First Commonwealth Announces Third Quarter 2010 Financial Results

Oct 28, 2010, 08:00 ET from First Commonwealth Financial Corporation

INDIANA, Pa., Oct. 28 /PRNewswire-FirstCall/ -- First Commonwealth Financial Corporation (NYSE: FCF) today reported net income of $10.7 million, or $0.11 diluted earnings per share, for the third quarter ended September 30, 2010 compared to a net loss of $5.9 million, or $0.07 per share, in the third quarter of 2009. For the nine months ended September 30, 2010, net income was $11.0 million, or $0.12 diluted earnings per share, compared to a net loss of $22.8 million or $0.27 per share in the first nine months of 2009.  The increase in net income for both periods was primarily the result of a lower provision for credit losses, a decrease in net securities impairment losses on investments in pooled trust preferred collateralized debt obligations, an increase in noninterest income and a decrease in noninterest expense.

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John J. Dolan, President and Chief Executive Officer, stated, "We are pleased to report favorable earnings results for the third quarter.  While macro-economic challenges persist, the ongoing resolution of our credit issues continues to result in improved performance.  An improved risk profile, along with our strong capital base, positions us well when the economic recovery takes shape."

Credit Quality

The provision for credit losses was $4.5 million and $53.6 million for the third quarter and year to date periods ended September 30, 2010, respectively, as compared to $23.0 million and $79.5 million in the prior year periods. The primary component of the reduced provision expense for the quarter was the favorable resolution of a troubled $11.9 million participation loan secured by a condominium development in Missouri. This loan was placed in nonaccrual status during the first quarter of 2010 and a $2.1 million charge-off was recorded in the third quarter of 2010. The payoff of this loan released $8.8 million of the $10.9 million previously established specific reserve.  

For the quarter ended September 30, 2010, nonperforming loans were $124.2 million, a decrease of $8.9 million from June 30, 2010 primarily from the resolution of the previously mentioned Missouri condominium participation loan. Nonperforming loans as a percentage of total loans were 2.89%, 3.00% and 2.88% for the periods ended September 30, 2010, June 30, 2010 and September 30, 2009, respectively.

Other real estate owned ("OREO") acquired through foreclosure was $24.6 million at September 30, 2010; $18.1 million is related to a food manufacturing property that was previously under a sales agreement which expired.

During the third quarter of 2010, net charge-offs were $6.9 million compared to $15.6 million in the third quarter of 2009. The most significant loan charge-offs for the third quarter of 2010 were $2.1 million related to the aforementioned Missouri condominium participation loan and $0.7 million for a $5.0 million participation loan for  a completed recreational facility in Illinois that was placed in nonaccrual status during the second quarter of 2009. A $2.1 million charge-off was recorded in the first quarter of 2010 and the $2.2 million remaining balance on the recreational facility was transferred to OREO in the third quarter 2010.  For the nine months ended September 30, 2010 net charge-offs were $49.5 million, or 1.46% of average loans on an annualized basis, compared to $41.8 million, or 1.24% of average loans on an annualized basis, for the same period in 2009. The allowance for credit losses as a percentage of total loans outstanding was 1.99%, 1.99% and 1.95% for September 30, 2010, June 30, 2010 and September 30, 2009, respectively.

Net Interest Income and Net Margin

During the third quarter of 2010 net interest income, on a fully taxable equivalent basis, decreased $1.0 million, or 2%, compared to the third quarter of 2009. The decrease was a result of a $532.0 million decline in average interest-earning assets, partially offset by a 28 basis point increase in the net interest margin. Net interest margin was 3.90%, 3.88% and 3.62% for the three-month periods ended September 30, 2010, June 30, 2010 and September 30, 2009, respectively. The improved net interest margin is the result of a more favorable deposit mix, disciplined loan pricing and reduced balance sheet leveraging. For the nine months ended September 30, 2010 net interest income, on a taxable equivalent basis, increased $1.8 million, or 1%. The increase was due to a 20 basis point increase in the net interest margin, partially offset by a decline in average interest-earning assets. The net interest margin for the nine months ended September 30, 2010 and 2009, respectively, was 3.89% and 3.69%.

Mr. Dolan added, "An organization-wide focus on improving our mix of deposits has provided lower funding costs and improved profitability.  In addition to significant growth in lower-costing transaction and savings deposits, our employees have maintained a relentless focus on deepening customer relationships by delivering competitive and appropriate financial solutions to the local communities we serve. These efforts have led to a more comprehensive customer service culture and should lead to improved financial performance."

