EX-99 2 mailer99ex.htm MAY 2006 8K EX-99 FIRST COMMONWEALTH

Exhibit 99    -  First Commonwealth Financial Corporation  - President and CEO's Letter to Shareholders mailed
                      May 18, 2006

   First
Commonwealth         

Banking
Insurance
Trust
Financial Management
Investments

 

 

 

First Commonwealth

 

 

Financial Corporation

 

 

22 N. 6thStreet

 

 

Indiana, Pennsylvania 15701

 

 

724 -349 -7220 Phone

 

 

724 -349 -6427 Fax

Joseph E. O'Dell

 

 

President and Chief Executive Officer

 

www.fcbanking.com

 

 

 

 

May 9, 2006





Dear Shareholder:

First Commonwealth Financial Corporation (NYSE:FCF) reported net income of $12.9 million for the first quarter of 2006 compared to net income of $15.2 million for the first quarter of 2005. Basic and diluted earnings per share were $0.19 compared to $0.22 for the comparable period of 2005. Return on equity was 9.95% and return on assets was 0.88% for the first quarter of 2006 compared to 11.48% and 1.00% respectively for the 2005 period. The decline in net income was primarily the result of a decrease in net interest income.

Due to the relatively flat yield curve the Company has limited the amount reinvested in investment securities that have matured or have been paid down resulting in a decrease of 4.0% or $227.8 million in average interest earning assets. Average total loans and average total deposits increased 3.1% and 2.8% respectively in the first three months of 2006 when compared to first quarter of 2005. The net interest margin increased 11 basis points in the first quarter of 2006 compared to the 3.2% net interest margin reported in the fourth quarter of 2005.

The Corporation experienced a number of significant events during the first quarter of 2006. In January the Board of Directors elected David S. Dahlmann as Chairman of the Board replacing E. James Trimarchi following his retirement in December 2005.  Mr. Dahlmann will serve as a non -executive Chairman and will continue his role as Lead Director. Additionally, the Board named Julia E. Trimarchi Cuccaro, Esq. to the Board to fill the unexpired term of her father.

During the first quarter, First Commonwealth Bank continued its community office expansion into higher growth markets as it began construction on two new offices in the Pittsburgh area market. The Bank also formed First Commonwealth Home Mortgage, LLC as a joint venture with Wells Fargo Venture, LLC to expand the array of home financing products available to their clients.

The Corporation received the annual Excellence in Corporate Governance Award from Bank Director magazine. This award is presented to the Board that has best instituted and practices corporate governance in a superlative manner.

At the end of the first quarter First Commonwealth was added to the S&P 600 small cap index. This action resulted in a number of new institutional shareholders. The trading volume in our common stock increased substantially, albeit temporarily, as various funds rebalanced their portfolios.

Subsequent to the end of the first quarter there were several significant announcements.  At the First Commonwealth Annual Meeting held in April, the slate of four directors were reelected to new three year terms. Also announced in April was the acquisition of Laurel Capital Group, Inc.  Laurel Capital Group, Inc., headquartered in Allison Park, Pennsylvania, is the holding company of Laurel Savings Bank with total assets of $310 million, deposits of $255 million, loans of $214 million and equity of $28 million as of December 31, 2005.  Laurel Savings Bank has eight full service offices, including seven in Allegheny County and one in Butler County. These offices fit perfectly into our community office optimization plan and the acquisition should be completed in the third quarter of 2006.

The saddest occurrence in the first quarter was the loss of First Commonwealth Board member Alan R. Fairman. Alan passed away in March and is greatly missed by his family, friends and associates.  Alan was a dedicated and effective Board member.  He was a successful business person, but more importantly, he was an outstanding person. The entire First Commonwealth family will miss his leadership and friendship.

As always, I would like to thank all the employees of First Commonwealth for their dedication and efforts, and the shareholders for their continued confidence and support.

Sincerely,


/s/JOSEPH E. O'DELL

The following tables provide you with consolidated selected financial data of First Commonwealth at and for the quarter ended March 31, 2006.  You should read this information along with the consolidated financial statements of First Commonwealth and the accompanying notes included in its annual report on Form 10 -K for the year ended December 31, 2005, and its quarterly report on Form 10 -Q for the quarter ended March 31, 2006, which are available to the public over the Internet at the Corporation's website at http://www.fcbanking.com or from the company upon request to the attention of the Corporate Secretary.


