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First Commonwealth Financial Corp. Reports Operating Results (10-Q)

May 10, 2010 | About:

First Commonwealth Financial Corp. (NYSE:FCF) filed Quarterly Report for the period ended 2010-03-31.

First Commonwealth Financial Corp. has a market cap of $467.55 million; its shares were traded at around $5.46 with and P/S ratio of 1.49. The dividend yield of First Commonwealth Financial Corp. stocks is 0.73%.FCF is in the portfolios of Manning & Napier Advisors, Inc, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

For the three months ended March 31, 2010, First Commonwealth had a net loss of $13.2 million or $0.15 per share as compared to net income of $1.7 million or $0.02 per diluted share for the same period in 2009. The return on average assets for the three month period was a negative 0.83% compared to a positive 0.11% for the comparable period in 2009. The return on average equity was a negative 8.17% for the three month period ended March 31, 2010 and a positive 1.03% for the same period in 2009.

The 2010 first quarter net loss resulted primarily from a provision for credit losses of $45.0 million related primarily to updated collateral values on three large commercial loans. Other items affecting results for the three month period ending March 31, 2010 include net impairment losses of $2.8 million; an increase of 15 basis points or $2.1 million in net interest margin on a fully tax-equivalent basis; an increase of $1.2 million in non-interest income, excluding net security losses; and a decrease of $0.1 million in non-interest expense compared to the same period as last year.

Net interest income, on a fully taxable-equivalent basis, increased $2.1 million, or 4%, in the first quarter of 2010 as compared to the first quarter of 2009, despite the negative impact of a $138.2 million increase in the level of nonperforming loans. The net interest income increase was a result of a 15 basis point increase in the net interest margin, partially offset by a decline in average earning assets. Net interest margin was 3.87% and 3.72% for the three month periods ended March 31, 2010 and 2009, respectively. The improved net interest margin can be attributed to a more favorable deposit mix, improved loan pricing and reduced balance sheet leveraging activities.

Interest income, on a fully taxable-equivalent basis, decreased $5.3 million, or 7%, as the contribution from loan growth was negatively offset by a decrease in average investment securities and lower interest rates. Comparing the first quarter of 2010 with the same period in 2009, average loans increased $175.4 million primarily in the commercial real estate, home equity and indirect lending categories, while average investments declined $232.5 million as proceeds from maturing securities contributed to a decrease in average borrowings. The taxable-equivalent yield on earnings assets decreased 35 basis points from 5.40% in the first quarter of 2009 to 5.05% in the first quarter of 2010.

Interest expense decreased $7.4 million or 30%, primarily due to a 58 basis point decline on rates paid for interest-bearing liabilities. The cost of interest-bearing liabilities was 1.34% and 1.92% at March 31, 2010 and 2009, respectively. The benefit from the lower interest rates paid was offset by growth in average deposits which increased $295.5 million, including $482.6 million of lower costing transaction and savings deposits, offset by a $187.1 million decrease in time deposits.

The provision for credit losses for the first quarter of 2010 totaled $45.0 million, an increase of $36.8 million as compared to the first quarter of 2009. The higher provision resulted primarily from an updated collateral valuation for a commercial real estate loan in Florida that was placed in nonaccrual status during the third quarter of 2009, an out-of market commercial loan that migrated to nonaccrual status during the first quarter of 2010 and continued deterioration in a western Pennsylvania commercial loan that was placed in nonaccrual status in the fourth quarter of 2009.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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