Significant changes to First Commonwealth's balance sheet from the third quarter of 2009 to the comparable period in 2010 include:  

  • A $941.7 million, or 71%, reduction in borrowings, driven by a decrease in loans and investment securities, and an increase in deposits.
  • The decrease of $349.5 million, or 8%, in loans is a result of planned decreases in residential real estate loans, more disciplined underwriting guidelines concerning geography and size for commercial loans and generally weak borrower demand.
  • The $345.3 million, or 26%, decline in investment securities is the result of matured securities not being replaced as the risk/reward for balance sheet leveraging activities has become less attractive in the current interest rate environment, in addition to the liquidation of municipal securities.
  • Continued improvement in the mix of deposits, as a $363.0 million, or 13%, growth in lower costing transaction and savings deposits has more than offset a $132.2 million decrease in time deposits.

During the third quarter of 2010, First Commonwealth completed a successful public offering by issuing 18,543,750 shares of common stock.  The net proceeds of $81.4 million will provide flexibility to capitalize on opportunities presented within our market area as well as to support regulatory capital needs. First Commonwealth's capital ratios for leverage, Total and Tier I at September 30, 2010 were 11.1%, 13.7% and 12.5%, respectively.  

Noninterest Income

Recognized net security losses were $2.9 million, $1.5 million and $11.9 million for the three-month periods ended September 30, 2010, June 30, 2010 and September 30, 2009, respectively. These losses resulted primarily from other-than-temporary impairment charges on investments in pooled trust preferred collateralized debt obligations. Net security losses for the three month period ended September 30, 2010 include $1.4 million of realized gains primarily from the sale of municipal securities. A strategy was implemented in the second quarter of 2010 that reduced the municipal securities portfolio exposure from $209.5 million at December 31, 2009 to $53.0 million at September 30, 2010. For the nine months ended September 30, 2010 and 2009, net security losses were $6.7 million and $30.4 million, respectively.

The company's pooled trust preferred collateralized debt obligations consist of 14 securities comprised of 368 banks and other financial institutions. Two pooled securities are senior tranches and the remaining 12 are mezzanine tranches. As of September 30, 2010, the book value of pooled securities totaled $59.9 million with an estimated fair value of $22.8 million. In the third quarter of 2010, a $4.0 million other-than-temporary impairment charge was recorded for five 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.

Noninterest income, excluding net security losses, increased $0.9 million, or 7%, in the third quarter of 2010 compared to the same period last year primarily as a result of increases in card related interchange income of $0.4 million, $0.7 million in miscellaneous noninterest income categories and $0.3 million in income from bank owned life insurance. Offsetting these increases was a decrease of $0.5 million in insurance and brokerage commissions as a result of lower sales activity.

For the nine months ended September 30, 2010, noninterest income, excluding net security losses, increased $0.9 million, or 2%, when compared to the same period of 2009; trust income increased $0.8 million as a result of increased market values of assets under management; card-related interchange income increased $1.4 million due to growth in demand deposit accounts, increased usage of debit cards and larger dollar transactions; and income from bank owned life insurance increased $0.7 million as a result of improved crediting rates. The second quarter of 2009 included a $2.1 million gain from a legal settlement.

Noninterest Expense

Noninterest expense decreased $1.0 million, or 2%, in the third quarter of 2010 from the third quarter of 2009.  The decrease is primarily related to the $0.8 million, or 4%, decline in salaries and employee benefits.

For the nine months ended September 30, 2010, as compared to the same period last year, noninterest expense decreased $2.8 million, or 2%. Contributing to this decrease was an expense reduction initiative that commenced in 2009, declines in FDIC premiums due to the special assessment of $2.9 million in 2009, $1.2 million of collection and repossession expenses related to two loans that were transferred to OREO, a decrease of $1.0 million in other loan related expenses and a decrease of $1.0 million in salaries and employee benefits. Offsetting these decreases were increases in data processing, software and maintenance expense of $1.3 million primarily due to higher investments in technology solutions and a $2.2 million write-down to current fair value for an OREO property.

Full time equivalent staff was 1,584 and 1,624 for the periods ended September 30, 2010 and 2009, respectively. The efficiency ratio, calculated as total noninterest expense as a percentage of total revenue (total revenue consists of net interest income, on a taxable equivalent basis, plus total noninterest income, excluding net impairment losses and net securities gains), improved to 62% for the nine months ended September 30, 2010 from 64% during the same period in 2009.

