30, 2020. The increase from the previous quarter was partially the result of new hires related to the company’s previously announced entry into the equipment finance business.
Dividends and Capital
First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.11 5 per share, which represents a 4.5% increase from the third quarter of 2020. The cash dividend is payable on November 19, 2021 to shareholders of record as of November 5, 2021. This dividend represents a 3.2% projected annual yield utilizing the October 25, 2021 closing market price of $14.54 .
First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2021 were 15.0% , 12.4% , 9.6% and 11.5% , 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 third quarter of 2021 on Wednesday, October 27, 2021 at 2:00 PM (ET). The call can be accessed by dialing (toll free) 1-888-660-6510 conference ID # 7758595 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 1-800-770-2030 and entering the conference ID # 7758595. A link to the webcast replay will also be accessible on the company’s webpage for 30 days.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation (NYSE: FCF), headquartered in Indiana, Pennsylvania, is a financial services Company with 119 community banking offices in 26 counties throughout western and central Pennsylvania and throughout Ohio, as well as business banking operations in Pittsburgh, Pennsylvania, and Canton, Cleveland, Columbus and Cincinnati, Ohio. The Company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson, and Lewis Center, Ohio. First Commonwealth provides a full range of commercial banking, consumer banking, mortgage, equipment finance, 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
Certain statements contained in this release that are not historical facts may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the Securities and Exchange Commission, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute “forward-looking statements” as well. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate” or words of similar meaning. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including uncertainties regarding the impact of the COVID-19 pandemic, and could be affected by many factors, including, but not limited to: (1) the effects of the COVID-19 pandemic on First Commonwealth and its customers; (2) volatility and disruption in national and international financial markets; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (4) inflation, interest rate, commodity price, securities market and monetary fluctuations; (5) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which First Commonwealth or its customers must comply; (6) the soundness of other financial institutions; (7) political instability; (8) impairment of First Commonwealth’s goodwill or other intangible assets; (9) acts of God or of war or terrorism; (10) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (11) changes in consumer spending, borrowings and savings habits; (12) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) First Commonwealth’s ability to attract and retain qualified employees; (16) changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (17) the ability to increase market share and control expenses; (18) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (19) the reliability of First Commonwealth’s vendors, internal control systems or information systems; (20) the costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals; and (21) other risks and uncertainties described in this report and in the other reports that we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. Further, statements about the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, clients, third parties and us.
