First Commonwealth Reports Fourth Quarter and Full Year 2017 Earnings; Declares Quarterly Dividend

/EINPresswire.com/ -- INDIANA, PA--(Marketwired - January 23, 2018) - First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year 2017.

Full Year 2017 Highlights

Franchise Growth

• The company successfully completed its acquisition of DCB Financial Corp. located in the Columbus, Ohio metropolitan area on April 3, 2017, which included $383 million in loans and $484 million in deposits at close.
• The company successfully negotiated a definitive merger agreement to acquire Cincinnati, Ohio based Foundation Bank, which was announced on January 10, 2018.

Earnings

• For the year ended December 31, 2017, net income was $55.2 million (or $0.58 diluted earnings per share). Core net income (non-GAAP), which excludes acquisition expenses and a previously disclosed $16.7 million non-cash charge for the revaluation of the deferred tax asset (DTA) taken in connection with the passage of the Tax Cuts and Jobs Act, was $78.5 million, or $0.82 diluted earnings per share.
  • Core earnings per share increased $0.13, or 18.8% from the previous year.
• Total revenue grew $45.9 million, or 17.1% from the prior year.
  • Net interest income (on a fully tax-equivalent (FTE) basis) increased $30.1 million, or 14.9%, from the prior year.
  • Noninterest income grew $15.7 million, or 24.4%, from the prior year.
• Provision for credit losses totaled $5.1 million, a decrease of $13.4 million as compared to the prior year, in part due to the recognition of two large commercial recoveries of $3.1 million in the second quarter.
• The return on average equity (ROE) for the year ended December 31, 2017 was 6.45%. The Core return on average tangible common equity (ROTCE) (non-GAAP) for the period was 13.38%, an increase of 259 basis points from the previous year.

Profitability

• The net interest margin improved 25 basis points to 3.57% compared to the prior year.
• The return on average assets (ROA) for the year ended December 31, 2017 was 0.77%. The Core ROA (non-GAAP) improved 16 basis points to 1.09% compared to the prior year.

"This was another very productive year for our company," stated T. Michael Price, President and Chief Executive Officer. "Our performance trajectory, especially in our fee income, demonstrates a desire to become one of the top performing community banks in the country. And our recent acquisitions have put additional wind in our sails by allowing us to expand beyond our core Pennsylvania markets and establish a presence in each of Ohio's three major metropolitan markets. As we enter 2018, our efforts will be focused on building on our successful expansion strategy in Ohio, while being mindful to keep costs in line with our revenue streams."

Fourth Quarter 2017 Highlights

Earnings

• For the quarter ended December 31, 2017, net income was $4.0 million (or $0.04 diluted earnings per share), resulting in an ROA of 0.21% and an ROE of 1.75%. Core net income (non-GAAP), which excludes acquisition expenses and the $16.7 million non-cash charge for the revaluation of the DTA, was $20.6 million, or $0.21 diluted earnings per share, resulting in a Core ROA and Core ROTCE of 1.11% and 13.29%, respectively.
• Total revenue grew $14.5 million, or 20.4%, from the prior year quarter.
  • Net interest income (FTE) increased $8.1 million, or 15.4%, from the prior year quarter.
  • Noninterest income grew $6.4 million, or 34.8%, from the prior year quarter (or $2.6 million and 14.7%, respectively, excluding securities gains).
• Total noninterest expense includes $2.5 million of expense for a one-time cash bonus of $1,500 paid to all employees (other than the top five executive officers) following the passage of the Tax Cuts and Jobs Act.
  • Noninterest expense in the fourth quarter also reflected $0.6 million in expense related to growth in unfunded loan commitments.
• Fourth quarter results also reflect approximately $0.7 million in expense related to expense management strategies associated with the recent tax law change.
• These expense items were offset by net security gains of $4.3 million following the successful auction call of a pooled trust preferred security held in the company's investment portfolio.
• Commercial loans grew at an annualized rate of 3.3%.

