3Q 2016 Earnings Supplement
NYSE: FCF
Supplemental Financial
Information
Third Quarter 2016
October 26, 2016
Filed by First Commonwealth Financial Corporation
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: DCB Financial Corp
(Commission File No.: 000-22387)
3Q 2016 Earnings Supplement
Forward‐looking statements
This presentation 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. 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:
› Local, regional, national and international economic conditions and the impact they may have on First Commonwealth and its customers;
› volatility and disruption in national and international financial markets;
› the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board;
› inflation, interest rate, commodity price, securities market and monetary fluctuations;
› the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which First
Commonwealth must comply;
› the soundness of other financial institutions;
› political instability;
› impairment of First Commonwealth’s goodwill or other intangible assets;
› acts of God or of war or terrorism;
› the timely development and acceptance of new products and services and perceived overall value of these products and services by users;
› changes in consumer spending, borrowings and savings habits;
› changes in the financial performance and/or condition of First Commonwealth’s borrowers;
› technological changes;
› acquisitions and integration of acquired businesses;
› First Commonwealth’s ability to attract and retain qualified employees;
› changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers;
› the ability to increase market share and control expenses;
› 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;
› the reliability of First Commonwealth’s vendors, internal control systems or information systems;
› 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
› 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.
3Q 2016 Earnings Supplement
3Q 2016 Highlights
3
$ in millions, except per share data
(1) Taxable equivalent
(2) Please refer to pages 22 ‐ 24 for disclosures regarding non‐GAAP measures
(3) Efficiency ratio is calculated as noninterest expense as a percentage of net interest income, on a fully taxable equivalent basis, and total noninterest income, excluding net securities gains and losses
(4) Quarter‐to‐date annualized
Net income of $17.2 million increased by
$5.2 million compared to linked quarter
(LQ) and $4.8 million year‐over‐year (YoY)
Maintained positive operating leverage
YoY, in that revenue growth outstripped
growth in operating expenses
Net interest income increased by $0.5
million to LQ and $3.0 million YoY
primarily as a result of strong commercial
loan growth
Fee income increased $0.4 million to LQ
primarily due to increases in service
charges on deposits, trust, retail
brokerage, and gain on sale of mortgage
loans
3Q16 2Q16 3Q15 2Q16 3Q15
Net interest income(1) $50.6 $50.1 $47.6 $0.5 $3.0
Provision for credit losses 3.4 10.4 4.6 (7.0) (1.2)
Fee revenue 16.5 16.1 16.3 0.4 0.2
Gain on sale of securities 0.0 0.0 0.0 0.0 0.0
Derivative mark‐to‐market 0.5 (0.5) (0.8) 1.0 1.3
Operating expense(2) 38.0 37.6 39.4 0.4 (1.4)
Other expense(2) 0.7 (0.2) 0.9 0.9 (0.2)
Income taxes(1) 8.3 5.9 5.8 2.4 2.5
Net income $17.2 $12.0 $12.4 $5.2 $4.8
Reported EPS $0.19 $0.14 $0.14 $0.05 $0.05
Operating EPS(2) $0.20 $0.14 $0.15 $0.06 $0.05
Return on average assets 1.02% 0.72% 0.78% 0.30% 0.24%
