INDIANA, Pa., Jan. 23 /PRNewswire-FirstCall/ -- First Commonwealth Financial Corporation , the holding company for First Commonwealth Bank, announced today the financial results for the fourth quarter and year ended December 31, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030416/FIRSTLOGO ) Fourth Quarter Results
First Commonwealth reported fourth quarter 2007 net income of $11.6 million or $0.16 per diluted share compared to $12.4 million or $0.17 per diluted share in the same period last year. The decrease of $750 thousand in net income was due to lower net interest income and higher income taxes, partly offset by a lower provision for credit losses and higher non-interest income. The return on average equity and average assets was 8.08% and 0.80%, respectively, compared to 8.50% and 0.81% for the prior year period.
Significant developments during the fourth quarter include: -- Net interest margin improved year over year. -- Mike Price joined First Commonwealth as President of First Commonwealth Bank to oversee all banking operations. -- A new location was opened in the Pittsburgh market (Cranberry Township), making this the 112th office for First Commonwealth's retail banking division. Year to Date Results
First Commonwealth reported 2007 net income of $46.3 million or $0.63 per diluted share compared to $53.0 million or $0.74 per diluted share in 2006. The decrease in net income was due to a decline in net interest income and higher non-interest expense partly offset by an increase in non-interest income, a lower provision for credit losses and lower income taxes. The return on average equity and average assets was 8.08% and 0.80%, respectively, compared to 9.76% and 0.89% for the prior year period.
"I am excited about the significant changes First Commonwealth experienced this quarter," said John J. Dolan, President and CEO. "I am confident that the addition of a new bank president, Mike Price, to our team will facilitate our client-centric focus of becoming 'First Choice' in our market place. With the hiring of three additional qualified lenders and the opening of a Loan Production Office in State College earlier in the year, we are beginning to see strong improvements to our commercial loan balances. We have also seen an increase in the quality and size of our commercial loan pipeline.
"Our increase in non-accrual loans is due to a few large credit relationships and is not a result of substandard lending. We have been working aggressively with these borrowers to develop a winning resolution."
Net Interest Income and Margin
Net interest income for the fourth quarter of 2007 decreased $1.7 million, or 4.3%, to $40.2 million from $41.9 million in the fourth quarter of 2006 due primarily to a lower level of interest-earning assets. The decrease in interest-earning assets accompanied by First Commonwealth's reduction in higher cost wholesale borrowings resulted in a more stable margin.
Net interest margin on a tax equivalent basis for the fourth quarter 2007 increased four basis points or 0.04% to 3.32%, compared with 3.28% in the corresponding period last year. The ratio of noninterest-bearing funding sources as a percent of interest-earning assets increased over the prior period contributing to the increase in net interest margin. Average investment securities decreased $152.0 million, or 8.9%, and average borrowings declined $339.9 million, or 31.1%, in the fourth quarter of 2007 compared to the same period in 2006.
Net interest margin increased three basis points or 0.03% for the year ended December 31, 2007 compared to the prior year period primarily due to the reasons noted above.
Non-Interest Income
Non-interest income for the fourth quarter of 2007 increased $782 thousand, or 6.5%, from the fourth quarter of 2006. During the fourth quarter of 2007, service charges on deposit accounts increased $97 thousand or 2.1% and card related interchange income increased $295 thousand or 19.7% due to a larger customer base, higher volume and changes in fee structures. Insurance commissions increased $220 thousand or 31.9% due to higher sales.
For the year 2007, non-interest income increased $4.6 million or 10.4% mainly due to the reasons noted above for the three month period ended December 31, 2007 and the inclusion of a $550 thousand gain from the sale of First Commonwealth's municipal bond servicing business during the second quarter of 2007. This business generated annual trust income of approximately $100 thousand, net of expenses.
Non-Interest Expense
Non-interest expense for the fourth quarter of 2007 decreased $104 thousand compared to the corresponding quarter last year. The fourth quarter of 2006 included a $1.1 million loss on the extinguishment of debt. Net occupancy expense increased $439 thousand or 14.4% due to branch expansion and depreciation. Advertising expense increased $316 thousand due to increased branding efforts.