Profitability

• The net interest margin improved 17 basis points to 3.61% compared to the prior year, and was unchanged from the prior quarter as positive replacement yields on loans offset deposit rate increases.
• The Core return on average assets (non-GAAP) was 1.11%.

"The fourth quarter builds on the success of recent quarters and sets us up well for the coming year," stated T. Michael Price, President and Chief Executive Officer. "We were particularly happy to be able to give back some of the benefit from the tax law change to our employees in the form of a cash bonus. In addition, in light of our recent performance and positive outlook for the future, we are pleased that we will be able to make a total of approximately $500 thousand in cash contributions to our employee's health savings accounts in 2018."

Financial Summary

(dollars in thousands,		For the Three Months Ended						For the Year Ended
except per share data)		December 31,		September 30,		December 31,		December 31,		December 31,
		2017		2017		2016		2017		2016
Reported Results
Net income		$3,981		$21,283		$17,914		$55,165		$59,590
Diluted earnings per share		$0.04		$0.22		$0.20		$0.58		$0.67
Return on average assets		0.21%		1.14%		1.07%		0.77%		0.89%
Return on average equity		1.75%		9.50%		9.46%		6.45%		8.02%
Operating Results (non-GAAP)(1)
Core net income		$20,561		$21,238		$19,744		$78,512		$61,652
Core diluted earnings per share		$0.21		$0.22		$0.22		$0.82		$0.69
Core return on average assets		1.11%		1.14%		1.18%		1.09%		0.93%
Return on average tangible common equity		2.84%		14.04%		12.46%		9.50%		10.43%
Core return on average tangible common equity		13.29%		14.01%		13.73%		13.38%		10.79%
Core efficiency ratio		62.24%		57.96%		61.70%		60.22%		58.71%
Net interest margin (FTE)		3.61%		3.61%		3.44%		3.57%		3.32%

(1)

Operating results are non-GAAP measures 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. See supplemental information included with the release for "non-GAAP Financial Measures and Key Performance Indicators" and additional information.

Earnings

Net income for the fourth quarter of 2017 was $4.0 million, as compared to $17.9 million for the fourth quarter of 2016. The current quarter's results were impacted by a previously disclosed valuation adjustment to the company's deferred tax asset which resulted in a non-cash charge of $16.7 million.

Net income for the year ended December 31, 2017 was $55.2 million, as compared to $59.6 million for the same period in 2016, a decrease of $4.4 million. The results for the current year were impacted by the aforementioned non-cash charge of $16.7 million as well as one-time merger-related expenses of $10.2 million (pretax).

Excluding these one-time expenses, core net income for the year ended December 31, 2017 was $78.5 million, an increase of $16.9 million, or 27.3%, from the previous year.

Net Interest Margin and Net Interest Income

The net interest margin for the year ended December 31, 2017 was 3.57%, an increase of 25 basis points from the previous year.

The increase from the prior year was due primarily to a 27 basis point increase in the yield on interest earning assets partially offset by a 2 basis point increase in funding costs. These increases were primarily due to improved yields on variable and adjustable loan portfolios following the Federal Reserve's decision to increase short-term rates in December of 2016, March, June and December of 2017, along with the ability to pay down higher cost short-term borrowings following our recent acquisitions.

The net interest margin for the fourth quarter of 2017 was 3.61%, which was unchanged from the previous quarter and an increase of 17 basis points from the fourth quarter of 2016. The increase from the prior year quarter was primarily due to a 30 basis point increase in the yield on loans, which was partially offset by higher short-term borrowing costs following the Federal Reserve's decisions to raise short-term interest rates.

For the quarter and year ended December 31, 2017, total average earning assets grew $571.7 million and $422.1 million, respectively, from the prior year period primarily due to the aforementioned acquisitions.

Total average deposits grew by $973.9 million for the year ended December 31, 2017 compared to the previous year. Growth from the prior year was driven by a $980.2 million increase in transaction accounts and a $6.3 million decrease in time deposits.

