First Commonwealth Announces 2009 Fourth Quarter and Full-Year Financial Results

Key Highlights Include Net Income and Continued Core Business Growth

Jan 28, 2010, 08:24 ET from First Commonwealth Financial Corporation

INDIANA, Pa., Jan. 28 /PRNewswire-FirstCall/ -- First Commonwealth Financial Corporation (NYSE: FCF), the holding company for First Commonwealth Bank, announced today financial results for the year and fourth quarter ended December 31, 2009.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20030416/FIRSTLOGO )

Fourth Quarter Results

First Commonwealth reported net income for the fourth quarter 2009 of $3.3 million, or $0.04 per diluted share, compared to net income of $8.9 million, or $0.11 per diluted share, in the fourth quarter of 2008. The year-over-year decline was primarily the result of a $10.4 million ($6.8 million after tax) increase in the provision for credit losses as well as an increase of $943 thousand ($613 thousand after tax) in other-than-temporary impairment charges. The higher provision was primarily related to a commercial and industrial (C&I) loan in Western Pennsylvania that migrated to nonaccrual status during the fourth quarter of 2009. The other-than-temporary impairment charges resulted from further credit deterioration of the company’s pooled trust preferred collateralized debt obligations. Sequentially, net income improved from the loss of $5.9 million reported in the third quarter 2009.

“Although our fourth quarter remained challenging, we’re pleased to report net interest income growth that was fueled by a rise in low-cost transaction and savings deposits. We’re focused on growing our core business and that’s helping to drive improved results,” said John J. Dolan, President and CEO.  “While our provision for credit losses remains high, our fourth quarter provision of $21.1 million was down from the previous quarter. Additionally, we continue to be disciplined in providing for credit loss provisions as economic conditions affecting the credit quality of our loan portfolio have not subsided. We believe these actions are prudent during this distressed economic period. At the same time, our capital ratios are strong, allowing us to work through this difficult environment.”

Developments during the fourth quarter included:

  • Low-cost (transaction and savings) deposits increased $98.7 million from September 30, 2009.
  • Nonperforming loans increased $14.7 million from September 30, 2009 to $148.6 million, or 3.20% of total loans as of December 31, 2009.
  • The provision for credit losses was $21.1 million ($13.7 million after tax) in the fourth quarter 2009.
  • The company recorded impairment losses of $4.8 million ($3.1 million after tax) in the 2009 fourth quarter relating to pooled trust preferred collateralized debt obligations.
  • FDIC insurance costs increased $1.9 million ($1.2 million after tax) from the fourth quarter of 2008.
  • Non-interest expense decreased $1.4 million from the quarter ended September 30, 2009.

Other developments:

  • Announced today that Robert E. Rout has agreed to join First Commonwealth as Executive Vice President/Chief Financial Officer. Bob brings with him 35 years of banking experience and served most recently as CFO of a local financial institution.

Average diluted shares in the fourth quarter 2009 were 5.6% greater than the comparable quarter in 2008 primarily due to the issuance of 11.5 million shares of common stock in connection with a capital raise completed on November 5, 2008.

First Commonwealth’s Total, Tier 1 and leverage capital ratios were 11.5%, 10.3% and 9.2%, respectively, at December 31, 2009. First Commonwealth Financial Corporation declared a dividend of $0.03 per share payable on February 12, 2010, to shareholders of record at the close of business January 29, 2010.

Net Interest Income and Margin

2009 fourth-quarter net interest income increased $784 thousand, or 1.5%, from the fourth quarter of 2008. The increase was a result of growth in earning assets, partially offset by a decline in the net interest margin.

The 2009 fourth-quarter net interest margin decreased nine basis points to 3.78%, compared with 3.87% in the corresponding prior-year period. The decrease in net interest margin can be attributed to declines in yields on total interest-earning assets exceeding the cost of interest-bearing liabilities. In the fourth quarter of 2008, the net interest margin enjoyed the benefit of abnormally high LIBOR rates which resulted in a higher net interest margin. The decrease in the cost of interest-bearing liabilities resulted from lower interest rates, combined with a shift in the mix of liabilities to low-cost transaction and savings deposits and short-term borrowings from time deposits and long-term debt.