For the year 2007, non-interest expense increased $10.3 million or 7.5% compared to 2006. Salaries and employee benefits increased $3.1 million or 4.3% due to the acquisition of Laurel Savings Bank in August 2006, merit salary increases, and $1.0 million of expenses recorded in connection with separation agreements with former executives of First Commonwealth. Net occupancy expense increased $1.6 million or 13.5% due to branch expansion and building repairs and maintenance. Advertising expense increased $1.1 million due to increased branding efforts. Intangible amortization increased $821 thousand or 31.5% due to the acquisition of Laurel Savings Bank. Other expenses increased $2.2 million or 7.8% primarily due to costs associated with strategic marketing initiatives, other professional fees, contributions and public relations.
Income Tax
Income tax expense increased $797 thousand for the fourth quarter of 2007 compared to the same period in 2006. First Commonwealth's effective tax rate was 15.4% in the fourth quarter of 2007 compared to 9.6% in the same period in 2006. Income tax expense increased $336 thousand in the fourth quarter of 2007 to record the tax effect of purchase accounting adjustments related to prior acquisitions. Also, income tax expense for the fourth quarter of 2006 included a tax benefit of $379 thousand recognized during management's reassessment of required tax accruals.
For the year 2007, income tax expense decreased $3.1 million compared to 2006, primarily due to a decrease of $9.8 million in pretax income. The effective tax rate was 11.4% for 2007 compared to 14.6% for 2006, as items excluded from taxable income remained consistent but represented a larger portion of pretax earnings.
Credit Quality and Provision for Credit Losses
First Commonwealth is not a participant or underwriter in the sub-prime mortgage loan or collateralized debt marketplace and therefore does not have any exposure to risks associated with these activities. All mortgage backed securities in First Commonwealth's investment portfolio are AAA rated and backed by U.S. Government agencies.
Non-accrual loans increased $42.1 million to $54.1 million at December 31, 2007 compared to $12.0 million at December 31, 2006, mainly due to two large credits. A $30.0 million commercial credit relationship was placed on non- accrual during the second quarter of 2007. This credit relationship had been monitored since the second quarter of 2006 when management disclosed that this credit had experienced deterioration. A $4.3 million commercial credit relationship was placed on non-accrual in the fourth quarter of 2007. These credits are collateralized by real estate or equipment and a reserve has been allocated, primarily during 2006, to cover the expected losses.
As previously disclosed, First Commonwealth purchased $7.0 million in loans from Equipment Finance LLC ("EFI"), a division of Sterling Financial Corporation of Lancaster, Pennsylvania ("Sterling"), during 2006. Sterling subsequently disclosed an investigation, which is still ongoing, into financial irregularities related to certain financing contracts at EFI. Loans in this portfolio are collateralized by equipment and reserves were allocated in the second quarter of 2007 to cover the expected losses. At December 31, 2007, the remaining balance in this portfolio was $4.4 million, of which $3.2 million was classified as non-accrual. Loans in this portfolio totaling $202 thousand were classified by First Commonwealth as non-accrual during the fourth quarter of 2007.
Loans past due in excess of 90 days and still accruing decreased $198 thousand or 1.5% to $12.9 million compared to December 31, 2006. The provision for credit losses for the fourth quarter of 2007 decreased $948 thousand compared to the fourth quarter of 2006. For the year 2007, the provision for credit losses decreased $1.5 million compared to the same period in 2006. In 2006, management increased the provision for credit losses to reflect the deterioration in the $30.0 million credit described above. Furthermore, during the fourth quarter of 2007, First Commonwealth experienced pay-offs on loans that carried specific allocated reserves, which resulted in an improvement in the credit quality of the loan portfolio and a decline in the provision for credit losses.