Credit Quality

The provision for credit losses totaled $5.1 million for the year ended December 31, 2017, a decrease of $13.4 million as compared to the prior year. The decrease from the prior year is primarily the result of lower net charge-offs and improved asset quality as well as the recognition of $3.1 million of recoveries on two large commercial relationships during the second quarter of 2017.

At December 31, 2017, nonperforming loans were $42.2 million, an increase of $3.4 million from September 30, 2017 and an increase of $0.4 million from December 31, 2016. Nonperforming loans as a percentage of total loans were 0.78%, 0.72% and 0.86% for the periods ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively.

For the year ended December 31, 2017, net charge-offs were $7.0 million, or 0.13% of average loans, compared to $19.1 million in the prior year period. Net charge-offs during the current year period included recoveries for two large commercial credits totaling $3.1 million.

During the fourth quarter of 2017, net charge-offs were $2.1 million, or 0.16% of average loans (annualized), compared to $1.1 million in the prior quarter and $2.7 million in the fourth quarter of 2016.

For the originated loan portfolio at December 31, 2017, the allowance for credit losses to total originated loans was 0.96%, compared to 0.97% at September 30, 2017 and 1.05% at December 31, 2016.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $20.4 million for the fourth quarter of 2017 as compared to $19.7 million for the third quarter of 2017 and $17.7 million for the fourth quarter of 2016. Swap fee income increased $1.3 million and $1.2 million from the prior quarter and the year ago quarter, respectively, primarily due to increased commercial borrower swap activity. Trust fee income and service charges on deposit accounts increased $0.6 million and $0.4 million from the prior year quarter due to an expanded customer base as a result of recent acquisitions. Gain on sale of mortgage loans totaled $1.7 million for the fourth quarter of 2017, an increase of $0.4 million from the prior year quarter, representing the highest quarterly total since the company reentered the traditional mortgage business in 2014.

Net security gains were $4.3 million for the quarter ended December 31, 2017, following the successful auction call of a single pooled trust preferred security for which the company had previously recognized an other-than-temporary impairment charge.

Noninterest expense (excluding merger-related expenses) totaled $52.1 million for the fourth quarter of 2017, as compared to $47.4 million for the third quarter of 2017 and $42.9 million for the fourth quarter of 2016. The $4.7 million increase from the previous quarter was primarily the result of $2.5 million of expense for a one-time bonus of $1,500 paid to all employees (other than the top five named executive officers) following the passage of the Tax Cuts and Jobs Act, a $0.4 million increase in furniture and equipment expense and a $0.3 million increase in occupancy expense primarily due to higher snow removal costs.

Full time equivalent staff was 1,372 at December 31, 2017, 1,366 at September 30, 2017 and 1,274 at December 31, 2016. The increase from the prior year is the result of the addition of employees from acquisitions and the continued expansion of the mortgage and commercial banking businesses in Ohio.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.08 per share, which is payable on February 16, 2018 to shareholders of record as of February 2, 2018. This dividend represents a 2.1% projected annual yield utilizing the January 22, 2018 closing market price of $15.10.

First Commonwealth's capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2017 were 12.3%, 11.5%, 9.7% and 10.3%, 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 quarter and year ended December 31, 2017 on Wednesday, January 24, 2018 at 2:00 PM (ET). The call can be accessed by dialing (toll free) 1-844-792-3645 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 1-877-344-7529 and entering the access code #10115427. A link to the webcast replay will also be accessible on the company's web page for 30 days.