In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements in this release. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Media Relations: JLongwill@fcbanking.com
Investor Relations:
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 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 SUMMARY RESULTS OF OPERATIONS Net interest income $ 70,645 $ 68,199 $ 66,369 $ 208,287 $ 200,779 Provision for credit losses 330 5,413 11,212 1,353 49,038 Noninterest income 27,245 26,086 26,769 80,686 67,854 Noninterest expense 55,027 51,542 58,247 158,429 161,274 Net income 34,092 29,619 19,186 103,481 47,764 Core net income (5) 34,131 29,777 23,889 103,764 52,795 Earnings per common share (diluted) $ 0.36 $ 0.31 $ 0.20 $ 1.08 $ 0.49 Core earnings per common share (diluted) (6) $ 0.36 $ 0.31 $ 0.24 $ 1.08 $ 0.54 KEY FINANCIAL RATIOS Return on average assets 1.42 % 1.26 % 0.81 % 1.48 % 0.71 % Core return on average assets (7) 1.43 % 1.26 % 1.01 % 1.48 % 0.79 % Return on average assets, pre-provision, pre-tax 1.79 % 1.81 % 1.48 % 1.86 % 1.61 % Core return on average assets, pre-provision, pre-tax 1.79 % 1.82 % 1.73 % 1.87 % 1.70 % Return on average shareholders' equity 12.14 % 10.82 % 7.01 % 12.62 % 5.92 % Return on average tangible common equity (8) 17.28 % 15.54 % 10.29 % 18.08 % 8.80 % Core return on average tangible common equity (9) 17.30 % 15.62 % 12.72 % 18.13 % 9.69 % Core efficiency ratio (2)(10) 55.27 % 53.21 % 54.31 % 53.90 % 56.37 % Net interest margin (FTE) (1) 3.23 % 3.17 % 3.11 % 3.27 % 3.34 % Book value per common share $ 11.69 $ 11.50 $ 11.07 Tangible book value per common share (11) 8.38 8.22 7.79 Market value per common share 13.63 14.07 7.74 Cash dividends declared per common share 0.115 0.115 0.110 0.340 0.330 ASSET QUALITY RATIOS Nonperforming loans as a percent of end-of-period loans (3) 0.56 % 0.78 % 0.71 % Nonperforming loans as a percent of end-of-period loans, excluding PPP loans (3) 0.58 % 0.82 % 0.78 % Nonperforming assets as a percent of total assets (3) 0.41 % 0.57 % 0.55 % Nonperforming assets as a percent of total assets, excluding PPP loans (3) 0.42 % 0.59 % 0.59 % Net charge-offs as a percent of average loans (annualized) (4) 0.13 % 0.23 % 0.25 % Net charge-offs as a percent of average loans, excluding PPP loans (annualized) (4) 0.14 % 0.25 % 0.27 % Allowance for credit losses as a percent of nonperforming loans (4) 247.30 % 183.81 % 177.58 % Allowance for credit losses as a percent of end-of-period loans (4) 1.40 % 1.44 % 1.27 % Allowance for credit losses as a percent of end-of-period loans, excluding PPP loans (4) 1.43 % 1.50 % 1.38 % CAPITAL RATIOS Shareholders' equity as a percent of total assets 11.7 % 11.8 % 11.5 % Tangible common equity as a percent of tangible assets (12) 8.7 % 8.7 % 8.4 % Tangible common equity as a percent of tangible assets, excluding PPP loans (12) 8.9 % 9.0 % 9.0 % Leverage Ratio 9.6 % 9.6 % 8.9 % Risk Based Capital - Tier I 12.4 % 12.6 % 11.8 % Risk Based Capital - Total 15.0 % 15.2 % 14.4 % Common Equity - Tier I 11.5 % 11.6 % 10.7 %