Return on average equity 9.14% 6.53% 6.86% 2.61% 2.28%
Return on average tangible common equity(2) 11.74% 8.41% 8.87% 3.33% 2.87%
Efficiency ratio(3) 57.27% 57.06% 63.83% 0.21% (6.56%)
Core efficiency ratio(2) 56.65% 56.88% 61.65% (0.23%) (5.00%)
Net interest margin(1) 3.29% 3.27% 3.25% 0.02% 0.04%
Net Chargeoffs(4) 0.70% 0.48% 0.13% 0.22% 0.57%
Change from
3Q 2016 Earnings Supplement
Balance Sheet
Commercial loans increased $45 million
compared to LQ primarily due to $35 million
growth in Commercial Real Estate (CRE)
balances and $19 million growth in
Commercial and Industrial (C&I), partially
offset by slight declines in Construction
Total deposits increased $65 million from LQ
due to growth in noninterest‐bearing demand
deposits
Noninterest‐bearing demand deposits
increased $165 million, or 15.3%, YoY and
currently comprise 27.8% of total deposits
4
$ in millions
Period‐end Balances 3Q16 2Q16 3Q15 2Q16 3Q15
Cash & securities $1,339 $1,418 $1,332 ($79) $7
Loans held for sale 8 12 5 (4) 3
Commercial loans 3,120 3,075 2,743 45 377
Consumer loans 1,741 1,768 1,833 (27) (92)
Allowance for credit losses (55) (60) (49) 5 (6)
OREO 8 9 11 (1) (3)
Goodwill & intangibles 165 165 163 0 2
Other 340 363 347 (23) (7)
Total Assets $6,666 $6,750 $6,385 ($84) $281
Noninterest Bearing DDA $1,242 $1,137 $1,077 $105 $165
Interest Bearing Savings & DDA 2,640 2,671 2,498 (31) 142
Time Deposits 576 585 582 (9) (6)
Brokered Deposits 1 1 4 0 (3)
Short‐term Borrowings 1,330 1,465 1,330 (135) 0
Long‐term Debt 81 81 111 0 (30)
Other 44 68 60 (24) (16)
Equity 752 742 723 10 29
Total Liabilities & Equity $6,666 $6,750 $6,385 ($84) $281
Change From
3Q 2016 Earnings Supplement
$47.6
$49.2 $49.7 $50.1
$50.6
3.25% 3.26% 3.29% 3.27% 3.29%
$25.0
$30 .0
$35 .0
$40 .0
$45 .0
$50 .0
$55 .0
2.50%
2.70%
2.90%
3.10%
3.30%
3.50%
3.70%
3.90%
3Q15 4Q15 1Q16 2Q16 3Q16
Net Interest Margin
3.52% 3.53% 3.59% 3.58% 3.60%
0.27% 0.27% 0.30% 0.31% 0.31%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
3Q15 4Q15 1Q16 2Q16 3Q16
Yield on Earning Assets Cost of Funds
Net interest income and net interest margin
(1) Taxable equivalent
Net interest income increased $0.5 million
compared to LQ primarily due to strong
commercial loan growth
Net interest margin of 3.29% increased 2bps
over LQ due to:
– Higher volume of commercial loans
– Positive replacement yields on
commercial and consumer loans
– Funding costs remaining relatively stable
Average interest earning assets decreased $31
million over LQ due to not replacing security
maturities as a result of unfavorable yield
opportunities in the current rate environment
5
$ in millions
Net Interest Income(1)
Yield / Cost Trends(1)
(1)
3Q 2016 Earnings Supplement
$1,127 $1,189 $1,208
$180 $242 $229
$1,436 $1,648
$1,683
$1,209
$1,207 $1,194
$629
$569 $555
3Q15 2Q16 3Q16
Commercial and Industrial Construction Commercial Real Estate
1‐4 Family Real Estate Consumer
$4,551
$4,833 $4,839
3.82% 3.86% 3.90%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
$3,500
$3,700
$3,900
$4,100
$4,300
$4,500
$4,700
$4,900
$5,100
3Q15 2Q16 3Q16
Yield on loans
Loans
(1) Includes loans held for sale
(2) Taxable equivalent yield
Average
Yield on loans of 3.90% increased 4bps from
LQ due to favorable replacement rates on
commercial and consumer loan yields
Period‐end
Loans increased $14 million to LQ and $288
million from the prior year driven by:
– Commercial loan growth of $44 million