About First Commonwealth Financial Corporation

First Commonwealth Financial Corporation (NYSE: FCF), headquartered in Indiana, Pennsylvania, is a financial services company with 135 banking offices in 20 counties throughout western and central Pennsylvania and central and northeastern Ohio, as well as a Corporate Banking Center in northeast Ohio and mortgage offices in Stow and Dublin, Ohio. First Commonwealth provides a full range of commercial banking, consumer banking, mortgage, 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

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 First Commonwealth's control. Factors that could cause actual results, performance or achievements to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national and international economic conditions and the impact they may have 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); (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 (including the pending acquisition Garfield Acquisition Corp and its banking subsidiary Foundation Bank); (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 the reports that First Commonwealth files 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 FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
		For the Three Months Ended												For the Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2017				2017				2016				2017				2016
SUMMARY RESULTS OF OPERATIONS
Net interest income (FTE) (1)		$	60,624			$	60,667			$	52,529			$	233,005			$	202,881
Provision for credit losses			2,253				1,214				(1,826	)			5,087				18,480
Noninterest income			24,705				19,790				18,332				80,331				64,599
Noninterest expense			51,909				47,361				45,675				200,298				159,925
Net income			3,981				21,283				17,914				55,165				59,590
Core net income (5)			20,561				21,238				19,744				78,512				61,652
Earnings per common share (diluted)		$	0.04			$	0.22			$	0.20			$	0.58			$	0.67
Core earnings per common share (diluted) (6)		$	0.21			$	0.22			$	0.22			$	0.82			$	0.69
KEY FINANCIAL RATIOS
Return on average assets			0.21	%			1.14	%			1.07	%			0.77	%			0.89	%
Core return on average assets (7)			1.11	%			1.14	%			1.18	%			1.09	%			0.93	%
Return on average shareholders' equity			1.75	%			9.50	%			9.46	%			6.45	%			8.02	%
Return on average tangible common equity (8)			2.84	%			14.04	%			12.46	%			9.50	%			10.43	%
Core return on average tangible common equity (9)			13.29	%			14.01	%			13.73	%			13.38	%			10.79	%
Core efficiency ratio (2)(10)			62.24	%			57.96	%			61.70	%			60.22	%			58.71	%
Net interest margin (FTE) (1)			3.61	%			3.61	%			3.44	%			3.57	%			3.32	%
Book value per common share		$	9.11			$	9.17			$	8.43
Tangible book value per common share (11)			6.34				6.39				6.20
Market value per common share			14.32				14.13				14.18
Cash dividends declared per common share			0.08				0.08				0.07			$	0.32			$	0.28
ASSET QUALITY RATIOS
Nonperforming loans as a percent of end-of-period loans (3)			0.78	%			0.72	%			0.86	%
Nonperforming assets as a percent of total assets (3)			0.62	%			0.61	%			0.73	%
Net charge-offs as a percent of average loans (annualized)			0.16	%			0.08	%			0.22	%
Allowance for credit losses as a percent of nonperforming loans (4)			114.34	%			124.16	%			120.02	%
Allowance for credit losses as a percent of end-of-period loans (4)			0.89	%			0.90	%			1.03	%
Allowance for credit losses (originated loans and leases) as a percent of originated loans and leases			0.96	%			0.97	%			1.05	%
CAPITAL RATIOS
Shareholders' equity as a percent of total assets			12.2	%			12.1	%			11.2	%
Tangible common equity as a percent of tangible assets (12)			8.8	%			8.8	%			8.5	%
Leverage Ratio			9.7	%			9.7	%			9.8	%
Risk Based Capital - Tier I			11.5	%			11.5	%			11.3	%
Risk Based Capital - Total			12.3	%			12.3	%			12.3	%
Common Equity - Tier I			10.3	%			10.3	%			10.1	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
			For the Three Months Ended												For the Year Ended
			December 31,				September 30,				December 31,				December 31,				December 31,
			2017				2017				2016				2017				2016
INCOME STATEMENT
	Interest income		$	65,840			$	65,411			$	55,932			$	250,550			$	217,614
	Interest expense			6,270				5,848				4,413				21,770				18,579
Net Interest Income				59,570				59,563				51,519				228,780				199,035
	Taxable equivalent adjustment (1)			1,054				1,104				1,010				4,225				3,846
Net Interest Income (FTE)				60,624				60,667				52,529				233,005				202,881
	Provision for credit losses			2,253				1,214				(1,826	)			5,087				18,480
Net Interest Income after Provision for Credit Losses (FTE)				58,371				59,453				54,355				227,918				184,401
	Net securities gains (losses)			4,345				92				589				5,040				617
	Trust income			1,823				2,147				1,268				7,098				5,366
	Service charges on deposit accounts			4,721				4,803				4,341				18,579				15,869
	Insurance and retail brokerage commissions			2,155				2,128				1,916				8,807				7,964
	Income from bank owned life insurance			1,486				1,472				1,424				5,699				5,381
	Gain on sale of mortgage loans			1,656				1,418				1,236				5,366				4,086
	Gain on sale of other loans and assets			486				503				363				1,753				1,411
	Card-related interchange income			4,907				4,780				3,916				18,780				14,955
	Derivative mark-to-market			(424	)			(14	)			1,294				(473	)			219
	Swap fee income			1,547				217				374				2,005				2,359
	Other income			2,003				2,244				1,611				7,677				6,372
Total Noninterest Income				24,705				19,790				18,332				80,331				64,599
	Salaries and employee benefits			28,781				26,169				24,913				103,714				87,125
	Net occupancy			4,051				3,715				3,307				15,648				13,150
	Furniture and equipment			3,755				3,342				3,028				13,508				11,624
	Data processing			2,431				2,229				2,050				9,090				7,429
	Pennsylvania shares tax			1,139				1,093				1,061				4,209				3,825
	Advertising and promotion			1,051				941				661				3,786				2,601
	Intangible amortization			819				844				229				3,081				547
	Collection and repossession			563				402				447				1,905				2,250
	Other professional fees and services			1,406				1,300				1,049				4,761				3,915
	FDIC insurance			744				696				698				3,210				3,903
	Litigation and operational losses			943				598				246				2,050				1,420
	Loss on sale or write-down of assets			348				167				526				1,834				1,155
	Merger and acquisition related			(199	)			(69	)			2,815				10,213				3,173
	Other operating expenses			6,077				5,934				4,645				23,289				17,808
Total Noninterest Expense				51,909				47,361				45,675				200,298				159,925
Income before Income Taxes				31,167				31,882				27,012				107,951				89,075
	Taxable equivalent adjustment (1)			1,054				1,104				1,010				4,225				3,846
	Income tax provision			26,132				9,495				8,088				48,561				25,639
Net Income			$	3,981			$	21,283			$	17,914			$	55,165			$	59,590
	Shares Outstanding at End of Period			97,456,478				97,475,575				89,007,077				97,456,478				89,007,077
	Average Shares Outstanding Assuming Dilution			97,507,465				97,457,470				88,887,387				95,331,037				88,851,573