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 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 INCOME STATEMENT Interest income $ 74,196 $ 72,051 $ 73,593 $ 220,308 $ 227,903 Interest expense 3,551 3,852 7,224 12,021 27,124 Net Interest Income 70,645 68,199 66,369 208,287 200,779 Provision for credit losses 330 5,413 11,212 1,353 49,038 Net Interest Income after Provision for Credit Losses 70,315 62,786 55,157 206,934 151,741 Net securities gains — 10 20 16 47 Trust income 3,118 2,706 2,554 8,340 6,774 Service charges on deposit accounts 4,770 4,310 4,035 13,127 12,066 Insurance and retail brokerage commissions 2,218 1,978 2,156 6,368 5,982 Income from bank owned life insurance 1,486 1,509 1,547 4,946 4,963 Gain on sale of mortgage loans 3,485 3,084 6,437 11,615 13,226 Gain on sale of other loans and assets 2,480 2,111 1,871 6,281 3,151 Card-related interchange income 7,052 7,406 6,441 20,885 17,589 Derivative mark-to-market 218 (277 ) (160 ) 1,371 (2,122 ) Swap fee income 317 1,252 41 1,715 864 Other income 2,101 1,997 1,827 6,022 5,314 Total Noninterest Income 27,245 26,086 26,769 80,686 67,854 Salaries and employee benefits 31,066 28,347 28,823 88,084 87,573 Net occupancy 3,960 3,881 4,609 12,614 13,979 Furniture and equipment 4,052 3,866 4,033 11,866 11,468 Data processing 3,196 3,192 2,741 9,440 7,804 Pennsylvania shares tax 1,257 1,258 1,254 3,347 3,246 Advertising and promotion 1,150 1,355 1,115 3,829 3,800 Intangible amortization 868 863 939 2,597 2,792 Other professional fees and services 1,308 1,091 937 3,150 2,755 FDIC insurance 830 438 876 1,964 1,637 Litigation and operational losses 589 556 329 1,624 1,038 Loss on sale or write-down of assets 171 43 63 223 416 COVID-19 related 50 232 125 357 567 Voluntary early retirement — — 3,304 — 3,304 Branch consolidation — (22 ) 2,544 18 2,544 Other operating expenses 6,530 6,442 6,555 19,316 18,351 Total Noninterest Expense 55,027 51,542 58,247 158,429 161,274 Income before Income Taxes 42,533 37,330 23,679 129,191 58,321 Income tax provision 8,441 7,711 4,493 25,710 10,557 Net Income $ 34,092 $ 29,619 $ 19,186 $ 103,481 $ 47,764 Shares Outstanding at End of Period 95,209,685 96,201,628 96,924,781 95,209,685 96,924,781 Average Shares Outstanding Assuming Dilution 95,892,304 96,282,425 98,160,143 96,130,602 98,224,506
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) September 30, June 30, September 30, 2021 2021 2020 BALANCE SHEET (Period End) Assets Cash and due from banks $ 94,579 $ 89,505 $ 97,060 Interest-bearing bank deposits 240,095 194,948 283,037 Securities available for sale, at fair value 1,137,675 1,102,057 921,202 Securities held to maturity, at amortized cost 548,057 554,225 268,638 Loans held for sale 19,925 19,530 37,998 Loans 6,732,580 6,740,535 6,949,716 Allowance for credit losses (94,185 ) (97,038 ) (88,307 ) Net loans 6,638,395 6,643,497 6,861,409 Goodwill and other intangibles 315,092 315,497 317,423 Other assets 484,036 483,143 502,599 Total Assets $ 9,477,854 $ 9,402,402 $ 9,289,366 Liabilities and Shareholders' Equity Noninterest-bearing demand deposits $ 2,656,229 $ 2,617,651 $ 2,301,821 Interest-bearing demand deposits 265,782 269,451 315,806 Savings deposits 4,609,393 4,566,815 4,425,119 Time deposits 405,081 431,102 661,161 Total interest-bearing deposits 5,280,256 5,267,368 5,402,086 Total deposits 7,936,485 7,885,019 7,703,907 Short-term borrowings 117,754 107,372 122,356 Long-term borrowings 182,519 182,767 233,490 Total borrowings 300,273 290,139 355,846 Other liabilities 128,241 120,825 156,782 Shareholders' equity 1,112,855 1,106,419 1,072,831 Total Liabilities and Shareholders' Equity $ 9,477,854 $ 9,402,402 $ 9,289,366