 

FIRST COMMONWEALTH FINANCIAL CORPORATION

 

 

CONSOLIDATED SELECTED FINANCIAL DATA

 

 

(Dollar Amounts in Thousands, except per share data)

 

 

 

For the Quarter Ended

 

March 31,

 

2006

2005

 

Interest income

$79,781 

$75,637 

Interest expense

38,334 

30,705 

 

     Net interest income

41,447 

44,932 

Provision for credit losses

908 

1,744 

 

     Net interest income after provision for credit losses

40,539 

43,188 

Net securities gains

63 

485 

Trust income

1,394 

1,325 

Service charges on deposits

3,869 

3,540 

Insurance commissions

719 

840 

Income from bank owned life insurance

1,375 

1,321 

Merchant discount income

 -0 - 

839 

Card related interchange income

1,298 

1,087 

Other income

1,578 

2,003 

 

     Total other income

10,296 

11,440 

 

 

 

Salaries and employee benefits

19,357 

18,298 

Net occupancy expense

3,402 

2,992 

Furniture and equipment expense

2,767 

2,870 

Data processing expense

795 

939 

Pennsylvania shares tax expense

1,350 

1,266 

Intangible amortization

565 

565 

Other operating expense

7,357 

8,463 

 

     Total other expenses

35,593 

35,393 

 

Income before income taxes 

15,242 

19,235 

Applicable income taxes

2,304 

4,016 

 

     Net income

$12,938 

$15,219 

 

 

 

 

Average shares outstanding

69,469,709 

69,346,722 

Average shares outstanding assuming dilution

69,918,151 

70,024,400 

 

 

 

Per Share Data:

 

 

Basic earnings per share

$0.19 

$0.22 

Diluted earnings per share 

$0.19 

$0.22 

Cash dividends per share

$0.170 

$0.165 

 

 

 

 

March 31,

December 31,

 

2006

2005

 

Assets

 

 

  Cash and due from banks on demand

$84,627 

$84,555 

  Interest -bearing bank deposits

391 

473 

  Federal funds sold

 -0 - 

1,575 

  Securities available for sale, at market

1,737,899 

1,851,986 

  Securities held to maturity, at amortized cost

 

 

    (Market value $86,986 in 2006 and $89,804 in 2005)

85,673 

87,757 

 

 

 

  Loans held for sale

553 

1,276 

 

 

 

  Loans:

 

 

    Portfolio loans

3,651,632 

3,623,102 

    Unearned income

(98)

(119)

    Allowance for credit losses

(38,017)

(39,492)

 

        Net loans

3,613,517 

3,583,491 

 

 

 

  Premises and equipment

61,230 

60,860 

  Other real estate owned

1,499 

1,655 

  Goodwill

122,702 

122,702 

  Amortizing intangibles, net

14,686 

15,251 

  Other assets

221,733 

214,739 

 

        Total assets

$5,944,510 

$6,026,320 

 

 

 

 

 

FIRST COMMONWEALTH FINANCIAL CORPORATION

 

 

CONSOLIDATED SELECTED FINANCIAL DATA

 

 

(Dollar Amounts in Thousands)

 

 

 

March 31,

December 31,

 

2006

2005

 

Liabilities

 

 

  Deposits (all domestic):

 

 

    Noninterest -bearing

$499,161 

$491,644 

    Interest -bearing

3,496,577 

3,504,908 

 

      Total deposits

3,995,738 

3,996,552 

 

 

 

  Short -term borrowings

601,426 

665,665 

  Other liabilities

37,952 

43,314 

 

 

 

  Subordinated debentures

108,250 

108,250 

  Other long -term debt

685,395 

691,494 

 

 

 

 

      Total long -term debt

793,645 

799,744 

 

        Total liabilities

5,428,761 

5,505,275 

 

 

 

Shareholders' Equity

 

 

  Common stock $1 par value per share

71,978 

71,978 

  Additional paid -in capital

173,369 

173,967 

  Retained earnings

319,523 

318,569 

  Accumulated other comprehensive income (loss)

(17,349)

(9,655)

  Treasury stock

(18,672)

(20,214)

  Unearned ESOP shares

(13,100)

(13,600)

 

        Total shareholders' equity

515,749 

521,045 

 

          Total liabilities and shareholders' equity

$5,944,510 

$6,026,320 

 

 

 

 

Shares issued

71,978,568 

71,978,568 

Shares outstanding 

70,500,069 

70,377,916 

Treasury shares

1,478,499 

1,600,652 

Book value per share 

$7.32 

$7.40 

Market value per share 

$14.66 

$12.93 

 