Management believes that the allowance for credit losses is at a level deemed sufficient to absorb losses inherent in the loan portfolio at December 31, 2007.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation is a $5.9 billion bank holding company headquartered in Indiana, Pennsylvania. It operates 112 retail branch offices in 15 counties in western and central Pennsylvania through First Commonwealth Bank, a Pennsylvania chartered bank and trust company. Financial services and insurance products are also provided through First Commonwealth Insurance Agency and First Commonwealth Financial Advisors, Inc.
Forward-Looking Statements
This release contains "forward-looking statements" 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, improvements in commercial loan balances and quality and the impact of recent organizational changes and strategic initiatives on future results. Forward- looking statements describe First Commonwealth's future plans, strategies and expectations and 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. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They 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 speak only as of the date they are made. Such risks and uncertainties include among other things:
-- adverse changes in the economy or business conditions, either nationally or in First Commonwealth's market areas, which could increase credit-related losses and expenses and/or limit growth; -- increases in defaults by borrowers and other delinquencies, which could result in an increased provision for credit losses on loans and related expenses; -- 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; -- the inability to successfully execute First Commonwealth's strategic growth initiatives, which could limit future revenue and earnings growth; 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. FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED SELECTED FINANCIAL DATA (dollars in thousands, except share data) For the Quarter Ended March 31, June 30, September 30, December 31, 2007 2007 2007 2007 Interest Income Interest and fees on loans $63,913 $62,813 $63,737 $63,488 Interest and dividends on investments: Taxable interest 16,145 14,889 14,259 14,967 Interest exempt from Federal income taxes 3,371 3,427 3,424 3,510 Dividends 733 720 753 752 Interest on Federal funds sold 24 2 57 74 Interest on bank deposits 11 10 8 8 Total interest income 84,197 81,861 82,238 82,799 Interest Expense Interest on deposits 31,585 32,872 33,786 34,527 Interest on short-term borrowings 4,946 2,700 1,977 1,819 Interest on subordinated debentures 2,117 2,123 2,130 2,156 Interest on other long-term debt 4,298 4,327 4,211 4,139 Total interest on long-term debt 6,415 6,450 6,341 6,295 Total interest expense 42,946 42,022 42,104 42,641 Net Interest Income 41,251 39,839 40,134 40,158 Provision for credit losses 2,979 2,415 2,296 2,352 Net Interest Income after provision for credit losses 38,272 37,424 37,838 37,806 Non-Interest Income Net securities gains 605 150 16 403 Trust income 1,418 1,518 1,517 1,428 Service charges on deposit accounts 4,165 4,517 4,609 4,690 Insurance commissions 730 857 1,064 909 Income from bank owned life insurance 1,490 1,520 1,534 1,557 Card related interchange income 1,485 1,634 1,654 1,791 Other income 1,533 2,205 1,819 2,052 Total non-interest income 11,426 12,401 12,213 12,830 Non-Interest Expense Salaries and employee benefits 20,284 18,588 18,401 18,859 Net occupancy expense 3,353 3,398 3,475 3,484 Furniture and equipment expense 2,717 2,914 3,243 3,126 Advertising expense 1,095 340 475 957 Data processing expense 954 925 942 987 