LQ and $377 million YoY
– $58 million of YoY growth from loans
acquired with the First Community Bank
acquisition in 4Q15
6
$ in millions
Average Loans(1)
Period‐end Loans(1)
(2)
$4,581
$4,869$4,855
3Q 2016 Earnings Supplement
$586 $586 $577
$2,498 $2,671 $2,640
$1,077
$1,137 $1,242
3Q15 2Q16 3Q16
Time Deposits Interest‐bearing DDA and Savings Noninterest‐bearing DDA
$4,229
$4,377 $4,393
0.22% 0.24% 0.26%
0.00%
0.50%
1.00%
1.50%
2.00%
$3,500
$3,600
$3,700
$3,800
$3,900
$4,000
$4,100
$4,200
$4,300
$4,400
$4,500
3Q15 2Q16 3Q16
Average Deposits Cost of Interest‐bearing Deposits
Deposits
Average
Average deposits increased $16 million over LQ
and increased $164 million YoY, including the
addition of $90 million in deposits acquired
through the First Community Bank acquisition in
4Q15
Year‐over‐year runoff was driven by the
intentional runoff of higher‐cost brokered time
deposits in 2015, which were relatively flat to LQ
and decreased $62 million YoY
Cost of interest‐bearing deposits of 0.26%
increased 2bps over LQ
Period‐end
Total deposits increased $65 million over LQ and
increased $298 million YoY, including the
addition of $89 million in deposits acquired
through the First Community Bank acquisition in
4Q15
Year‐over‐year runoff was due in part to the
intentional runoff of higher‐cost brokered time
deposits in 2015
Noninterest bearing demand deposits increased
$165 million YoY and currently comprise 27.8%
of total deposits
7
$ in millions
Average Deposits
Period‐end Deposits
$4,161 $4,394
$4,459
3Q 2016 Earnings Supplement
Noninterest income
Service charges on deposit accounts increased
$0.2 million to LQ as a result of seasonal
fluctuations
Trust and retail brokerage increased $0.4
million to LQ as a result of tax preparation
fees and higher retail brokerage and annuity
sales
Swap fee income decreased $0.1 million
compared to LQ, but increased $0.6 million
YoY
Gain on sale of mortgage loans increased $0.3
million to LQ and $0.4 million YoY due to
expansion of our mortgage business into Ohio
The derivative mark‐to‐market adjustment
increased noninterest income by $0.5 million
in 3Q16, but decreased noninterest income by
$0.8 million in 3Q15
8
$ in millions
3Q16 2Q16 3Q15 2Q16 3Q15
Service charges $4.0 $3.8 $4.1 $0.2 ($0.1)
Interchange 3.7 3.8 3.6 (0.1) 0.1
Trust 1.5 1.3 1.6 0.2 (0.1)
Retail brokerage 1.2 1.0 1.2 0.2 0.0
Insurance 0.9 1.0 1.0 (0.1) (0.1)
BOLI 1.4 1.3 1.4 0.1 0.0
SWAP fees 0.7 0.8 0.1 (0.1) 0.6
Gain on sale of mortgage loans 1.2 0.9 0.8 0.3 0.4
Other fees 1.9 2.2 2.5 (0.3) (0.6)
Total fee income 16.5 16.1 16.3 0.4 0.2
Gain on sale of securities 0.0 0.0 0.0 0.0 0.0
Derivative mark‐to‐market 0.5 (0.5) (0.8) 1.0 1.3
Total noninterest income 17.0 15.6 15.5 1.4 1.5
Change from
$15.5 $15.3
$13.7
$15.6
$17.0
3Q15 4Q15 1Q16 2Q16 3Q16
3Q 2016 Earnings Supplement
$40.3
$43.1
$38.1 $37.4 $38.7
63.8%
66.6%
60.1%
57.1% 57.3%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100 .0%
110 .0%
$15 .0
$20 .0
$25 .0
$30 .0
$35 .0
$40 .0
$45 .0
$50 .0
$55 .0
3Q15 4Q15 1Q16 2Q16 3Q16
Efficiency Ratio
Noninterest expense
Salaries and benefits increased $0.8 million to
LQ primarily due to continued realignment of
staffing back into our consumer banking
businesses and higher hospitalization costs,
but decreased $1.8 million YoY primarily due to
the realignment of the staffing and capabilities
of our consumer banking businesses and
relatively low hospitalization costs