Average interest-earning assets increased by $187.4 million, or 3.3%, in the fourth quarter of 2009 compared to the fourth quarter of 2008, driven by an increase in average loans of $352.1 million, or 8.2%, due primarily from the loan growth First Commonwealth experienced in the fourth quarter of 2008.  This year-over-year gain was funded by investment run-off and deposit growth. Average investment securities decreased $164.9 million and average deposits increased $263.1 million from fourth quarter 2008 to fourth quarter 2009.

The mix of deposits continued to improve during the fourth quarter of 2009.  Average time deposits decreased $223.7 million, or 12.0%, from the fourth quarter of 2008 to the fourth quarter of 2009.  This run-off was offset with increased levels of lower costing transaction and savings deposits. Average noninterest-bearing demand deposits increased $44.8 million, or 7.9%, and average interest-bearing demand deposits and savings deposits increased $441.9 million, or 23.6%, from the fourth quarter of 2008 to the fourth quarter of 2009.

Non-Interest Income

Non-interest income decreased $281 thousand, or 2.8%, in the 2009 fourth quarter compared to the same period last year, primarily due to higher credit related other-than-temporary impairment losses of $943 thousand.

Insurance and retail brokerage commissions rose $583 thousand, or 47.2%, as additional producers and an enhanced calling program yielded higher sales. Card-related interchange income increased $345 thousand due to growth in usage of debit cards and larger dollar transactions. These improvements were partially offset by a decline of $600 thousand in other operating income primarily as a result of the decrease in swap fee income.

“In 2010 we will better integrate First Commonwealth’s wealth management capabilities within the commercial and retail side of the Bank,” Mr. Dolan commented.

Non-Interest Expense

Non-interest expense decreased $1.4 million, or 3.2%, for the fourth quarter of 2009 from the fourth quarter of 2008 due to lower other operating expenses and salaries. Other operating expenses decreased $2.6 million primarily due to a $1.2 million low income housing partnership impairment charge recorded in the fourth quarter of 2008 which was recorded to write down the value of underlying real estate. The remaining $1.4 million decrease in other operating expenses was due to declines in various expense accounts as a result of First Commonwealth's cost containment efforts. Salaries decreased $932 thousand due to lower staff levels and incentive pay. The decrease in other operating expenses and salaries were primarily offset by the increases of $1.9 million in FDIC insurance, $450 thousand in hospitalization costs and $330 thousand in collection and repossession expenses.  

Credit Quality and Provision for Credit Losses

For the quarter ending December 31, 2009, nonperforming loans increased $14.7 million to $148.6 million from September 30, 2009. This was primarily due to a $46.3 million C&I loan in Pennsylvania that migrated to nonaccrual status during the fourth quarter. The borrower is an individual who has had a loan relationship with the Bank since 2004 and whose business is retail property management and development.

Net charge-offs were $29.9 million in the 2009 fourth quarter, compared to $3.4 million in the prior-year period.  Nearly 90 percent of the fourth quarter 2009 charge-offs were nonaccrual loans. Nonperforming loans as a percentage of total loans increased from 2.88% at September 30, 2009 to 3.20% at December 31, 2009.  

Loans past due in excess of 90 days and still accruing at December 31, 2009, increased $785 thousand to $15.2 million compared to September 30, 2009. The majority of these loans are consumer loans secured by residential real estate.

The 2009 fourth quarter provision for credit losses was $21.1 million, an increase of $10.4 million compared to the fourth quarter of 2008. The allowance for credit losses as a percentage of end-of-period loans decreased from 1.95% at September 30, 2009 to 1.76% at December 31, 2009 as net charge-offs of $29.9 million exceeded the provision for credit losses for the fourth quarter of 2009. The fourth quarter 2009 charge-offs were primarily nonperforming loans in which an allowance was established in prior quarters.

Income Tax

The provision for income taxes for the 2009 fourth quarter decreased $3.0 million from the year-ago period primarily due to the decrease in income before taxes, partly offset by a decline in nontaxable income and tax credits. First Commonwealth’s effective tax rate was 107.0% for the tax benefit in the 2009 fourth quarter, compared to 12.4% for the tax expense in the comparable 2008 quarter. The effective tax rate in the 2009 fourth quarter reflects permanent differences and tax credits. Non-taxable income and tax credits had a greater impact on the effective tax rate during the 2009 fourth quarter due to the lower pretax income, compared to the pretax income in the fourth quarter 2008.