Pennsylvania shares tax expense 1,469 1,415 1,439 1,446 Intangible amortization 870 870 857 831 Loss (Gain) on extinguishment of debt 0 0 0 0 Other expenses 7,027 8,433 7,648 7,185 Total non-interest expense 37,769 36,883 36,480 36,875 Income before income taxes 11,929 12,942 13,571 13,761 Applicable income taxes 1,034 1,454 1,352 2,113 Net Income $10,895 $11,488 $12,219 $11,648 Average Shares Outstanding 73,113,823 73,180,532 72,589,329 72,391,577 Average Shares Outstanding Assuming Dilution 73,370,678 73,314,997 72,705,753 72,513,962 Per Share Data: Basic Earnings Per Share $0.15 $0.16 $0.17 $0.16 Diluted Earnings Per Share $0.15 $0.16 $0.17 $0.16 Cash Dividends Declared per Common Share $0.17 $0.17 $0.17 $0.17 For the Quarter Ended March 31, June 30, September 30, December 31, 2006 2006 2006 2006 Interest Income Interest and fees on loans $58,314 $60,487 $64,575 $65,362 Interest and dividends on investments: Taxable interest 17,585 17,166 16,826 16,680 Interest exempt from Federal income taxes 3,219 3,230 3,215 3,212 Dividends 603 787 776 792 Interest on Federal funds sold 46 13 17 66 Interest on bank deposits 14 10 48 27 Total interest income 79,781 81,693 85,457 86,139 Interest Expense Interest on deposits 23,384 25,182 28,254 31,634 Interest on short-term borrowings 6,364 6,622 7,338 5,124 Interest on subordinated debentures 2,054 2,097 2,134 2,134 Interest on other long- term debt 6,532 6,499 5,453 5,302 Total interest on long- term debt 8,586 8,596 7,587 7,436 Total interest expense 38,334 40,400 43,179 44,194 Net Interest Income 41,447 41,293 42,278 41,945 Provision for credit losses 908 4,298 3,038 3,300 Net Interest Income after provision for credit losses 40,539 36,995 39,240 38,645 Non-Interest Income Net securities gains 63 19 5 610 Trust income 1,394 1,481 1,482 1,444 Service charges on deposit accounts 3,869 4,144 4,361 4,593 Insurance commissions 719 595 801 689 Income from bank owned life insurance 1,375 1,414 1,451 1,502 Card related interchange income 1,298 1,391 1,398 1,496 Other income 1,578 1,752 1,609 1,714 Total non-interest income 10,296 10,796 11,107 12,048 Non-Interest Expense Salaries and employee benefits 19,357 17,235 17,690 18,706 Net occupancy expense 3,402 2,785 2,845 3,045 Furniture and equipment expense 2,767 2,915 2,998 3,023 Advertising expense 343 349 417 641 Data processing expense 795 820 903 938 Pennsylvania shares tax expense 1,350 1,358 1,349 1,363 Intangible amortization 565 566 658 818 Loss (Gain) on extinguishment of debt 0 (270) (1,283) 1,143 Other expenses 7,014 7,194 6,582 7,302 Total non-interest expense 35,593 32,952 32,159 36,979 Income before income taxes 15,242 14,839 18,188 13,714 Applicable income taxes 2,304 2,613 2,796 1,316 Net Income $12,938 $12,226 $15,392 $12,398 Average Shares Outstanding 69,469,709 69,653,432 70,875,018 73,026,948 Average Shares Outstanding Assuming Dilution 69,918,151 70,037,609 71,177,930 73,362,224 Per Share Data: Basic Earnings Per Share $0.19 $0.18 $0.22 $0.17 Diluted Earnings Per Share $0.19 $0.17 $0.22 $0.17 Cash Dividends Declared per Common Share $0.17 $0.17 $0.17 $0.17 For the Year Ended December 31, 2007 2006 Interest Income Interest and fees on loans $253,951 $248,738 Interest and dividends on investments: Taxable interest 60,260 68,257 Interest exempt from Federal income taxes 13,732 12,876 Dividends 2,958 2,958 Interest on Federal funds sold 157 142 Interest on bank deposits 37 99 Total interest income 331,095 333,070 Interest Expense Interest on deposits 132,770 108,454 Interest on short-term borrowings 11,442 25,448 Interest on subordinated debentures 8,526 8,419 Interest on other long-term debt 