Dolan commented, "There has been a significant, upward shift in the expense base for the banking industry due to FDIC insurance premiums, credit cycle costs and added regulatory compliance.  Despite these headwinds, we are pleased with our organization's cost control efforts thus far, but see additional opportunities through better technology utilization and improved staff efficiencies. These will be a strategic focus for us going forward."

Conference Call

First Commonwealth will host its quarterly conference call to discuss its financial results for the third quarter of 2010 on Thursday, October 28, 2010 at 2:00 PM (ET). The call can be accessed by dialing (toll free) 1-800-860-2442 or through our web page, http://www.fcbanking.com at our "Investor Relations" link. A replay of the call will be available one hour after the end of the conference at this web page for 30 days.

About First Commonwealth Financial Corporation

First Commonwealth Financial Corporation is a $5.9 billion financial holding company headquartered in Indiana, Pennsylvania.  It operates 114 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, 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 SELECTED FINANCIAL DATA (a)

(dollars in thousands, except share data)

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2010

2010

2010

2009

2009

2010

2009

Interest Income

Interest and fees on loans

$56,051

$57,367

$57,408

$58,877

$57,085

$170,826

$173,153

Interest and dividends on investments:

Taxable interest

9,193

9,664

10,467

11,300

12,406

29,324

39,291

Interest exempt from federal income taxes

721

1,839

2,151

2,351

2,540

4,711

8,094

Dividends

13

19

27

25

31

59

183

Interest on bank deposits

4

48

25

4

1

77

3

Total interest income

65,982

68,937

70,078

72,557

72,063

204,997

220,724

Interest Expense

Interest on deposits

12,194

13,067

13,580

15,338

17,014

38,841

54,464

Interest on short-term borrowings

284

616

852

789

947

1,752

3,427

Interest on subordinated debentures

1,429

1,390

1,375

1,398

1,447

4,194

4,772

Interest on other long-term debt

979

1,268

1,173

1,592

1,672

3,420

4,991

Total interest on long-term debt

2,408

2,658

2,548

2,990

3,119

7,614

9,763

Total interest expense

14,886

16,341

16,980

19,117

21,080

48,207

67,654

Net Interest Income

51,096

52,596

53,098

53,440

50,983

156,790

153,070

Taxable equivalent adjustment

1,965

2,639

2,798

2,975

3,052

7,402

9,328

Net Interest Income (FTE) (a)

53,061

55,235

55,896

56,415

54,035

164,192

162,398

Provision for credit losses

4,522

4,010

45,020

21,059

23,020

53,552

79,510

Net Interest Income after Provision for Credit Losses (FTE) (a)

48,539

51,225

10,876

35,356

31,015

110,640

82,888

Noninterest Income

Changes in fair value on impaired securities

(5,787)

190

(1,517)

(4,091)

(25,473)

(7,114)

(68,483)

Non-credit related (gains) losses on securities not expected to

be sold (recognized in other comprehensive income)

1,497

(2,300)

(1,233)

(1,564)

13,570

(2,036)

37,953

Net impairment losses

(4,290)

(2,110)

(2,750)

(5,655)

(11,903)

(9,150)

(30,530)

Net securities gains

1,430

562

420

149

44

2,412

124

Trust income

1,486

1,398

1,494

1,201

1,366

4,378

3,604

Service charges on deposit accounts

4,302

4,603

4,152

4,642

4,555

13,057

12,798

Insurance and retail brokerage commissions

1,600

1,866

1,862

1,819

2,068

5,328

5,440

Income from bank owned life insurance

1,377

1,301

1,257

1,192

1,078

3,935

3,250

Card related interchange income

2,689

2,686

2,320

2,301

2,224

7,695

6,258

Other income

2,285

2,343

2,696

3,220

1,569

7,324

9,512

Total noninterest income

10,879

12,649

11,451

8,869

1,001

34,979

10,456

Noninterest Expense

Salaries and employee benefits

20,617

21,047

22,327

21,073

21,405

63,991

64,986

Net occupancy expense

3,317

3,539

3,893

3,262

3,263

10,749

10,791

Furniture and equipment expense

3,084

3,101

3,165

3,012

3,121

9,350

9,073

Data processing expense

1,367

1,478

1,437

1,254

1,136

4,282

3,433

Pennsylvania shares tax expense

1,468

1,457

1,057

1,361

1,310

3,982

3,953

Intangible amortization

408

576

657

656

684

1,641

2,170

Collection and repossession expense

1,209

794

923

915

1,444

2,926

4,095

Other professional fees and services

719

1,062

1,166

796

723

2,947

2,633

FDIC insurance

2,014

2,012

1,963

2,041

2,046

5,989

8,430

Loss on sale or write-down of assets

92

2,314

83

140

50

2,489

161

Other operating expenses

6,636

6,298

6,568

6,013

6,763

19,502

20,903

Total noninterest expense

40,931

43,678

43,239

40,523

41,945

127,848

130,628

Income (Loss) before income taxes

18,487

20,196

(20,912)