Single Issue Trust Preferred Securities, Subordinated Debentures and Pooled Trust Preferred Collateralized Debt Obligations

First Commonwealth’s investment portfolio includes single issue trust preferred securities, subordinated debentures and pooled trust preferred collateralized debt obligations.

As of December 31, 2009, our single issue portfolio consists of 16 issues with a book value of $21.4 million and an estimated fair value of $17.6 million, while the book value and estimated fair value of the three subordinated debentures totaled $1.2 million. The single issues and subordinated debentures are issued primarily from money center and large regional banks.

The company’s pooled trust preferred collateralized debt obligations consist of 14 securities comprised of 376 banks and other financial institutions. Two pooled securities are senior tranches and the remainder are mezzanine tranches.  As of December 31, 2009, the book value of our pooled securities totaled $70.2 million with an estimated fair value of $30.2 million. In the fourth quarter of 2009, a $4.8 million other-than-temporary impairment charge was recorded on eleven trust preferred collateralized debt obligations that are expected to experience a principal shortfall. The amount of impairment charge recognized represents the expected credit loss on these securities.

Based on management’s valuation analysis as of December 31, 2009, all of the single issues and subordinated debentures and the remainder of the pooled trust preferred collateralized debt obligations are expected to return 100% of their principal and interest. However, additional bank failures or interest deferrals and defaults occurring before the filing of First Commonwealth’s 10-K may require additional other-than-temporary impairment charges for the fourth quarter of 2009.

2010 Growth Strategy

“In 2010, we intend to grow First Commonwealth and improve our financial performance by continuing to seize the opportunity from market disruptions within our footprint, primarily in the Pittsburgh market,” Mr. Dolan said. “We will continue to focus on transaction and savings deposit growth, with a focus on the small business segment and reduce short-term borrowing dependency. We will also continue to reduce the size of our individual credit exposure to be more in line with current policies.”

Year-to-Date Results

Net loss for the year ended December 31, 2009 was $19.5 million, or $0.23 per share compared to net income of $43.1 million, or $0.58 per diluted share in the same period last year. The decrease was due to the $77.5 million ($50.4 million after tax) increase in the provision for credit losses and a $22.3 million ($14.5 million after tax) increase in other-than-temporary impairment losses related primarily to our pooled trust preferred collateralized debt obligations.

Net Interest Income and Margin

Net interest income for the year ended December 31, 2009, increased $17.9 million, or 9.5%, from 2008 despite the negative impact of loans transferred to nonaccrual status. The increase was a result of both growth in earning assets and an increase in the net interest margin.

The net interest margin for 2009 increased 14 basis points to 3.71% compared with 3.57% in 2008. The increase in net interest margin is attributable to increased loan volume and decreases 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 is the result of lower interest rates, combined with a shift in the mix of liabilities to low-cost transaction and savings deposits and short-term borrowings from time deposits and long-term debt.

In 2009, average time deposits declined $263.5 million, or 13.2%, offset with increases in lower-costing transaction and savings accounts. Average non-interest-bearing demand deposits increased $45.8 million, or 8.4%, and average interest-bearing demand deposits and savings deposits increased $350.6 million, or 19.8%. The net interest margin for the year ended December 31, 2009 was negatively impacted $2.5 million, or four basis points (0.04%) due to reversal of previously recorded income on loans transferred to nonaccrual status during 2009 compared to $667 thousand, or one basis point (0.01%) in 2008.

Average interest-earning assets in 2009 were $252.7 million, or 4.5%, higher in 2009 versus 2008, primarily from an increase in average loans of $472.7 million, or 11.6%. The increase in loans was funded by investment run-off, and deposit and short-term borrowings growth. Average investment securities declined $220.2 million while average deposits increased $132.9 million and average short-term borrowings increased by $261.9 million.

Non-Interest Income

Non-interest income in 2009 decreased $22.6 million from 2008. The decline was primarily due to increased credit-related other-than-temporary impairment losses of $23.8 million on pooled trust preferred collateralized debt obligations in addition to the $1.2 million decline in net securities gains. These were partially offset by the decrease of $1.5 million in other-than-temporary impairment losses on bank equity securities in 2009 compared to 2008.