16,975 23,786 Total interest on long-term debt 25,501 32,205 Total interest expense 169,713 166,107 Net Interest Income 161,382 166,963 Provision for credit losses 10,042 11,544 Net Interest Income after provision for credit losses 151,340 155,419 Non-Interest Income Net securities gains 1,174 697 Trust income 5,881 5,801 Service charges on deposit accounts 17,981 16,967 Insurance commissions 3,560 2,804 Income from bank owned life insurance 6,101 5,742 Card related interchange income 6,564 5,583 Other income 7,609 6,653 Total non-interest income 48,870 44,247 Non-Interest Expense Salaries and employee benefits 76,132 72,988 Net occupancy expense 13,710 12,077 Furniture and equipment expense 12,000 11,703 Advertising expense 2,867 1,750 Data processing expense 3,808 3,456 Pennsylvania shares tax expense 5,769 5,420 Intangible amortization 3,428 2,607 Loss (Gain) on extinguishment of debt 0 (410) Other expenses 30,293 28,092 Total non-interest expense 148,007 137,683 Income before income taxes 52,203 61,983 Applicable income taxes 5,953 9,029 Net Income $46,250 $52,954 Average Shares Outstanding 72,816,208 70,766,348 Average Shares Outstanding Assuming Dilution 72,973,259 71,133,562 Per Share Data: Basic Earnings Per Share $0.64 $0.75 Diluted Earnings Per Share $0.63 $0.74 Cash Dividends Declared per Common Share $0.68 $0.68 FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED SELECTED FINANCIAL DATA (dollars in thousands, except share data) March 31, June 30, September 30, December 31, 2007 2007 2007 2007 Assets Cash and due from banks $84,137 $92,407 $86,499 $100,791 Interest-bearing bank deposits 463 1,310 1,060 1,719 Securities available for sale, at market value 1,557,247 1,451,019 1,460,909 1,574,217 Securities held to maturity, at amortized cost, (Market value $72,928 at December 31, 2007 and $80,156 at December 31, 2006) 78,092 76,366 73,024 71,497 Loans held for sale 0 0 0 0 Loans: Portfolio loans 3,703,545 3,674,725 3,660,153 3,697,843 Unearned income (47) (37) (30) (24) Allowance for credit losses (43,379) (43,968) (43,210) (42,396) Net loans 3,660,119 3,630,720 3,616,913 3,655,423 Premises and equipment, net 70,916 70,567 70,133 69,487 Other real estate owned 1,663 1,241 1,803 2,172 Goodwill 160,759 160,755 159,956 159,956 Amortizing intangibles, net 15,999 15,129 14,272 13,441 Other assets 231,817 235,674 237,527 234,915 Total assets $5,861,212 $5,735,188 $5,722,096 $5,883,618 Liabilities Deposits (all domestic): Noninterest-bearing $525,387 $530,063 $522,810 $523,203 Interest-bearing 3,830,000 3,877,708 3,811,133 3,824,016 Total deposits 4,355,387 4,407,771 4,333,943 4,347,219 Short-term borrowings 309,895 147,346 237,734 354,201 Other liabilities 45,318 43,807 44,156 65,464 Subordinated debentures 108,250 108,250 108,250 105,750 Other long-term debt 470,032 467,856 435,781 442,196 Total long-term debt 578,282 576,106 544,031 547,946 Total liabilities 5,288,882 5,175,030 5,159,864 5,314,830 Shareholders' Equity Preferred stock, $1 par value per share, 3,000,000 shares authorized, none issued 0 0 0 0 Common stock, $1 par value per share, 100,000,000 shares authorized; 75,100,431 shares issued and 73,128,612 shares outstanding at December 31, 2007; 75,100,431 shares issued and 73,916,377 shares outstanding at December 31, 2006 75,100 75,100 75,100 75,100 Additional paid-in capital 207,958 207,553 207,310 206,889 Retained earnings 320,734 319,677 319,472 319,246 Accumulated other comprehensive loss, net (6,224) (15,417) (6,736) (147) Treasury stock (1,971,819 and 1,184,054 shares at December 31, 2007 and December 31, 2006, respectively, at cost) (14,138) (16,155) (22,814) (22,700) Unearned