Other operating expenses included $0.3 million
of write‐downs on three ORE properties in
2Q16
Unfunded commitments increased $1.0 million
to LQ and $0.5 million YoY primarily due to
higher commercial construction commitments
9
$ in millions
(1)
(1) Efficiency ratio is calculated as noninterest expense as a percentage of net interest income, on a fully taxable equivalent basis, and total
noninterest income, excluding net securities gains and losses
3Q16 2Q16 3Q15 2Q16 3Q15
Salaries and benefits $20.7 $19.9 $22.5 $0.8 ($1.8)
Occupancy 3.2 3.2 3.3 0.0 (0.1)
Furniture and equipment 2.8 2.9 2.7 (0.1) 0.1
PA shares tax 0.9 1.1 1.0 (0.2) (0.1)
Data processing 1.8 1.8 1.5 0.0 0.3
Collection and repo 0.8 0.5 0.8 0.3 0.0
Professional fees 1.2 0.9 1.0 0.3 0.2
FDIC insurance 1.1 1.1 1.0 0.0 0.1
Operational losses 0.3 0.6 0.3 (0.3) 0.0
Other operating expenses 5.2 5.6 5.3 (0.4) (0.1)
Total operating expense 38.0 37.6 39.4 0.4 (1.4)
Unfunded commitments 0.5 (0.5) 0.0 1.0 0.5
Intangible amortization 0.1 0.1 0.2 0.0 (0.1)
Shares tax settlement 0.0 0.0 0.7 0.0 (0.7)
Loss on sale / write‐down 0.0 0.0 0.0 0.0 0.0
Acquisition expenses 0.1 0.2 0.0 (0.1) 0.10
Total noninterest expense 38.7 37.4 40.3 1.3 (1.6)
Change from
3Q 2016 Earnings Supplement
$28.8
$36.7
$46.8 $48.1 $40.5
$12.0
$14.1
$15.0 $16.3
$14.3 $10.9
$9.6
$9.0 $8.9
$8.0
3Q15 4Q15 1Q16 2Q16 3Q16
$0.0
$10 .0
$20 .0
$30 .0
$40 .0
$50 .0
$60 .0
$70 .0
$80 .0
Nonaccrual Loans Restructured Debt (accruing) OREO
$4.6
$6.1 $6.5
$10.4
$3.4
$1.4
$3.8
$2.1
$5.8
$8.5
0.13%
0.32% 0.18%
0.48% 0.70%
$0.0
$2.0
$4.0
$6.0
$8.0
$10 .0
$12 .0
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
3Q15 4Q15 1Q16 2Q16 3Q16
Provision Expense Net Charge‐offs Net Charge‐off Rate
Credit quality
(1) Net charge‐offs as a percentage of period‐to‐date average loans, annualized
Provision expense of $3.4 million decreased
$7.0 million to LQ due to the establishment of
$7.5 million in a specific reserve for a
manufacturer of safety products for the
mining industry that was placed into
nonperforming status in 2Q16
Net charge‐offs in 3Q16 included a $6.5
million charge‐off of a previously established
reserve for the aforementioned manufacturer
of safety products for the mining industry that
was classified as nonaccrual in 2Q16
Nonperforming loans (nonaccrual loans plus
restructured accruing debt) decreased $9.6
million to LQ
10
$ in millions
Provision Expense and Net Charge‐offs
Nonperforming Assets
$73.3
$62.8
$51.7
$60.4
$70.8
(1)
3Q 2016 Earnings Supplement
Other
98.2%
Oil, Gas and
Coal
1.8%
Energy Related Credits
11
$ in millions
Total Loans
$4.9
billion
Oil and Gas Loans 3Q16 2Q16 1Q16
Balance $66.1 $67.4 $63.7
Reserves (% o/s) 4.5% 3.4% 7.7%
Non‐performing (% o/s) 15.3% 15.8% 20.4%
Non‐pass (% o/s) 39.5% 40.0% 38.8%
Utilization 52.3% 49.0% 43.5%
Total exposure $126.3 $137.5 $146.3
Coal Loans 3Q16 2Q16 1Q16
Balance $20.2 $28.5 $29.3
Reserves (% o/s) 0.5% 26.9% 1.9%
Non‐performing (% o/s) 19.6% 37.0% 0.0%
Non‐pass (% o/s) 28.3% 44.5% 43.5%
Utilization 54.7% 49.5% 42.9%
Total exposure $36.9 $57.4 $68.4
3Q 2016 Earnings Supplement
50%
62%
50% 52%
36%
50%
62%
54% 54%
36%
0%
10%
20%
30%
40%
50%
60%
70%
3Q15 4Q15 1Q16 2Q16 3Q16
Dividend Payout Ratio Net Payout Ratio
Capital Return
(1) Net payout ratio represents common stock dividends and share repurchases less share issuances and stock compensation‐related items, divided by net
income attributable to common stock.