Insurance and retail brokerage commissions increased $2.0 million as a result of higher sales due to additional producers and an enhanced calling program. Other operating income increased $1.0 million due to a $2.1 million gain on a favorable legal settlement. Card related interchange income increased by $950 thousand primarily due to growth in debit card use and larger dollar transactions. These increases were partially offset by decreases in service charges on deposit accounts of $1.1 million, income from bank owned life insurance of $1.1 million and trust income of $834 thousand. The decline in service charges on deposit accounts was due to lower overdraft activity. Income from bank owned life insurance decreased due to lower crediting rates and trust income decreased as a result of lower market values of assets under management.

During the first quarter of 2009, First Commonwealth early adopted FASB Accounting Standards Codification 320-10-65, Transition Related to FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-than-Temporary Impairments,  which requires that 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 year ended December 31, 2009, increased $12.5 million, or 7.9%, from the corresponding period in 2008 primarily due to higher FDIC insurance costs, salaries and employee benefits and collection and repossession expense.

Provision for Credit Losses

The provision for credit loss for the year ended December 31, 2009, increased $77.5 million from the comparable period in 2008 due primarily to the deterioration in current economic conditions surrounding industries closely linked to the residential housing, hospitality, and recreation markets outside of Pennsylvania, as well as deterioration in commercial loans in and outside of our local market.  For the year ended December 31, 2009, the provision of $100.6 million exceeded the net charge-offs of $71.7 million. Please refer to the Credit Quality and Provision for Credit Losses section above for further detail.

Income Tax

The 2009 provision for income taxes decreased $32.2 million from 2008 due to the $94.7 million decline in income before taxes. The effective tax rate was 56.7% for the tax benefit in the year ended December 31, 2009, compared to 13.3% for the tax expense in 2008. Nontaxable income and tax credits had a greater impact on the effective tax rate for the year ended December 31, 2009, due to the 2009 pretax loss compared to pretax income for the year ended December 31, 2008.

About First Commonwealth Financial Corporation

First Commonwealth Financial Corporation is a $6.4 billion financial 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; and expected future cash flows from investments in pooled 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 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; 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

For the Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,

2009

2009

2009

2009

2008

2009

2008

Interest Income

Interest and fees on loans

$58,877 

$57,085 

$57,793 

$58,275 

$64,580 

$232,030 

$251,546 

Interest and dividends on investments:

Taxable interest

11,300 

12,406 

13,177 

13,708 

14,434 

50,591 

60,556 

Interest exempt from Federal income taxes

2,351 

2,540 

2,660 

2,894 

3,025 

10,445 

13,143 

Dividends

25 

31 

89 

63 

389 

208 

2,339 

Interest on Federal funds sold

Interest on bank deposits

10 

Total interest income

72,557 

72,063 

73,720 

74,941 

82,429 

293,281 

327,596 

Interest Expense

Interest on deposits

15,338 

17,014 

17,874 

19,576 

22,045 

69,802 

101,517 

Interest on short-term borrowings

789 

947 

1,133 

1,347 

2,238 

4,216 

14,828 

Interest on subordinated debentures

1,398 

1,447 

1,559 

1,766 

1,908 

6,170 

7,567 

Interest on other long-term debt

1,592 

1,672 

1,666 

1,653 

3,582 

6,583 

15,086 

Total interest on long-term debt

2,990 

3,119 

3,225 

3,419 

5,490 

12,753 

22,653 

Total interest expense

19,117 

21,080 

22,232 

24,342 

29,773 

86,771 

138,998 

Net Interest Income

53,440 

50,983 

51,488 

50,599 

52,656 

206,510 

188,598 

Provision for credit losses

21,059 

23,020 

48,248 

8,242 

10,642 

100,569 

23,095 

Net Interest Income after provision for credit losses

32,381 

27,963 

3,240 

42,357 

42,014 

105,941 

165,503 

Non-Interest Income

Impairment losses on securities

(3,659)

(25,473)

(14,421)

(28,589)

(3,850)

(72,142)

(13,011)

Noncredit-related (gains) losses on securities not expected to

be sold (recognized in other comprehensive income) (a)

(1,134)

13,570 

5,660 

18,723 

36,819 

Net impairment losses

(4,793)

(11,903)

(8,761)

(9,866)

(3,850)

(35,323)

(13,011)