3,702

(9,929)

17,771

(37,284)

Taxable equivalent adjustment

1,965

2,639

2,798

2,975

3,052

7,402

9,328

Income tax (benefit) provision

5,863

4,015

(10,542)

(2,002)

(7,120)

(664)

(23,819)

Net Income (Loss)

$10,659

$13,542

($13,168)

$2,729

($5,861)

$11,033

($22,793)

Average Shares Outstanding

97,199,306

85,777,550

85,029,748

84,681,199

84,594,952

89,380,112

84,558,972

Average Shares Outstanding Assuming Dilution

97,203,753

85,788,566

85,029,748

84,681,199

84,594,952

89,382,588

84,558,972

Per Share Data:

Basic Earnings (Loss) Per Share

$0.11

$0.15

($0.15)

$0.03

($0.07)

$0.12

($0.27)

Diluted Earnings (Loss) Per Share

$0.11

$0.15

($0.15)

$0.03

($0.07)

$0.12

($0.27)

Cash Dividends Declared per Common Share

$0.01

$0.01

$0.03

$0.03

$0.03

$0.05

$0.15

(a) Presented on a taxable equivalent basis meaning net interest income is adjusted for the effect of tax-exempt income as if it were taxable using the 35% Federal income tax statutory rate.

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL DATA

(dollars in thousands, except share data)

September 30,

June 30,

March 31,

December 31,

September 30,

2010

2010

2010

2009

2009

Assets

Cash and due from banks

$94,567

$86,855

$79,136

$89,232

$79,694

Interest-bearing bank deposits

40,852

1,503

57,073

327

332

Securities available-for-sale, at fair value

927,121

996,220

1,062,713

1,133,856

1,231,015

Securities held to maturity, at amortized cost

0

0

31,891

36,758

41,397

Other investments

51,431

51,431

51,431

51,431

51,431

Loans:

Portfolio loans

4,299,573

4,434,291

4,595,409

4,636,501

4,649,034

Allowance for credit losses

(85,646)

(88,046)

(118,725)

(81,639)

(90,466)

Net loans

4,213,927

4,346,245

4,476,684

4,554,862

4,558,568

Premises and equipment, net

68,270

69,203

70,357

70,742

72,074

Other real estate owned

24,555

21,548

23,191

24,287

24,138

Goodwill

159,956

159,956

159,956

159,956

159,956

Other intangibles, net

5,766

6,175

6,752

7,407

8,063

Other assets

325,258

318,933

324,645

317,435

284,771

Total assets

$5,911,703

$6,058,069

$6,343,829

$6,446,293

$6,511,439

Liabilities

Deposits (all domestic):

Noninterest-bearing

$730,939

$651,250

$639,184

$641,231

$599,842

Interest-bearing demand deposits

103,346

107,261

99,218

107,612

93,062

Savings deposits

2,354,843

2,360,648

2,273,714

2,175,953

2,133,203

Time deposits

1,538,743

1,619,479

1,640,153

1,610,989

1,670,930

Total interest-bearing

3,996,932

4,087,388

4,013,085

3,894,554

3,897,195

Total deposits

4,727,871

4,738,638

4,652,269

4,535,785

4,497,037

Short-term borrowings

162,020

355,682

794,195

958,932

1,043,447

Subordinated debentures

105,750

105,750

105,750

105,750

105,750

Other long-term debt

119,475

155,250

119,084

168,697

179,784

Total long-term debt

225,225

261,000

224,834

274,447

285,534

Other liabilities

54,777

48,499

39,452

38,318

42,276

Total liabilities

5,169,893

5,403,819

5,710,750

5,807,482

5,868,294

Shareholders' Equity

Preferred stock, $1 par value per share, 3,000,000 shares authorized, none issued