Strong capital levels allow us to continue to
return capital to shareholders
– Returned $6.2 million in dividends to
shareholders in 3Q16
– Suspended the $25 million share
repurchase program in July as a result of
the pending acquisition of 13 branches in
Ohio
– Dividend payout ratio expected to remain
in the 40%‐60% range
12
Payout Ratios
(1)
3Q 2016 Earnings Supplement
NYSE: FCF
Appendix
Acquisition of DCB Financial
Corp. and 13 FirstMerit
Branches in Ohio
Non‐GAAP Measures
3Q 2016 Earnings Supplement
Ohio Buildout to Date
Successful Expansion Efforts
Leveraging significant management experience in Ohio market
Opened a business center in Cleveland in April 2014
Targeting commercial customers in northeastern OH
Acquired First Community Bank in Columbus, OH in October
2015
~$100 million in assets and ~$90 million in deposits at
time of acquisition
Cost savings fully achieved
Successful transition with minimal customer disruption;
deposits have grown since close
Opened two mortgage production offices in central and
northeast OH in 2016
Continue to build‐out mortgage delivery in central and
northeastern OH
Announced acquisition of 13 branches from FirstMerit in July ’16
$735 million in deposits and $115 million in loans
Announced acquisition of DCB Financial Corp in October ’16
Including DCBF acquisition, First Commonwealth’s Ohio franchise
will be comprised of:
271 employees(2)
$1.1 billion loans
$1.3 billion deposits
32 banking branches
3 loan production offices
Ohio Loan Portfolio ($MM)(1)
First Commonwealth’s presence in Ohio presents significant opportunity for growth
(1): Includes all OH based consumer loans, Commercial Real Estate loans with properties located in OH and C&I loans with borrowers headquartered in OH
(2): At announcement
$177
$202
$232
$284
$332
$424
$502
$565 $574
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
14
3Q 2016 Earnings Supplement
Checking
25.1%
Interest
Checking
18.8%
Money
Market
33.6%
Savings
10.7%
CDs
11.8%
C&I
26.3%
Comm.
Real
Estate
26.5%
Resi. Real
Estate
31.3%
Consumer
Loans
15.9%
Acquisition of DCB Financial Corporation
Note: Loan and deposit data as of June 30, 2016.
(1): As of June 30, 2015, pro forma for announced M&A through September 30, 2016.
Acquisition of DCB Financial Corporation includes
$52 million average deposits per (full‐service) branch
$467million of deposits at an average cost of 0.25%
$397 million of loans yielding 4.18%
Top 10 pro forma deposit market share(1) in Columbus, OH
market provides meaningful retail banking presence
First Commonwealth will become the third largest
community bank in Columbus, OH and the largest in
Delaware County
#10 overall market share in Columbus, OH MSA
#3 overall market share in Delaware County, OH
Complements existing Columbus presence which includes four
retail branches and a Mortgage Production Office in Dublin
Financially compelling
Immediately accretive to GAAP earnings per share
IRR of approximately 20%
TBV per share earnback less than 5 years
First Commonwealth Pro Forma Footprint
Acquired Deposits Acquired Loans
Total Deposits: $467MM
Cost of Deposits: 0.25%
Total Loans: $397MM
Yield on Loans: 4.18%
Acquired FMER Branches First Commonwealth DCB Financial
FCF Commercial Loan Production OfficeFCF Mortgage Loan Production Office
15
3Q 2016 Earnings Supplement
Acquisition of DCBF ‐ Key Financial Terms
Transaction Value: Implied consideration of $14.50 per DCBF common share or $106.4 million in aggregate
Approximately 178% of DCBF’s tangible book value
Form of Consideration: DCBF shareholders will be entitled to elect to receive either 1.427 shares of First Commonwealth common
stock or $14.50 in cash for each share of DCBF common stock, subject to proration to ensure that the
aggregate merger consideration is comprised of 80% of First Commonwealth common stock and 20% cash