ESOP shares (11,100) (10,600) (10,100) (9,600) Total shareholders' equity 572,330 560,158 562,232 568,788 Total liabilities and shareholders' equity $5,861,212 $5,735,188 $5,722,096 $5,883,618 Book value per share $7.74 $7.59 $7.69 $7.78 Market value per share $11.75 $10.92 $11.06 $10.65 March 31, June 30, September 30, December 31, 2006 2006 2006 2006 Assets Cash and due from banks $84,627 $89,688 $95,151 $95,134 Interest-bearing bank deposits 391 905 7,986 985 Securities available for sale, at market value 1,737,899 1,681,139 1,649,506 1,644,690 Securities held to maturity, at amortized cost, (Market value $72,928 at December 31, 2007 and $80,156 at December 31, 2006) 85,673 82,720 79,841 78,501 Loans held for sale 553 4,436 0 0 Loans: Portfolio loans 3,651,632 3,680,070 3,818,846 3,783,874 Unearned income (98) (83) (70) (57) Allowance for credit losses (38,017) (39,020) (42,085) (42,648) Net loans 3,613,517 3,640,967 3,776,691 3,741,169 Premises and equipment, net 61,230 63,832 68,518 68,901 Other real estate owned 1,499 1,930 1,911 1,507 Goodwill 122,702 122,702 159,889 160,366 Amortizing intangibles, net 14,686 14,120 18,262 16,869 Other assets 221,733 222,947 234,784 235,794 Total assets $5,944,510 $5,925,386 $6,092,539 $6,043,916 Liabilities Deposits (all domestic): Noninterest-bearing $499,161 $507,021 $538,986 $522,451 Interest-bearing 3,496,577 3,491,784 3,779,956 3,803,989 Total deposits 3,995,738 3,998,805 4,318,942 4,326,440 Short-term borrowings 601,426 654,315 494,877 500,014 Other liabilities 37,952 38,662 45,308 52,681 Subordinated debentures 108,250 108,250 108,250 108,250 Other long-term debt 685,395 613,991 556,194 485,170 Total long-term debt 793,645 722,241 664,444 593,420 Total liabilities 5,428,761 5,414,023 5,523,571 5,472,555 Shareholders' Equity Preferred stock, $1 par value per share, 3,000,000 shares authorized, none issued 0 0 0 0 Common stock, $1 par value per share, 100,000,000 shares authorized; 75,100,431 shares issued and 73,128,612 shares outstanding at December 31, 2007; 75,100,431 shares issued and 73,916,377 shares outstanding at December 31, 2006 71,978 71,978 75,100 75,100 Additional paid-in capital 173,369 172,707 208,621 208,313 Retained earnings 319,523 319,740 322,583 322,415 Accumulated other comprehensive loss, net (17,349) (23,515) (9,065) (7,914) Treasury stock (1,971,819 and 1,184,054 shares at December 31, 2007 and December 31, 2006, respectively, at cost) (18,672) (16,947) (16,171) (14,953) Unearned ESOP shares (13,100) (12,600) (12,100) (11,600) Total shareholders' equity 515,749 511,363 568,968 571,361 Total liabilities and shareholders' equity $5,944,510 $5,925,386 $6,092,539 $6,043,916 Book value per share $7.32 $7.24 $7.71 $7.73 Market value per share $14.66 $12.70 $13.03 $13.43 FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED SELECTED FINANCIAL DATA Loans by Categories (dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2007 2007 2007 2007 2006 Commercial, financial, agricultural and other $926,904 $901,679 $866,590 $854,843 $861,427 Real estate - construction 207,708 143,680 123,844 101,719 92,192 Real estate - residential 1,237,986 1,268,313 1,288,089 1,312,389 1,346,503 Real estate - commercial 861,077 865,389 899,669 914,389 935,635 Loans to individuals 464,106 480,956 496,228 519,711 547,253 Leases, net of unearned income 62 136 305 494 864 Gross loans and leases 3,697,843 3,660,153 3,674,725 3,703,545 3,783,874 Unearned income (24) (30) (37) (47) (57) Total loans and leases net of unearned income $3,697,819 $3,660,123 $3,674,688 $3,703,498 $3,783,817 FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED SELECTED FINANCIAL DATA Quarter To Date Average Balance Sheets and Net Interest Analysis at December 31, (dollars in thousands) 2007 Average Income/ Yield or Balance Expense Rate (a) Assets Interest-earning assets: Interest-bearing deposits with banks $848 $8 4.11% Tax-free investment securities 313,165 3,510 6.84% Taxable investment securities 1,246,973 15,719 5.00% Federal funds sold 6,398 74 4.56% Loans, net of unearned income (b)(c) 3,666,006 63,488 7.06% Total interest-earning assets 5,233,390 82,799 6.55% Noninterest-earning assets: Cash 75,184 Allowance for credit losses (43,600) Other assets 487,765 Total noninterest-earning assets 519,349 Total Assets $5,752,739 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits (d) $595,956 $2,557 1.70% Savings deposits (d) 1,067,639 5,995 2.23% Time deposits 2,214,463 25,975 4.65% Short-term borrowings 209,726 1,819 3.44% Long-term debt 544,569 6,295 4.59% Total interest-bearing liabilities 4,632,353 42,641 3.65% Noninterest-bearing liabilities and capital: Noninterest-bearing demand deposits (d) 514,299 Other liabilities 34,163 Shareholders' equity 571,924 Total noninterest-bearing funding sources 1,120,386 Total Liabilities and Shareholders' Equity $5,752,739 Net Interest Income and Net Yield on Interest-Earning Assets $40,158 3.32% 2006 Average Income/ Yield or Balance Expense Rate (a) Assets Interest-earning assets: Interest-bearing deposits with banks $1,944 $27 5.59% Tax-free investment securities 283,970 3,212 6.90% Taxable investment securities 1,428,155 17,472 4.85% Federal funds sold 4,923 66 5.31% Loans, net of unearned income (b)(c) 3,795,900 65,362 7.04% Total interest-earning assets 5,514,892 86,139 6.46% Noninterest-earning assets: Cash 83,224 Allowance for credit losses (42,611) Other assets 490,184 Total noninterest-earning assets 530,797 Total Assets $6,045,689 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits (d) $602,999 $2,930 1.93% Savings deposits (d) 1,125,970 5,823 2.05% Time deposits 2,101,559 22,881 4.32% Short-term borrowings 444,028 5,124 4.58% Long-term debt 650,187 7,436 4.54% Total interest-bearing liabilities 4,924,743 44,194 3.56% Noninterest-bearing liabilities and capital: Noninterest-bearing demand deposits (d) 507,352 Other liabilities 35,004 Shareholders' equity 578,590 Total noninterest-bearing funding sources 1,120,946 Total Liabilities and Shareholders' Equity $6,045,689 Net Interest Income and Net Yield on Interest-Earning Assets $41,945 3.28% (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) 2007 Average Income/ Yield or Balance Expense Rate (a) Assets Interest-earning assets: Interest-bearing deposits with banks $639 $37 5.82% Tax-free investment securities 304,842 13,732 6.93% Taxable investment securities 1,278,469 63,218 4.94% Federal funds sold 3,204 157 4.89% Loans, net of unearned income (b)(c)(d) 3,687,037 253,951 7.09% Total interest-earning assets 5,274,191 331,095 6.56% Noninterest-earning assets: Cash 80,453 Allowance for credit losses (43,811) Other assets 489,502 Total noninterest-earning assets 526,144 Total Assets $5,800,335 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits (e) $595,055 $10,538 1.77% Savings deposits (e) 1,104,789 25,008 2.26% Time deposits 2,138,296 97,224 4.55% Short-term borrowings 279,045 11,442 4.10% Long-term debt 563,919 25,501 4.52% Total interest-bearing liabilities 4,681,104 169,713 3.63% Noninterest-bearing liabilities and capital: Noninterest-bearing demand deposits(e) 514,256 Other liabilities 32,335 Shareholders' equity 572,640 Total noninterest-bearing funding sources 1,119,231 Total Liabilities and Shareholders' Equity $5,800,335 Net