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) For the Three Months Ended For the Nine Months Ended September 30, Yield/ June 30, Yield/ September 30, Yield/ September 30, Yield/ September 30, Yield/ 2021 Rate 2021 Rate 2020 Rate 2021 Rate 2020 Rate NET INTEREST MARGIN Assets Loans, excluding PPP loans (FTE)(1)(3) $ 6,538,477 3.75 % $ 6,341,805 3.80 % $ 6,402,968 3.97 % $ 6,391,688 3.82 % $ 6,343,862 4.25 % PPP Loans 225,262 10.05 % 429,917 5.11 % 572,434 2.67 % 380,551 6.72 % 326,957 2.69 % Securities and interest-bearing bank deposits (FTE) (1) 1,937,385 1.43 % 1,886,184 1.43 % 1,553,252 1.59 % 1,786,050 1.46 % 1,407,609 1.98 % Total Interest-Earning Assets (FTE) (1) 8,701,124 3.39 % 8,657,906 3.35 % 8,528,654 3.45 % 8,558,289 3.45 % 8,078,428 3.79 % Noninterest-earning assets 801,377 793,777 861,311 804,619 846,887 Total Assets $ 9,502,501 $ 9,451,683 $ 9,389,965 $ 9,362,908 $ 8,925,315 Liabilities and Shareholders' Equity Interest-bearing demand and savings deposits $ 4,899,328 0.07 % $ 4,858,531 0.07 % $ 4,818,576 0.20 % $ 4,788,309 0.08 % $ 4,535,072 0.30 % Time deposits 417,274 0.36 % 458,638 0.47 % 696,227 1.28 % 467,653 0.54 % 766,106 1.49 % Short-term borrowings 118,112 0.06 % 114,966 0.09 % 124,670 0.11 % 117,478 0.09 % 146,270 0.61 % Long-term borrowings 182,623 4.92 % 206,495 4.65 % 233,588 4.37 % 207,225 4.64 % 233,818 4.40 % Total Interest-Bearing Liabilities 5,617,337 0.25 % 5,638,630 0.27 % 5,873,061 0.49 % 5,580,665 0.29 % 5,681,266 0.64 % Noninterest-bearing deposits 2,647,089 2,604,695 2,281,200 2,556,078 2,030,364 Other liabilities 124,286 110,264 147,603 129,883 136,655 Shareholders' equity 1,113,789 1,098,094 1,088,101 1,096,282 1,077,030 Total Noninterest-Bearing Funding Sources 3,885,164 3,813,053 3,516,904 3,782,243 3,244,049 Total Liabilities and Shareholders' Equity $ 9,502,501 $ 9,451,683 $ 9,389,965 $ 9,362,908 $ 8,925,315 Net Interest Margin (FTE) (annualized) (1) 3.23 % 3.17 % 3.11 % 3.27 % 3.34 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) September 30, June 30, September 30, 2021 2021 2020 Loan Portfolio Detail Commercial Loan Portfolio: Commercial, financial, agricultural and other $ 1,072,489 $ 1,081,822 $ 1,163,268 Paycheck Protection Program 152,102 292,355 573,468 Commercial real estate 2,231,890 2,205,758 2,215,311 Real estate construction 318,120 317,496 366,936 Total Commercial 3,774,601 3,897,431 4,318,983 Consumer Loan Portfolio: Closed-end mortgages 1,311,052 1,259,798 1,154,366 Home equity lines of credit 564,323 568,985 589,654 Real estate construction 105,896 97,320 86,053 Total Real Estate - Consumer 1,981,271 1,926,103 1,830,073 Auto loans 886,367 829,150 692,475 Direct installment 32,509 28,805 40,081 Personal lines of credit 52,667 53,720 62,155 Student loans 5,165 5,326 5,949 Total Other Consumer 976,708 917,001 800,660 Total Consumer Portfolio 2,957,979 2,843,104 2,630,733 Total Portfolio Loans 6,732,580 6,740,535 6,949,716 Loans held for sale 19,925 19,530 37,998 Total Loans $ 6,752,505 $ 6,760,065 $ 6,987,714 September 30, June 30, September 30, 2021 2021 2020 ASSET QUALITY DETAIL Nonperforming Loans: Loans on nonaccrual basis $ 14,466 $ 22,219 $ 38,139 Loans held for sale on a nonaccrual basis — — — Troubled debt restructured loans on nonaccrual basis 