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
				December 31,				September 30,				December 31,
				2017				2017				2016
BALANCE SHEET (Period End)
Assets
	Cash and due from banks			$	98,624			$	98,319			$	91,033
	Interest-bearing bank deposits				8,668				29,709				24,644
	Securities available for sale, at fair value				761,195				810,946				815,110
	Securities held to maturity, at amortized cost				422,096				436,081				372,513
	Loans held for sale				14,850				17,100				7,052
		Loans			5,407,376				5,375,847				4,879,347
		Allowance for credit losses			(48,298	)			(48,176	)			(50,185	)
	Net loans				5,359,078				5,327,671				4,829,162
	Goodwill and other intangibles				270,360				271,347				198,496
	Other assets				373,668				393,166				346,008
Total Assets				$	7,308,539			$	7,384,339			$	6,684,018
Liabilities and Shareholders' Equity
	Noninterest-bearing demand deposits			$	1,416,771			$	1,416,814			$	1,268,786
		Interest-bearing demand deposits			187,281				264,731				114,043
		Savings deposits			3,361,840				3,290,978				2,972,747
		Time deposits			614,813				582,534				591,832
	Total interest-bearing deposits				4,163,934				4,138,243				3,678,622
	Total deposits				5,580,705				5,555,057				4,947,408
		Short-term borrowings			707,466				805,825				867,943
		Long-term borrowings			87,918				88,155				80,916
	Total borrowings				795,384				893,980				948,859
	Other liabilities				44,323				41,001				37,822
	Shareholders' equity				888,127				894,301				749,929
Total Liabilities and Shareholders' Equity				$	7,308,539			$	7,384,339			$	6,684,018