Financing: Existing cash used to finance cash component of consideration (no additional capital raise required)
Pro Forma Ownership: 91% FCF / 9% DCBF
GAAP EPS Accretion: Immediately accretive to EPS
2017: $0.03 / 3.8% (excluding one‐time costs)
2018: $0.05 / 6.6%
Internal Rate of Return: Approximately 20%
Tangible Book Value Dilution: ~ $0.25 per share (3.9%) tangible book value per share dilution at close (including one‐time costs)
Tangible book value per share earnback period of 4.7 years (crossover method)
Cost Savings: Approximately 46% of DCBF’s annualized 2016 operating expenses or $10.2 million (pre‐tax)
One‐Time Costs: ~ $12.0 million (pre‐tax)
Purchase Accounting Marks: Gross credit mark of $9.4 million (2.4% of loans and 204% of reserves)
$1.5 million interest rate mark
CDI equal to 0.71% of core deposits ($2.3 million)
Deferred gain from sale/leaseback of $2.8 million
Expected Closing: 2nd Quarter of 2017
Required Approvals: Standard regulatory approval
Shareholder approval from DCB Financial shareholders
16
3Q 2016 Earnings Supplement
Acquisition of DCBF ‐ Tangible Book Value Per Share Dilution and Earnback
Note: Based on expectations and assumptions as of announcement date; subject to change at transaction closing
(1): Based on fixed exchange ratio of 1.427 shares of First Commonwealth common stock
Tangible Book Value Dilution Calculation Goodwill and Intangibles Calculation
$MM Shares Per Share $MM
FCF Tangible Book Value at March 30, 2017 (est.) $567.7 88.9 $6.38 Deal Value $106.4
Equity Consideration to DCBF(1) 84.5 8.4 DCBF TCE (at close) $61.0
Goodwill and Intangibles Created (48.3) DCBF Acquisition Expenses (after tax) (1.2)
One‐time Acquisition Expenses (after tax) (6.9) Net Credit Mark (after tax) (3.1)
Pro Forma FCF Tangible Book Value at Close $597.0 97.3 $6.13 Net Rate and Other Marks (after tax) 2.8
Adjusted Tangible Book Value $59.5
Tangible Book Value Accretion/ (Dilution) $29.3
Per Share ($0.25) (3.9%) Excess Over Adjusted TBV $46.9
Core Deposit Intangible Created (net of DTL) ($1.5)
Tangible Book Value Per Share Earnback Asset Mgmt Intangible Created (net of DTL) ($1.2)
Goodwill Created $44.2
CDI and Other Intangibles Created $4.1
Total Goodwill and Intangibles Created $48.3
~ 4.7 Years
17
3Q 2016 Earnings Supplement
Canton
Ashtabula
Columbus
PA
OH Pittsburgh
Altoona
Cleveland
Real Estate
Lines
52%Commercial
38%
Real Estate
Loans
8%
Auto /
Vehicle
2%
Other
Consumer
0%
Small
Business
0%
Savings
57%
Demand /
NOW
36%
CDs
4%
IRAs
3%
Acquisition of 13 FirstMerit Branches
Note: Acquired loan and deposit data as of May 31, 2016.
(1): As of June 30, 2015, pro forma for announced M&A through July 26, 2016.
Acquisition of 13 FirstMerit branches in Northeast Ohio in
conjunction with Huntington’s previously announced acquisition
of FirstMerit
$56 million average deposits per branch
$735 million of deposits at an average cost of 0.22%
$115 million of loans yielding 4.05%
Top 10 pro forma deposit market share(1) in target markets
provides meaningful market presence
First Commonwealth will become the largest community
bank in the Canton market
#3 in Canton, OH MSA
#6 in Ashtabula, OH MSA
Northeast Ohio markets complement existing Cleveland loan
production office and Columbus presence
Financially compelling
4.5% deposit premium
Immediately accretive to GAAP and Cash earnings per
share
IRR significantly exceeds cost of capital
First Commonwealth Pro Forma Footprint
Acquired Deposits Acquired Loans
Total Deposits: $735MM
Cost of Deposits: 0.22%
Total Loans: $115MM
Yield on Loans: 4.05%
Acquired FirstMerit Branches First Commonwealth
First Commonwealth Commercial Loan Production Office
First Commonwealth Mortgage Loan Production Office
18
3Q 2016 Earnings Supplement
Acquisition of 13 FirstMerit Branches ‐ Key Transaction Terms
Note: Acquired branches, deposit and loan data as of May 31, 2016.