Net securities gains

149 

44 

56 

24 

15 

273 

1,517 

Trust income

1,201 

1,366 

1,151 

1,087 

1,125 

4,805 

5,639 

Service charges on deposit accounts

4,642 

4,555 

4,406 

3,837 

4,555 

17,440 

18,558 

Insurance and retail brokerage commissions

1,819 

2,068 

1,756 

1,616 

1,236 

7,259 

5,297 

Income from bank owned life insurance

1,192 

1,078 

1,034 

1,138 

1,155 

4,442 

5,523 

Card related interchange income

2,301 

2,224 

2,138 

1,896 

1,956 

8,559 

7,609 

Other operating income

3,220 

1,569 

4,935 

3,008 

3,820 

12,732 

11,699 

Total non-interest income

9,731 

1,001 

6,715 

2,740 

10,012 

20,187 

42,831 

Non-Interest Expense

Salaries and employee benefits

21,073 

21,405 

21,081 

22,500 

21,658 

86,059 

83,507 

Net occupancy expense

3,262 

3,263 

3,528 

4,000 

3,807 

14,053 

15,055 

Furniture and equipment expense

3,012 

3,121 

2,977 

2,975 

2,845 

12,085 

11,976 

Data processing expense

1,254 

1,136 

1,165 

1,132 

1,161 

4,687 

4,283 

Pennsylvania shares tax expense

1,361 

1,310 

1,312 

1,331 

1,357 

5,314 

5,309 

Intangible amortization

655 

684 

743 

743 

743 

2,825 

3,208 

Collection and repossession expense

915 

1,444 

1,750 

901 

585 

5,010 

2,546 

FDIC insurance

2,041 

2,046 

4,863 

1,521 

182 

10,471 

608 

Other operating expenses

6,950 

7,536 

7,916 

8,245 

9,539 

30,647 

32,123 

Total non-interest expense

40,523 

41,945 

45,335 

43,348 

41,877 

171,151 

158,615 

(Loss) Income before income taxes

1,589 

(12,981)

(35,380)

1,749 

10,149 

(45,023)

49,719 

Income (benefit) tax provision

(1,700)

(7,120)

(16,761)

62 

1,260 

(25,519)

6,632 

Net (Loss) Income

$3,289 

($5,861)

($18,619)

$1,687 

$8,889 

($19,504)

$43,087 

Average Shares Outstanding

84,681,199 

84,594,952 

84,559,889 

84,521,266 

80,076,383 

84,589,780 

74,477,795 

Average Shares Outstanding Assuming Dilution

84,681,199 

84,597,649 

84,597,997 

84,582,545 

80,179,260 

84,615,071 

74,583,236 

Per Share Data:

Basic (Loss) Earnings Per Share

$0.04 

($0.07)

($0.22)

$0.02 

$0.11 

($0.23)

$0.58 

Diluted (Loss) Earnings Per Share

$0.04 

($0.07)

($0.22)

$0.02 

$0.11 

($0.23)

$0.58 

Cash Dividends Declared per Common Share

$0.03 

$0.03 

$0.00 

$0.12 

$0.17 

$0.18 

$0.68 

(a) In accordance with the early adoption of Financial Accounting Standards Board Accounting Standards Codification 320-10-65, Transition Related to FSP FAS 115-2 and FAS 124-2, Recognition

     and Presentation of Other-than-Temporary Impairments, as of January 1, 2009, prior period net impairment losses are not restated; but rather reflect both credit and non-credit related impairment.

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL DATA

(dollars in thousands, except share data)

December 31,

September 30,

June 30,

March 31,

December 31,

2009

2009

2009

2009

2008

Assets

Cash and due from banks

$89,232 

$79,694 

$84,346 

$93,259 

$88,277 

Interest-bearing bank deposits

327 

332 

961 

392 

289 

Securities available for sale, at fair value

1,134,282 

1,231,015 

1,264,685 

1,271,925 

1,349,920 

Securities held to maturity, at amortized cost,

(Fair value $37,586 in 2009 and $50,558 in 2008)

36,758 

41,397 

44,398 

46,433 

50,840 

Other Investments

51,431 

51,431 

51,431 

51,431 

51,431 

Loans:

Portfolio loans, net of unearned income

4,636,501 

4,649,034 

4,536,771 

4,457,358 

4,418,377 

Allowance for credit losses

(81,639)