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
				For the Three Months Ended																		For the Year Ended
				December 31,			Yield/			September 30,			Yield/			December 31,			Yield/			December 31,			Yield/			December 31,			Yield/
				2017			Rate			2017			Rate			2016			Rate			2017			Rate			2016			Rate
NET INTEREST MARGIN
Assets
	Loans (FTE)(1)(3)			$	5,433,384		4.29	%		$	5,398,815		4.28	%		$	4,856,579		3.99	%		$	5,278,511		4.20	%		$	4,818,759		3.91	%
	Securities and interest bearing bank deposits (FTE) (1)				1,220,469		2.63	%			1,265,416		2.60	%			1,225,600		2.66	%			1,252,739		2.63	%			1,290,392		2.56	%
		Total Interest-Earning Assets (FTE) (1)			6,653,853		3.99	%			6,664,231		3.96	%			6,082,179		3.72	%			6,531,250		3.90	%			6,109,151		3.63	%
	Noninterest-earning assets				710,946						713,142						555,920						679,212						551,465
Total Assets				$	7,364,799					$	7,377,373					$	6,638,099					$	7,210,462					$	6,660,616
Liabilities and Shareholders' Equity
	Interest-bearing demand and savings deposits			$	3,521,485		0.20	%		$	3,576,365		0.18	%		$	2,768,287		0.14	%		$	3,429,445		0.17	%		$	2,659,202		0.14	%
	Time deposits				596,051		0.73	%			562,868		0.64	%			577,851		0.63	%			578,158		0.65	%			584,429		0.63	%
	Short-term borrowings				807,831		1.19	%			829,954		1.16	%			1,210,619		0.58	%			867,391		1.01	%			1,387,737		0.58	%
	Long-term borrowings				88,019		4.24	%			88,256		4.18	%			80,984		3.82	%			86,391		4.12	%			81,197		3.67	%
		Total Interest-Bearing Liabilities			5,013,386		0.50	%			5,057,443		0.46	%			4,637,741		0.38	%			4,961,385		0.44	%			4,712,565		0.39	%
	Noninterest-bearing deposits				1,411,902						1,393,024						1,195,862						1,356,125						1,146,189
	Other liabilities				39,011						38,125						50,837						37,818						58,918
	Shareholders' equity				900,500						888,781						753,659						855,134						742,944
		Total Noninterest-Bearing Funding Sources			2,351,413						2,319,930						2,000,358						2,249,077						1,948,051
Total Liabilities and Shareholders' Equity				$	7,364,799					$	7,377,373					$	6,638,099					$	7,210,462					$	6,660,616
Net Interest Margin (FTE) (annualized)(1)							3.61	%					3.61	%					3.44	%					3.57	%					3.32	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
						December 31,				September 30,				December 31,
						2017				2017				2016
Loan Portfolio Detail
	Commercial Loan Portfolio:
		Commercial, financial, agricultural and other				$	1,163,383			$	1,154,225			$	1,139,547
		Commercial real estate					2,019,096				1,990,264				1,742,210
		Real estate construction					248,868				259,129				219,621
			Total Commercial				3,431,347				3,403,618				3,101,378
	Consumer Loan Portfolio:
		Closed-end mortgages					897,284				893,809				713,471
		Home equity lines of credit					529,086				529,613				515,721
			Total Real Estate - Consumer				1,426,370				1,423,422				1,229,192
		Auto loans					454,932				454,320				458,610
		Direct installment					24,560				24,995				24,381
		Personal lines of credit					60,023				58,880				53,339
		Student loans					10,144				10,612				12,447
			Total Other Consumer				549,659				548,807				548,777
			Total Consumer Portfolio				1,976,029				1,972,229				1,777,969
				Total Portfolio Loans			5,407,376				5,375,847				4,879,347
		Loans held for sale					14,850				17,100				7,052
			Total Loans			$	5,422,226			$	5,392,947			$	4,886,399
						December 31,				September 30,				December 31,
						2017				2017				2016
ASSET QUALITY DETAIL
Nonperforming Loans:
Loans on nonaccrual basis						$	19,455			$	14,943			$	16,301
Troubled debt restructured loans on nonaccrual basis							11,222				11,408				11,722
Troubled debt restructured loans on accrual basis							11,563				12,451				13,790
		Total Nonperforming Loans				$	42,240			$	38,802			$	41,813
Other real estate owned ("OREO")							2,765				5,701				6,805
Repossessions ("Repos")							292				200				242
		Total Nonperforming Assets				$	45,297			$	44,703			$	48,860
Loans past due in excess of 90 days and still accruing							1,854				1,332				2,131
Classified loans							73,017				65,948				92,705
Criticized loans							124,417				125,034				134,372
Nonperforming assets as a percentage of total loans, plus OREO and Repos							0.83	%			0.83	%			1.00	%
Allowance for credit losses						$	48,298			$	48,176			$	50,185