16,210 23,981 4,511 Troubled debt restructured loans on accrual basis 7,410 6,593 7,078 Total Nonperforming Loans $ 38,086 $ 52,793 $ 49,728 Other real estate owned ("OREO") 502 394 1,079 Repossessions ("Repos") 453 440 685 Total Nonperforming Assets $ 39,041 $ 53,627 $ 51,492 Loans past due in excess of 90 days and still accruing 1,135 903 1,249 Classified loans 58,780 55,957 80,190 Criticized loans 195,791 250,427 188,957 Nonperforming assets as a percentage of total loans, plus OREO and Repos (4) 0.58 % 0.80 % 0.74 % Allowance for credit losses $ 94,185 $ 97,038 $ 88,307
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Net Charge-offs (Recoveries): Commercial, financial, agricultural and other $ 1,960 $ 3,784 $ 3,338 $ 6,223 $ 4,977 Real estate construction — (135 ) — (135 ) (26 ) Commercial real estate 12 6 (110 ) 1,529 2,263 Residential real estate (87 ) (160 ) 117 (179 ) 621 Loans to individuals 392 432 1,001 2,036 4,533 Net Charge-offs $ 2,277 $ 3,927 $ 4,346 $ 9,474 $ 12,368 Net charge-offs as a percentage of average loans outstanding (annualized) (4) 0.13 % 0.23 % 0.25 % 0.19 % 0.25 % Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4) 0.14 % 0.25 % 0.27 % 0.20 % 0.26 % Provision for credit losses as a percentage of net charge-offs 14.49 % 137.84 % 257.98 % 14.28 % 396.49 % Provision for credit losses $ 330 $ 5,413 $ 11,212 $ 1,353 $ 49,038
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% .(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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Interest income $ 74,196 $ 72,051 $ 73,593 $ 220,308 $ 227,903 Adjustment to fully taxable equivalent basis (1) 235 290 373 834 1,129 Interest income adjusted to fully taxable equivalent basis (non-GAAP) 74,431 72,341 73,966 221,142 229,032 Interest expense 3,551 3,852 7,224 12,021 27,124 Net interest income, (FTE) (1) $ 70,880 $ 68,489 $ 66,742 $ 209,121 $ 201,908
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Net Income $ 34,092 $ 29,619 $ 19,186 $ 103,481 $ 47,764 Intangible amortization 868 863 939 2,597 2,792 Tax benefit of amortization of intangibles (182 ) (181 ) (197 ) (545 ) (586 ) Net Income, adjusted for tax affected amortization of intangibles $ 34,778 $ 30,301 $ 19,928 $ 105,533 $ 49,970 Average Tangible Equity: Total shareholders' equity $ 1,113,789 $ 1,098,094 $ 1,088,101 $ 1,096,282 $ 1,077,030 Less: intangible assets 315,303 315,776 317,702 315,835 318,483 Tangible Equity 798,486 782,318 770,399 780,447 758,547 Less: preferred stock — — — — — Tangible Common Equity $ 798,486 $ 782,318 $ 770,399 $ 780,447 $ 758,547 (8) Return on Average Tangible Common Equity 17.28 % 15.54 % 10.29 % 18.08 % 8.80 %
For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Core Net Income: Total Net Income $ 34,092 $ 29,619 $ 19,186 $ 103,481 $ 47,764 Net securities gains — (10 ) (20 ) (16 ) (47 ) Tax benefit of net securities gains — 2 4 3 10 COVID-19 related 50 232 125 357 567 Tax benefit of COVID 19 related (11 ) (49 ) (26 ) (75 ) (119 ) Early retirement related — — 3,304 — 3,304 Tax benefit of early retirement related expenses — — (694 ) — (694 ) Branch consolidation related — (22 ) 2,544 18 2,544 Tax benefit of bank consolidation related expenses — 5 (534 ) (4 ) (534 ) (5) Core net income $ 34,131 $ 29,777 $ 23,889 $ 103,764 $ 52,795 Average Shares Outstanding Assuming Dilution 95,892,304 96,282,425 98,160,143 96,130,602 98,224,506 (6) Core Earnings per common share (diluted) $ 0.36 $ 0.31 $ 0.24 $ 1.08 $ 0.54 Intangible amortization 868 863 939 2,597 2,792 Tax benefit of amortization of intangibles (182 ) (181 ) (197 ) (545 ) (586 ) Core Net Income, adjusted for tax affected amortization of intangibles $ 34,817 $ 30,459 $ 24,631 $ 105,816 $ 55,001 (9) Core Return on Average Tangible Common Equity 17.30 % 15.62 % 12.72 % 18.13 % 9.69 %