(90,466)

(83,056)

(41,549)

(52,759)

Net loans

4,554,862 

4,558,568 

4,453,715 

4,415,809 

4,365,618 

Premises and equipment, net

70,742 

72,074 

72,379 

73,376 

72,636 

Other real estate owned

24,287 

24,138 

25,565 

25,936 

3,262 

Goodwill

159,956 

159,956 

159,956 

159,956 

159,956 

Amortizing intangibles, net

7,407 

8,063 

8,747 

9,490 

10,233 

Other assets

317,292 

284,771 

282,814 

274,567 

273,418 

Total assets

$6,446,576 

$6,511,439 

$6,448,997 

$6,422,574 

$6,425,880 

Liabilities

Deposits (all domestic):

Noninterest-bearing

$641,231 

$599,842 

$592,219 

$573,573 

$566,845 

Interest-bearing demand deposits

107,612 

93,062 

99,281 

90,217 

97,011 

Savings deposits

2,175,953 

2,133,203 

2,045,970 

1,850,809 

1,773,843 

Time deposits

1,610,989 

1,670,930 

1,748,420 

1,803,829 

1,842,644 

Total interest-bearing

3,894,554 

3,897,195 

3,893,671 

3,744,855 

3,713,498 

Total deposits

4,535,785 

4,497,037 

4,485,890 

4,318,428 

4,280,343 

Short-term borrowings

958,932 

1,043,447 

998,259 

1,111,220 

1,139,737 

Other liabilities

38,324 

42,276 

44,866 

56,255 

63,778 

Subordinated debentures

105,750 

105,750 

105,750 

105,750 

105,750 

Other long-term debt

168,697 

179,784 

180,922 

183,421 

183,493 

Total long-term debt

274,447 

285,534 

286,672 

289,171 

289,243 

Total liabilities

5,807,488 

5,868,294 

5,815,687 

5,775,074 

5,773,101 

Shareholders' Equity

Preferred stock, $1 par value per share, 3,000,000 shares authorized,

none issued

Common stock, $1 par value per share, 200,000,000 shares

authorized;

86,600,431 shares issued and 85,151,875 shares outstanding

at December 31, 2009;

86,600,431 shares issued and 85,050,744 shares outstanding

at December 31, 2008

86,600 

86,600 

86,600 

86,600 

86,600 

Additional paid-in capital

301,523 

302,418 

302,602 

302,862 

303,008 

Retained earnings

279,448 

278,695 

287,092 

305,712 

309,947 

Accumulated other comprehensive loss, net

(6,329)

(762)

(18,618)

(22,763)

(21,269)

Treasury stock (1,448,556 and 1,549,687 shares at

December 31, 2009 and December 31, 2008, respectively,

at cost)

(16,554)

(17,706)

(17,766)

(17,811)

(17,907)

Unearned ESOP shares

(5,600)

(6,100)

(6,600)

(7,100)

(7,600)

Total shareholders' equity

639,088 

643,145 

633,310 

647,500 

652,779 

Total liabilities and shareholders' equity

$6,446,576 

$6,511,439 

$6,448,997 

$6,422,574 

$6,425,880 

Book value per share

$7.51 

$7.56 

$7.45 

$7.61 

$7.68 

Market value per share

$4.65 

$5.68 

$6.34 

$8.87 

$12.38 

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL DATA

Loans by Categories

(dollars in thousands)

December 31,

September 30,

June 30,

March 31,

December 31,

2009

2009

2009

2009

2008

Commercial, financial, agricultural and other

$1,208,339

$1,224,336

$1,193,646

$1,223,246

$1,236,622

Real estate - construction

387,227

374,423

502,341

474,826

489,150

Real estate - residential

1,208,741

1,221,901

1,218,941

1,194,806

1,206,366

Real estate - commercial

1,274,858

1,278,273

1,094,314

1,063,194

990,439

Loans to individuals

557,336

550,101

527,529

501,286

495,800

    Total loans and leases, net of unearned income

$4,636,501

$4,649,034

$4,536,771

$4,457,358

$4,418,377

Certain reclassifications have been made in the Loans by Categories for prior quarters to conform to the classification presented for the fourth quarter 2009.