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
			For the Three Months Ended												For the Year Ended
			December 31,				September 30,				December 31,				December 31,				December 31,
			2017				2017				2016				2017				2016
Net Charge-offs (Recoveries):
	Commercial, financial, agricultural and other		$	777			$	315			$	2,392			$	2,733			$	15,439
	Real estate construction			-				(373	)			(335	)			(470	)			(562	)
	Commercial real estate			177				(25	)			(567	)			62				(952	)
	Residential real estate			240				276				139				916				708
	Loans to individuals			937				912				1,094				3,733				4,474
Net Charge-offs			$	2,131			$	1,105			$	2,723			$	6,974			$	19,107
Net charge-offs as a percentage of average loans outstanding (annualized)				0.16	%			0.08	%			0.22	%			0.13	%			0.40	%
Provision for credit losses as a percentage of net charge-offs				105.73	%			109.86	%			(67.06	)%			72.94	%			96.72	%
Provision for credit losses			$	2,253			$	1,214			$	(1,826	)		$	5,087			$	18,480

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES

(1) Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the 35% federal income tax statutory rate.

(2) 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 Year Ended
				December 31,				September 30,				December 31,				December 31,				December 31,
				2017				2017				2016				2017				2016
Net Income				$	3,981			$	21,283			$	17,914			$	55,165			$	59,590
	Intangible amortization				819				844				229				3,081				547
	Tax benefit of amortization of intangibles				(287	)			(295	)			(80	)			(1,078	)			(191	)
		Net Income, adjusted for tax affected amortization of intangibles			4,513				21,832				18,063				57,168				59,946
Average Tangible Equity:
	Total shareholders' equity			$	900,500			$	888,781			$	753,659			$	855,134			$	742,944
	Less: intangible assets				270,906				271,670				177,081				253,533				168,446
		Tangible Equity			629,594				617,111				576,578				601,601				574,498
	Less: preferred stock				-				-				-				-				-
		Tangible Common Equity		$	629,594			$	617,111			$	576,578			$	601,601			$	574,498
(8) Return on Average Tangible Common Equity					2.84	%			14.04	%			12.46	%			9.50	%			10.43	%