0

0

0

0

0

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

105,515

86,971

86,755

86,600

86,600

Additional paid-in capital

366,647

303,961

302,841

301,523

302,418

Retained earnings

280,706

271,139

258,593

278,887

278,695

Accumulated other comprehensive income (loss), net

1,009

5,236

(1,181)

(6,045)

(762)

Treasury stock, at cost

(7,967)

(8,457)

(8,829)

(16,554)

(17,706)

Unearned ESOP shares

(4,100)

(4,600)

(5,100)

(5,600)

(6,100)

Total shareholders' equity

741,810

654,250

633,079

638,811

643,145

Total liabilities and shareholders' equity

$5,911,703

$6,058,069

$6,343,829

$6,446,293

$6,511,439

Book value per share

$7.08

$7.59

$7.36

$7.50

$7.56

Market value per share

$5.45

$5.25

$6.71

$4.65

$5.68

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL DATA

Quarter To Date Average Balance Sheets and Net Interest Analysis

(dollars in thousands)

September 30,

September 30,

2010

2009

Average Balance

Income/Expense (a)

Yield or Rate

Average Balance

Income/Expense (a)

Yield or Rate

Assets

Interest-earning assets:

Interest-bearing deposits with banks

$6,650

$4

0.24%

$461

$1

1.04%

Tax-free investment securities

67,459

1,109

6.53%

228,271

3,909

6.79%

Taxable investment securities

930,423

9,206

3.93%

1,097,915

12,437

4.49%

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

4,390,123

57,628

5.21%

4,600,016

58,768

5.07%

Total interest-earning assets

$5,394,655

$67,947

5.00%

$5,926,663

$75,115

5.03%

Noninterest-earning assets:

Cash

78,412

78,497

Allowance for credit losses

(91,247)

(82,698)

Other assets

591,115

562,452

Total noninterest-earning assets

578,280

558,251

Total Assets

$5,972,935

$6,484,914

Liabilities and Shareholders' Equity

Interest-bearing liabilities:

Interest-bearing demand deposits (d)

$629,307

$175

0.11%

$603,830

$388

0.25%

Savings deposits (d)

1,817,235

2,773

0.61%

1,601,898

4,421

1.10%

Time deposits

1,601,826

9,246

2.29%

1,707,787

12,205

2.84%

Short-term borrowings

265,855

284

0.42%

996,416

947

0.38%

Long-term debt

234,255

2,408

4.08%

286,427

3,119

4.32%

Total interest-bearing liabilities

$4,548,478

$14,886

1.30%

$5,196,358

$21,080

1.61%

Noninterest-bearing liabilities and shareholders' equity:

Noninterest-bearing demand deposits (d)

663,947

599,606

Other liabilities

46,727

40,149

Shareholders' equity

713,783

648,801

Total noninterest-bearing funding sources

1,424,457

1,288,556

Total Liabilities and Shareholders' Equity

$5,972,935

$6,484,914

Net Interest Income and Net Yield on Interest-Earning Assets

$53,061

3.90%

$54,035

3.62%

(a) Income on interest-earning assets is shown on a taxable 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

(dollars in thousands)

September 30,

September 30,

2010

2009

Average Balance

Income/Expense (a)

Yield or Rate

Average Balance

Income/Expense (a)

Yield or Rate

Assets

Interest-earning assets:

Interest-bearing deposits with banks

$40,036

$77

0.26%

$679

$3

0.60%

Tax-free investment securities

144,922

7,248

6.69%

241,709

12,453

6.89%

Taxable investment securities

938,233

29,383

4.19%

1,120,002

39,474

4.71%

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

4,525,149

175,691

5.19%

4,524,567

178,122

5.26%

Total interest-earning assets

5,648,340

212,399

5.03%

5,886,957

230,052

5.22%

Noninterest-earning assets:

Cash

77,027

75,994

Allowance for credit losses

(99,649)

(59,817)

Other assets

591,133

548,766

Total noninterest-earning assets

568,511

564,943

Total Assets

$6,216,851

$6,451,900

Liabilities and Shareholders' Equity

Interest-bearing liabilities:

Interest-bearing demand deposits (d)

$620,231

$591

0.13%

$600,229

$1,367

0.30%

Savings deposits (d)

1,778,204

9,642

0.72%

1,450,336

12,715

1.17%

Time deposits

1,626,660

28,608

2.35%

1,766,375

40,382

3.06%

Short-term borrowings

594,182

1,752

0.39%

1,065,530

3,427

0.43%

Long-term debt

244,547

7,614

4.16%

288,221

9,763

4.53%

Total interest-bearing liabilities

4,863,824

48,207

1.33%

5,170,691

67,654

1.75%

Noninterest-bearing liabilities and shareholders' equity:

Noninterest-bearing demand deposits (d)

640,911

582,952

Other liabilities

40,807

41,766

Shareholders' equity

671,309

656,491

Total noninterest-bearing funding sources

1,353,027

1,281,209

Total Liabilities and Shareholders' Equity

$6,216,851

$6,451,900

Net Interest Income and Net Yield on Interest-Earning Assets

$164,192

3.89%

$162,398

3.69%

(a) Yields on interest-earning assets have been computed on a taxable 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)

September 30,

June 30,

March 31,

December 31,

September 30,

2010

2010

2010

2009

2009

Nonperforming Loans:

Loans on nonaccrual basis

$123,221

$132,555

$166,779

$147,937

$133,200

Troubled debt restructured loans

1,013

599

609

619

627

Total nonperforming loans

$124,234

$133,154

$167,388

$148,556

$133,827

Loans past due in excess of 90 days and still accruing

$15,838

$15,045

$13,371

$15,154

$14,369

Other real estate owned

$24,555

$21,548

$23,191

$24,287

$24,138

Loans outstanding at end of period

$4,299,573

$4,434,291

$4,595,409

$4,636,501

$4,649,034

Average loans outstanding

$4,525,149

$4,593,781

$4,635,712

$4,557,227

$4,524,567

Provision for credit losses (Year To Date)

$53,552

$49,030

$45,020

$100,569

$79,510

Allowance for credit losses

$85,646

$88,046

$118,725

$81,639

$90,466

Net charge-offs (year to date)

$49,545

$42,623

$7,934

$71,689

$41,803

Nonperforming loans as a percentage of total loans

2.89%

3.00%

3.64%

3.20%

2.88%

Net charge-offs as a percentage of average loans

outstanding (annualized)

1.46%

1.87%

0.69%

1.57%

1.24%

Provision for credit losses as a percentage of net charge-offs

108.09%

115.03%

567.43%

140.29%

190.20%

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

loans outstanding  

1.99%

1.99%

2.58%

1.76%

1.95%

Allowance for credit losses as a percentage of nonperforming

loans

68.94%

66.12%

70.93%

54.96%

67.60%

Nonperforming Securities:

Nonaccrual securities at market value

$11,050

$6,483

$6,553

$3,258

$3,503

Profitability Ratios

(dollars in thousands)

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2010

2010

2010

2009

2009

2010

2009

Return on average assets (a)

0.71%

0.87%

-0.83%

0.17%

-0.36%

0.24%

-0.47%

Return on average equity (a)

5.92%

8.41%

-8.17%

1.65%

-3.58%

2.20%

-4.64%

Net interest margin (b)

3.90%

3.88%

3.87%

3.78%

3.62%

3.89%

3.69%

Efficiency ratio (c)

61.27%

62.91%

62.06%

57.24%

62.70%

62.09%

64.27%

(a) Annualized

(b) Net interest margin has been computed on a taxable equivalent basis using the 35% federal income tax statutory rate.

(c) Efficiency ratio is "total noninterest expense" as a percentage of total revenue.

    Total revenue consists of "net interest income, on a taxable equivalent basis," plus "total noninterest income," excluding "net impairment losses" and "net securities gains."

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL DATA

Capital Ratios

September 30, 2010

(dollars in thousands)

Excess Over

Actual

Regulatory Minimum

Well Capitalized

Well Capitalized

Capital

Capital

Capital

Capital

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Total Capital to Risk Weighted Assets

   First Commonwealth Financial Corporation

$705,259

13.7%

$410,605

8.0%

N/A

N/A

N/A

   First Commonwealth Bank

$659,982

13.0%

$406,320

8.0%

$507,901

10.0%

$152,081

Tier I Capital to Risk Weighted Assets

   First Commonwealth Financial Corporation

$640,827

12.5%

$205,303

4.0%

N/A

N/A

N/A

   First Commonwealth Bank

$596,211

11.7%

$203,160

4.0%

$304,740

6.0%

$291,471

Tier I Capital to Average Assets

   First Commonwealth Financial Corporation

$640,827

11.1%

$230,819

4.0%

N/A

N/A

N/A

   First Commonwealth Bank

$596,211

10.4%

$229,092

4.0%

$286,365

5.0%

$309,846

SOURCE First Commonwealth Financial Corporation



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