 

 

Asset Quality Data At March 31,

 

 

 

2006

2005

 

Loans on nonaccrual basis

$14,599 

$11,200 

Past due loans

14,305 

16,846 

Renegotiated loans

170 

182 

 

     Total nonperforming loans

$29,074 

$28,228 

Loans outstanding at end of period (a)

$3,652,087 

$3,554,441 

Average loans outstanding(year -to -date) (a)

$3,650,953 

$3,542,655 

Allowance for credit losses

$38,017 

$40,794 

Nonperforming loans as percent of total loans

0.80%

0.79%

Net charge -offs (year -to -date)

$2,383 

$2,013 

Net charge -offs as percent of average loans (annualized)

0.26%

0.23%

Allowance for credit losses as percent of average loans

 

 

   Outstanding

1.04%

1.15%

Allowance for  credit losses as percent of nonperforming loans

130.76%

144.52%

Other real estate owned

$1,499 

$1,463 

(a) Includes loans held for sale

 

 

 

 

 

Profitability Ratios 

 

 

 

For the Quarter Ended

 

March 31,

 

2006

2005

 

Return on average assets

0.88%

1.00%

Return on average equity

9.95%

11.48%

Efficiency ratio (FTE) (a)

64.35%

59.35%

Fully tax equivalent adjustment

$3,570 

$3,267 

 

(a) Efficiency ratio is "total other expenses" as a percentage of total revenue.  Total revenue consists of 
      "net interest income", on a fully tax -equivalent basis," plus "total other income."


 

 

First Commonwealth Financial Corporation

                                          

Mail Address:

Old Courthouse Square

 

P.O. Box 400

22 North Sixth Street

 

Indiana PA  15701 -0400

Indiana PA   15701

 

 

Telephone:  724 -349 -7220

 

Website:  www.fcbanking.com




INVESTOR INFORMATION


STOCK LISTING:  First Commonwealth Financial Corporation common stock is listed on The New York Stock Exchange and is traded under the symbol FCF.

For assistance regarding a change in shareholder account registration, replacing lost stock certificates/dividend checks, or an address change, please contact First Commonwealth's transfer agent listed below (for directly registered accounts only).   The Bank of New York's website also provides information regarding online Individual Account Access.  If shares are held through a brokerage firm (street name accounts), please contact the broker if there are questions regarding an account.



THE BANK OF NEW YORK

Investor Services Department 

Toll Free:  1-800-524-4458

 

P.O. Box 11258

Website:   www.stockbny.com

 

New York, NY   10286-1258

 



DIVIDEND REINVESTMENT PLAN:  First Commonwealth Financial Corporation offers a direct purchase and dividend reinvestment plan, First Commonwealth Stock Direct, administered by The Bank of New York.  The plan allows both directly registered shareholders and interested first-time investors to purchase First Commonwealth common stock without the customary brokerage expenses and also to automatically reinvest cash dividends paid on the common stock.  Purchases made through the Plan with reinvested dividends receive a 10% discount on the fair market price (on shareholder accounts directly held with the Bank of New York).  For more information, please visit our website at www.fcbanking.com (click on "Investor Relations").  A copy of the plan prospectus and enrollment form may also be downloaded through The Bank of New York's website, www.stockbny.com (under "Company Facts & Forms", click on "Company List", then "First Commonwealth"); and copies may also be requested from The Bank of New York by phone or mail.


DIRECT DEPOSIT OF DIVIDENDS:  Direct deposit of dividend payments to a checking or savings account is also available. To enroll, please call The Bank of New York for an Authorization Form (completed forms must be received by The Bank of New York 30 days prior to the dividend payment date). 

INVESTOR/SHAREHOLDER INQUIRIES:  Request for information or assistance regarding the Corporation should be directed to the attention of Shareholder Relations at the Corporate Office in Indiana, PA 1-800-331-4107.

FORWARD LOOKING STATEMENTS:  The enclosed shareholder communication contains "forward -looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, that involve significant risks and uncertainties.  Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to:  the timing and magnitude of changes in interest rates; changes in accounting principles, policies, or guidelines:  changes in regional, national and global economic conditions; changes in regulatory requirements, and significant changes in the securities markets.  Consequently, all forward -looking statements made in this shareholder communication are qualified by these cautionary statements and the cautionary language in First Commonwealth's most recent documents filed with the Securities and Exchange Commission.



First

              Commonwealth

 

                         First Commonwealth

                           Financial Corporation