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 Year Ended
						December 31,				September 30,				December 31,				December 31,				December 31,
						2017				2017				2016				2017				2016
Core Net Income:
	Total Net Income					$	3,981			$	21,283			$	17,914			$	55,165			$	59,590
		Deferred tax asset writedown					16,709				-				-				16,709				-
		Merger & Acquisition related expenses					(199	)			(69	)			2,815				10,213				3,173
		Tax benefit of merger & acquisition related expenses					70				24				(985	)			(3,575	)			(1,111	)
	(5) Core net income						20,561				21,238				19,744				78,512				61,652
		Average Shares Outstanding Assuming Dilution					97,507,465				97,457,470				88,887,387				95,331,037				88,851,573
		(6) Core Earnings per common share (diluted)				$	0.21			$	0.22			$	0.22			$	0.82			$	0.69
			Intangible amortization				819				844				229				3,081				547
			Tax benefit of amortization of intangibles				(287	)			(295	)			(80	)			(1,078	)			(191	)
				Core Net Income, adjusted for tax affected amortization of intangibles		$	21,093			$	21,787			$	19,893			$	80,515			$	62,008
(9) Core Return on Average Tangible Common Equity							13.29	%			14.01	%			13.73	%			13.38	%			10.79	%
						For the Three Months Ended												For the Year Ended
						December 31,				September 30,				December 31,				December 31,				December 31,
						2017				2017				2016				2017				2016
Core Return on Average Assets:
	Total Net Income					$	3,981			$	21,283			$	17,914			$	55,165			$	59,590
	Total Average Assets						7,364,799				7,377,373				6,638,099				7,210,462				6,660,616
		Return on Average Assets					0.21	%			1.14	%			1.07	%			0.77	%			0.89	%
	Core Net Income (5)					$	20,561			$	21,238			$	19,744			$	78,512			$	61,652
	Total Average Assets						7,364,799				7,377,373				6,638,099				7,210,462				6,660,616
		(7) Core Return on Average Assets					1.11	%			1.14	%			1.18	%			1.09	%			0.93	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
						For the Three Months Ended												For the Year Ended
						December 31,				September 30,				December 31,				December 31,				December 31,
						2017				2017				2016				2017				2016
Core Efficiency Ratio:
	Total Noninterest Expense					$	51,909			$	47,361			$	45,675			$	200,298			$	159,925
		Adjustments to Noninterest Expense:
			Unfunded commitment reserve				624				(1	)			71				1,075				(341	)
			Intangible amortization				819				844				229				3,081				547
			Merger and acquisition related				(199	)			(69	)			2,815				10,213				3,173
				Noninterest Expense - Core		$	50,665			$	46,587			$	42,560			$	185,929			$	156,546
		Net interest income, fully tax equivalent				$	60,624			$	60,667			$	52,529			$	233,005			$	202,881
		Total noninterest income					24,705				19,790				18,332				80,331				64,599
		Net securities gains					(4,345	)			(92	)			(589	)			(5,040	)			(617	)
			Total Revenue			$	80,984			$	80,365			$	70,272			$	308,296			$	266,863
		Adjustments to Revenue:
			Derivative mark-to-market				(424	)			(14	)			1,294				(473	)			219
				Total Revenue - Core		$	81,408			$	80,379			$	68,978			$	308,769			$	266,644
(10) Core Efficiency Ratio							62.24	%			57.96	%			61.70	%			60.22	%			58.71	%
						December 31,				September 30,				December 31,
						2017				2017				2016
Tangible Equity:
	Total shareholders' equity					$	888,127			$	894,301			$	749,929
	Less: intangible assets						270,360				271,347				198,496
		Tangible Equity					617,767				622,954				551,433
	Less: preferred stock						-				-				-
		Tangible Common Equity				$	617,767			$	622,954			$	551,433
Tangible Assets:
	Total assets					$	7,308,539			$	7,384,339			$	6,684,018
	Less: intangible assets						270,360				271,347				198,496
		Tangible Assets				$	7,038,179			$	7,112,992			$	6,485,522
(12) Tangible Common Equity as a percentage of Tangible Assets							8.78	%			8.76	%			8.50	%
Shares Outstanding at End of Period							97,456,478				97,475,575				89,007,077
(11) Tangible Book Value Per Common Share						$	6.34			$	6.39			$	6.20
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.