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Core Return on Average Assets: Total Net Income $ 34,092 $ 29,619 $ 19,186 $ 103,481 $ 47,764 Total Average Assets 9,502,501 9,451,683 9,389,965 9,362,908 8,925,315 Return on Average Assets 1.42 % 1.26 % 0.81 % 1.48 % 0.71 % Core Net Income (5) $ 34,131 $ 29,777 $ 23,889 $ 103,764 $ 52,795 Total Average Assets 9,502,501 9,451,683 9,389,965 9,362,908 8,925,315 (7) Core Return on Average Assets 1.43 % 1.26 % 1.01 % 1.48 % 0.79 %
For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Core Efficiency Ratio: Total Noninterest Expense $ 55,027 $ 51,542 $ 58,247 $ 158,429 $ 161,274 Adjustments to Noninterest Expense: Unfunded commitment reserve — — 471 — (1,181 ) Intangible amortization 868 863 939 2,597 2,792 COVID-19 related 50 232 125 357 567 Early retirement related — — 3,304 — 3,304 Branch consolidation related — (22 ) 2,544 18 2,544 Noninterest Expense - Core $ 54,109 $ 50,469 $ 50,864 $ 155,457 $ 153,248 Net interest income, (FTE) $ 70,880 $ 68,489 $ 66,742 $ 209,121 $ 201,908 Total noninterest income 27,245 26,086 26,769 80,686 67,854 Net securities gains — (10 ) (20 ) (16 ) (47 ) Total Revenue 98,125 94,565 93,491 289,791 269,715 Adjustments to Revenue: Derivative mark-to-market 218 (277 ) (160 ) 1,371 (2,122 ) Total Revenue - Core $ 97,907 $ 94,842 $ 93,651 $ 288,420 $ 271,837 (10) Core Efficiency Ratio 55.27 % 53.21 % 54.31 % 53.90 % 56.37 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES September 30, June 30, September 30, 2021 2021 2020 Tangible Equity: Total shareholders' equity $ 1,112,855 $ 1,106,419 $ 1,072,831 Less: intangible assets 315,092 315,497 317,423 Tangible Equity 797,763 790,922 755,408 Less: preferred stock — — — Tangible Common Equity $ 797,763 $ 790,922 $ 755,408 Tangible Assets: Total assets $ 9,477,854 $ 9,402,402 $ 9,289,366 Less: intangible assets 315,092 315,497 317,423 Tangible Assets $ 9,162,762 $ 9,086,905 $ 8,971,943 Less: PPP loans 152,102 292,355 573,468 Tangible Assets, excluding PPP loans $ 9,010,660 $ 8,794,550 $ 8,398,475 (12) Tangible Common Equity as a percentage of Tangible Assets 8.71 % 8.70 % 8.42 % (12) Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans 8.85 % 8.99 % 8.99 % Shares Outstanding at End of Period 95,209,685 96,201,628 96,924,781 (11) Tangible Book Value Per Common Share $ 8.38 $ 8.22 $ 7.79 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.
For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020 Pre-tax pre-provision income: Net interest income $70,645 $68,199 $66,369 $208,287 $200,779 Noninterest income 27,245 26,086 26,769 80,686 67,854 Noninterest expense 55,027 51,542 58,247 158,429 161,274 Pre-tax pre-provision income $ 42,863 $ 42,743 $ 34,891 $ 130,544 $ 107,359 Net securities gains $0 ($10 ) ($20 ) ($16 ) ($47 ) COVID-19 related 50 232 125 357 567 Voluntary early retirement — — 3,304 — 3,304 Branch consolidation 0 (22 ) 2,544 18 2,544 Core pre-tax pre-provision income $ 42,913 $ 42,943 $ 40,844 $ 130,903 $ 113,727 Net charge-offs $ 2,277 $ 3,927 $ 4,346 $ 9,474 $ 12,368