(1): Net book value as of May 31, 2016.
Purchase Price
4.5% premium on deposits
$33.1 million based on $735 million of deposits as of May 31, 2016
Premium will be calculated based on average daily balance of deposits for the 30 days prior to and inclusive
of the 5th business day prior to closing
Loans
$115 million of loans as of May 31, 2016
62% consumer
38% commercial
Branches
13 branches in Canton and Ashtabula markets
Canton: 11 branches with $676 million deposits
Ashtabula: 2 branches with $59 million deposits
Fixed Assets
Fixed assets to be acquired at net book value at close
Approximately $4.6 million in aggregate(1)
One‐Time Costs $2.7 million pre‐tax one‐time restructuring charges
EPS
Accretion
Immediately accretive to EPS
~5% GAAP EPS accretive by year 3
~8% Cash EPS accretive by year 3
Tangible Book Value
Dilution
~5.0% tangible book value dilution at close including the impact of all one‐time restructuring charges
<5 year tangible book value per share earn back period (crossover method)
Purchase Accounting
Marks
2.4% credit mark on loan portfolio ($2.8 million)
$1.4 million interest rate mark on loans
CDI equal to 2.07% of core deposits
Capital Remaining capacity under January 2016 common stock repurchase program not expected to be executed
Closing Conditions Customary regulatory approvals
Expected Closing 4Q16
19
3Q 2016 Earnings Supplement
Adjusted Earnings Impact
(1) Assumes March 31, 2017 completion date for modeling purposes
$ in millions
20
13 Branches DCBF (1) Total 13 Branches DCBF Total
Net Interest Income $7.5 $15.2 $22.7 $9.0 $21.6 $30.6
Noninterest Income 5.8 6.9 12.7 6.1 10.3 16.4
Total Revenue $13.3 $22.1 $35.4 $15.1 $31.9 $47.0
Loan Loss Provision 0.1 0.2 0.3 0.1 0.3 0.4
Operating Expenses 6.8 9.8 16.6 6.8 13.6 20.4
Amortization of Intangibles 2.2 0.4 2.6 2.0 0.7 2.7
Restructuring Charges 0.0 10.5 10.5 0.0 0.0 0.0
Pre‐tax Income $4.2 $1.2 $5.4 $6.2 $17.3 $23.5
Shares Issued 0.0 8.4 8.4 0.0 0.0 0.0
Pro Forma Average Diluted Shares 89.0 95.2 95.2 97.3 97.3 97.3
2017E 2018E
3Q 2016 Earnings Supplement
NYSE: FCF
Appendix
Acquisition of DCB Financial
Corp. and 13 First Merit
Branches in Ohio
Non‐GAAP Measures
3Q 2016 Earnings Supplement
Non‐GAAP measures
22
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.