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL DATA

Quarter To Date Average Balance Sheets and Net Interest Analysis at December 31,

(dollars in thousands)

2009

2008

Average Balance

Income/Expense

Yield or Rate (a)

Average Balance

Income/Expense

Yield or Rate (a)

Assets

Interest-earning assets:

Interest-bearing deposits with banks

$676   

$4   

2.04%

$538   

$1   

1.42%

Tax-free investment securities

216,109   

2,351   

6.64%

262,211   

3,025   

7.06%

Taxable investment securities

1,050,952   

11,325   

4.28%

1,169,700   

14,823   

5.04%

Federal funds sold

0   

0   

0.00%

0   

0   

0.00%

Loans, net of unearned income (b)(c)

4,654,144   

58,877   

5.16%

4,302,009   

64,580   

6.11%

Total interest-earning assets

5,921,881   

72,557   

5.06%

5,734,458   

82,429   

5.94%

Noninterest-earning assets:

Cash

83,886   

79,659   

Allowance for credit losses

(90,436)  

(45,653)  

Other assets

560,819   

524,130   

Total noninterest-earning assets

554,269   

558,136   

Total Assets

$6,476,150   

$6,292,594   

Liabilities and Shareholders' Equity

Interest-bearing liabilities:

Interest-bearing demand deposits (d)

$605,642   

$310   

0.20%

$605,986   

$1,089   

0.71%

Savings deposits (d)

1,709,407   

4,231   

0.98%

1,267,157   

5,015   

1.57%

Time deposits

1,644,011   

10,797   

2.61%

1,867,689   

15,941   

3.40%

Short-term borrowings

931,170   

789   

0.34%

949,017   

2,238   

0.94%

Long-term debt

277,528   

2,990   

4.27%

386,245   

5,490   

5.65%

Total interest-bearing liabilities

5,167,758   

19,117   

1.47%

5,076,094   

29,773   

2.33%

Noninterest-bearing liabilities and capital:

Noninterest-bearing demand deposits (d)

613,112   

568,289   

Other liabilities

40,661   

37,720   

Shareholders' equity

654,619   

610,491   

Total noninterest-bearing funding sources

1,308,392   

1,216,500   

Total Liabilities and Shareholders' Equity

$6,476,150   

$6,292,594   

Net Interest Income and Net Yield on Interest-Earning Assets

$53,440   

3.78%

$52,656   

3.87%

(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

Year To Date Average Balance Sheets and Net Interest Analysis at December 31,

(dollars in thousands)

2009

2008

Average Balance

Income/Expense

Yield or Rate (a)

Average Balance

Income/Expense

Yield or Rate (a)

Assets

Interest-earning assets:

Interest-bearing deposits with banks

$678   

$7   

0.96%

$447   

$10   

2.34%

Tax-free investment securities

235,256   

10,445   

6.83%

290,595   

13,143   

6.96%

Taxable investment securities

1,102,598   

50,799   

4.61%

1,267,446   

62,895   

4.96%

Federal funds sold

0   

0   

0.00%

94   

2   

2.49%

Loans, net of unearned income (b)(c)

4,557,227   

232,030   

5.24%

4,084,506   

251,546   

6.31%

Total interest-earning assets

5,895,759   

293,281   

5.18%

5,643,088   

327,596   

6.04%

Noninterest-earning assets:

Cash

77,983   

77,208   

Allowance for credit losses

(67,535)  

(43,669)  

Other assets

551,805   

505,790   

Total noninterest-earning assets

562,253   

539,329   

Total Assets

$6,458,012   

$6,182,417   

Liabilities and Shareholders' Equity

Interest-bearing liabilities:

Interest-bearing demand deposits (d)

$601,594   

$1,677   

0.28%

$603,256   

$5,302   

0.88%

Savings deposits (d)

1,515,636   

16,946   

1.12%

1,163,383   

18,860   

1.62%

Time deposits

1,735,533   

51,179   

2.95%

1,999,016   

77,355   

3.87%

Short-term borrowings

1,031,664   

4,216   

0.41%

769,770   

14,828   

1.93%

Long-term debt

285,525   

12,753   

4.47%

487,533   

22,653   

4.65%

Total interest-bearing liabilities

5,169,952   

86,771   

1.68%

5,022,958   

138,998   

2.77%

Noninterest-bearing liabilities and capital:

Noninterest-bearing demand deposits (d)