Interest Income and Net Yield on Interest-Earning Assets $161,382 3.34% 2006 Average Income/ Yield or Balance Expense Rate (a) Assets Interest-earning assets: Interest-bearing deposits with banks $1,878 $99 5.27% Tax-free investment securities 281,823 12,876 7.03% Taxable investment securities 1,487,267 71,215 4.79% Federal funds sold 2,854 142 4.99% Loans, net of unearned income (b)(c)(d) 3,707,233 248,738 6.92% Total interest-earning assets 5,481,055 333,070 6.34% Noninterest-earning assets: Cash 79,509 Allowance for credit losses (40,510) Other assets 452,915 Total noninterest-earning assets 491,914 Total Assets $5,972,969 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits (e) $584,717 $10,251 1.75% Savings deposits (e) 1,138,579 21,496 1.89% Time deposits 1,889,731 76,707 4.06% Short-term borrowings 568,327 25,448 4.48% Long-term debt 724,846 32,205 4.44% Total interest-bearing liabilities 4,906,200 166,107 3.39% Noninterest-bearing liabilities and capital: Noninterest-bearing demand deposits (e) 493,790 Other liabilities 30,526 Shareholders' equity 542,453 Total noninterest-bearing funding sources 1,066,769 Total Liabilities and Shareholders' Equity $5,972,969 Net Interest Income and Net Yield on Interest-Earning Assets $166,963 3.31% (a) Yields on interest-earning assets have been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. (b) Average balance includes loans held for sale in 2006. (c) Income on nonaccrual loans is accounted for on the cash basis, and the loan balances are included in interest-earning assets. (d) Loan income includes loan fees. (e) 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) For the Year Ended December 31, 2007 2006 Loans on non-accrual basis $54,119 $12,043 Troubled debt restructured loans 147 160 Total nonperforming loans $54,266 $12,203 Loans past due in excess of 90 days and still accruing $12,853 $13,051 Loans outstanding at end of period $3,697,819 $3,783,817 Average loans outstanding (a) $3,687,037 $3,707,233 Allowance for credit losses $42,396 $42,648 Nonperforming loans as a percentage of total loans 1.47% 0.32% Net charge offs $10,294 $8,980 Reduction in allowance for credit losses due to transfer of credit to held for sale $0 $1,387 Net credit losses $10,294 $10,367 Net credit losses as a percentage of average loans outstanding 0.28% 0.28% Allowance for credit losses as a percentage of average loans outstanding 1.15% 1.15% Allowance for credit losses as a percentage of nonperforming loans 78.13% 349.49% Other real estate owned $2,172 $1,507 (a) Includes average loans held for sale in 2006. Profitability Ratios (dollars in thousands) For the Quarter Ended March 31, June 30, September 30, December 31, 2007 2007 2007 2007 Return on average assets 0.74% 0.79% 0.85% 0.80% Return on average equity 7.64% 8.00% 8.59% 8.08% Net interest margin 3.36% 3.31% 3.36% 3.32% Efficiency ratio (b) 66.98% 65.88% 65.17% 65.15% Fully tax equivalent adjustment $3,715 $3,745 $3,633 $3,614 For the Quarter Ended March 31, June 30, September 30, December 31, 2006 2006 2006 2006 Return on average assets 0.88% 0.83% 1.02% 0.81% Return on average equity 9.95% 9.39% 11.29% 8.50% Net interest margin 3.31% 3.31% 3.34% 3.28% Efficiency ratio (b) 64.35% 59.16% 56.31% 64.08% Fully tax equivalent adjustment $3,570 $3,608 $3,724 $3,711 For the Year Ended December 31, 2007 2006 Return on average assets 0.80% 0.89% Return on average equity 8.08% 9.76% Net interest margin 3.34% 3.31% Efficiency ratio (b) 65.79% 60.97% Fully tax equivalent adjustment $14,707 $14,613 (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."
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