$ in millions
(1) Core Efficiency Ratio is calculated as Operating Expense as a percentage of Operating Revenue
Operating Revenue 3Q16 2Q16 1Q16 4Q15 3Q15
Net Interest Income $49.6 $49.1 $48.8 $48.3 $46.7
Tax equivalent adjustment 1.0 1.0 0.9 0.9 0.9
Net Interest Income (FTE) 50.6 50.1 49.7 49.2 47.6
Noninterest Income (Reported) 17.0 15.6 13.7 15.3 15.5
Less: Realized gains/ (losses) on securities 0.0 0.0 0.0 (0.3) 0.0
Less: Derivative mark‐to‐market 0.5 (0.5) (1.0) 0.2 (0.8)
Less: Gain on sale of other assets 0.0 0.0 0.0 0.0 0.0
Total Noninterest Income (Operating) $16.5 $16.1 $14.7 $15.4 $16.3
Total Operating Revenue $67.1 $66.2 $64.4 $64.6 $63.9
Average Assets 6,680 6,707 6,618 6,531 6,343
Operating Revenue/ Average Assets (%) 1.00% 0.99% 0.97% 0.99% 1.01%
Operating Expense 3Q16 2Q16 1Q16 4Q15 3Q15
Noninterest Expense $38.7 $37.4 $38.1 $43.1 $40.3
Less: Unfunded commitment reserve 0.5 (0.5) (0.4) 0.6 0.0
Less: Intangible amortization 0.1 0.1 0.1 0.1 0.2
Less: Pennsylvania shares tax dispute 0.0 0.0 0.0 0.0 0.7
Less: Severance 0.0 0.0 0.0 2.1 0.0
Less: Merger and acquisition related 0.1 0.2 0.0 0.9 0.0
Less: Loss on sale or writedown of other assets 0.0 0.0 0.0 0.4 0.0
Total Operating Expense $38.0 $37.6 $38.4 $39.0 $39.4
Average Assets 6,680 6,707 6,618 6,531 6,343
Operating Expense/ Average Assets (%) 0.57% 0.56% 0.58% 0.60% 0.62%
Core Efficiency Ratio(1) 56.7% 56.9% 59.5% 60.3% 61.7%
3Q 2016 Earnings Supplement
Non‐GAAP measures
23
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.
$ in millions, except per share data
Operating Earnings per Share 3Q16 2Q16 1Q16 4Q15 3Q15
Net Income (GAAP) $17.2 $12.0 $12.5 $10.1 $12.4
(after tax)
Realized gains/ (losses) on securities 0.0 0.0 0.0 0.2 0.0
Derivative mark‐to‐market (0.3) 0.3 0.7 (0.1) 0.5
Gain on sale of other assets 0.0 0.0 0.0 0.0 0.0
Unfunded commitment reserve 0.3 (0.3) (0.3) 0.4 0.0
Intangible amortization 0.1 0.1 0.1 0.1 0.1
Pennsylvania shares tax dispute 0.0 0.0 0.0 0.0 0.5
Severance 0.0 0.0 0.0 1.4 0.0
Merger and acquisition related 0.1 0.1 0.0 0.6 0.0
Loss on sale or writedown of other assets 0.0 0.0 0.0 0.3 0.0
Net Operating Income (Non‐GAAP) 17.4 12.2 13.0 13.0 13.5
Average Diluted Shares Outstanding 88.9 88.8 88.8 88.9 88.8
Earnings per Share (Non‐GAAP) $0.20 $0.14 $0.15 $0.15 $0.15
Tangible Common Equity/ Tangible Assets
(Tangible Common Equity Ratio) 3Q16 2Q16 1Q16 4Q15 3Q15
Total Equity $752 $742 $733 $720 $723
Less: Intangible assets 165 165 166 166 163
Less: Preferred stock 0 0 0 0 0
Tangible Common Equity $587 $577 $567 $554 $560
Total Assets $6,666 $6,750 $6,699 $6,567 $6,385
Less: Intangible assets 165 165 166 166 163
Tangible Assets $6,501 $6,585 $6,533 $6,401 $6,222
Tangible Common Equity/ Tangible Assets 9.0% 8.8% 8.7% 8.7% 9.0%
3Q 2016 Earnings Supplement
Non‐GAAP measures
24
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.
$ in millions, except per share data
Return on Average Tangible Common Equity (%) 3Q16 2Q16 1Q16 4Q15 3Q15
Average Equity $748 $740 $730 $726 $718
Less: Average Intangible assets 165 166 166 164 163
Less: Average Preferred stock 0 0 0 0 0
Average Tangible Common Equity $583 $574 $564 $562 $555
Net Income (GAAP) $17.2 $12.0 $12.5 $10.1 $12.4
Return on Average Tangble Common Equity 11.7% 8.4% 8.9% 7.1% 8.9%
3Q 2016 Earnings Supplement
NYSE: FCF
For more information, please contact:
Ryan M. Thomas
Vice President / Finance & Investor Relations
First Commonwealth Financial Corporation
654 Philadelphia Street
Indiana, Pennsylvania 15701
(724) 463‐1690
InvestorRelations@fcbanking.com