590,554   

544,743   

Other liabilities

41,487   

36,582   

Shareholders' equity

656,019   

578,134   

Total noninterest-bearing funding sources

1,288,060   

1,159,459   

Total Liabilities and Shareholders' Equity

$6,458,012   

$6,182,417   

Net Interest Income and Net Yield on Interest-Earning Assets

$206,510   

3.71%

$188,598   

3.57%

(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)

December 31,

September 30,

June 30,

March 31,

December 31,

2009

2009

2009

2009

2008

Nonperforming Loans:

Loans on nonaccrual basis

$147,937

$133,200

$81,285

$29,049

$55,922

Troubled debt restructured loans

619

627

637

128

132

Total nonperforming loans

$148,556

$133,827

$81,922

$29,177

$56,054

Loans past due in excess of 90 days and still accruing

$15,154

$14,369

$14,978

$17,532

$16,189

Loans outstanding at end of period

$4,636,501

$4,649,034

$4,536,771

$4,457,358

$4,418,377

Average loans outstanding

$4,557,227

$4,524,567

$4,486,216

$4,460,337

$4,084,506

Allowance for credit losses

$81,639

$90,466

$83,056

$41,549

$52,759

Nonperforming loans as a percentage of total loans

3.20%

2.88%

1.81%

0.65%

1.27%

Provision for credit losses (Year To Date)

$100,569

$79,510

$56,490

$8,242

$23,095

Net credit losses (Year To Date)

$71,689

$41,803

$26,193

$19,451

$12,732

Net credit losses as a percentage of average loans

outstanding (annualized)

1.57%

1.24%

1.18%

1.77%

0.31%

Allowance for credit losses as a percentage of average loans

outstanding

1.79%

2.00%

1.85%

0.93%

1.29%

Allowance for credit losses as a percentage of end-of-period

loans outstanding  

1.76%

1.95%

1.83%

0.93%

1.19%

Allowance for credit losses as a percentage of nonperforming

loans

54.96%

67.60%

101.38%

142.40%

94.12%

Other real estate owned

$24,287

$24,138

$25,565

$25,936

$3,262

Nonperforming Securities:

Nonaccrual securities at market value

$3,454

$3,503

$530

$0

$0

Profitability Ratios

(dollars in thousands)

For the Quarter Ended

For the Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,

2009

2009

2009

2009

2008

2009

2008

Return on average assets

0.20%

-0.36%

-1.16%

0.11%

0.56%

-0.30%

0.70%

Return on average equity

1.99%

-3.58%

-11.34%

1.03%

5.79%

-2.97%

7.45%

Net interest margin (a)

3.78%

3.62%

3.73%

3.72%

3.87%

3.71%

3.57%

Efficiency ratio (b)

57.12%

62.66%

64.71%

65.29%

60.10%

62.39%

61.59%

Fully tax equivalent adjustment

$2,975

$3,052

$3,091

$3,185

$3,166

$12,303

$13,094

(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
    
    
                                                 Capital Ratios
    
    
                           As of                                   Excess
                           December      Regulatory    Well        Over Well
                           31, 2009      Minimum       Capitalized Capitalized
                           --------      -------       ----------- -----------
                           Capital       Capital       Capital         Capital
                           Amount Ratio  Amount Ratio  Amount Ratio     Amount
                           ------ -----  ------ -----  ------ -----     ------
    Total Capital
     to Risk
     Weighted Assets
       First Commonwealth
        Financial
        Corporation       $650,009 11.5% $450,426 8.0%    N/A    N/A     N/A
       First Commonwealth
        Bank              $600,409 10.8% $445,347 8.0%  $556,683 10.0% $43,726
    
    Tier I Capital to
     Risk Weighted Assets
       First Commonwealth
        Financial
        Corporation       $579,630 10.3% $225,213 4.0%    N/A    N/A     N/A
       First Commonwealth
        Bank              $530,824  9.5% $222,673 4.0%  $334,010 6.0% $196,814
    
    Tier I Capital to
     Average Assets
       First Commonwealth
        Financial
        Corporation       $579,630  9.2% $252,351 4.0%    N/A    N/A     N/A
       First Commonwealth
       Bank               $530,824  8.5% $249,799 4.0%  $312,249 5.0% $218,575
    
    

SOURCE First Commonwealth Financial Corporation