EX-99 2 mailer99ex.htm PRESIDENT AND CEO'S LETTER MAILED TO SHAREHOLDERS FIRST COMMONWEALTH

Exhibit 99   -  First Commonwealth Financial Corporation - President and CEO's Letter to Shareholders mailed
                      August 22, 2005

   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

 

 

 

 

 

August 12, 2005


Dear Shareholder:

        The Corporation reported second quarter net income of $17.8 million, which translates into $0.26 per diluted share.  This compares with net income of $11.6 million, or $0.18 per diluted share in last year's second quarter.   Second quarter return on equity was 13.55% and return on assets was 1.15% compared with 9.76% and 0.82% respectively in the corresponding period last year.  Included in the 2005 second quarter results are pretax gains of $3.1 million ($2.0 million after tax or $0.03 per diluted share) on the previously announced sale of the Pine Grove Mills Community Office, and a $2.0 million gain ($1.3 million after tax or $0.02 per diluted share) on the sale of the Company's merchant processing business.  Last year's second quarter included integration costs and certain employee separation expenses of $0.9 million related to the acquisition of Pittsburgh Financial Corporation which was completed in December 2003.  Also contributing to the second quarter net income improvement were an increase in average earning assets and a higher net interest margin.  The increase in average earning assets was due primarily to the inclusion of the balances from the acquisition of GA Financial, Inc. completed in May 2004.

        The branch office sale was part of First Commonwealth's continuing delivery system optimization strategic plan to increase penetration in higher growth markets.  The Company opened two de novo community offices in Washington County late in the first quarter and expects the construction of a total of nine new offices in 2005 up from four added in 2004.  These include relocations, renovations, and de novo offices.  First Commonwealth opened its newest community office in July at Pittsburgh Mills, western Pennsylvania's newest and largest commercial retail real estate development project.

        Net income for the six months ended June 30, 2005 increased 32.8% to $33.1 million or $0.47 per diluted share, compared with $24.9 million or $0.39 per diluted share in the corresponding period last year.  Included in the 2005 first half results are the previously mentioned gains on the sale of a community office and merchant processing business.  Last year's first half results included merger and integration charges totaling $2.2 million ($1.4 million after tax or $0.02 per diluted share).  Return on equity was 12.51% and return on assets was 1.07% for the first half of 2005 compared with 10.90% and 0.92% respectively for the first half of 2004.

        The Corporation also previously announced the resignation of Johnston A. Glass as President and Chief Executive Officer of First Commonwealth Bank for personal reasons.  John provided the company with 33 years of dedicated service and his leadership will be missed. Fortunately, John plans to continue his service as a member of the First Commonwealth Financial Corporation Board of Directors.  We appreciate John's many contributions and wish him every success in the future.

        The Board of Directors has responded quickly to this situation by selecting Gerard M. Thomchick to assume the role of President and Chief Executive Officer of First Commonwealth Bank.  Jerry has been with First Commonwealth in a number of management roles for the past twenty years.  His most current responsibilities were as Senior Executive Vice President and Chief Operating Officer of First Commonwealth Financial Corporation.  He was also President of several of the Corporation's affiliates and was Chairman of the Credit Committee for many years.  Jerry graduated from Penn State University where he received a Bachelor of Science degree in Mathematics in 1977.  In 1979 he received a Master of Business Administration from Harvard University with a concentration in Finance.  Included among his many industry affiliations is his recent election to the Board of Directors of the Federal Home Loan Bank of Pittsburgh.

        A more somber transition occurred in the second quarter with the passing of Director Emeritus Thomas L. Delaney.  Tom served on the First Commonwealth Financial Corporation Board of Directors for many years and was instrumental in making our first major acquisition a success.  Tom was a great friend and a true gentleman. He will be missed. 

        First Commonwealth Financial Corporation remains strong and confident in the future.  As always, your continued support is sincerely appreciated.

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 June 30, 2005.  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, 2004, and its quarterly report on Form 10-Q for the quarter ended June 30, 2005, which are available to the public over the Internet at the Corporation's website at http://www.fcbanking.comor 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

For the 6 Months

 

 

 

 

Ended June 30,

Ended June 30,

 

 

 

 

2005

2004

2005

2004

 

 

 

Interest income

$77,540

$65,498

$153,177

$127,470

 

 

 

Interest expense

33,900

27,063

64,605

52,228

 

 

 

 

 

 

 

     Net interest income

43,640

38,435

88,572

75,242

 

 

 

Provision for credit losses

3,000

2,520

4,744

4,620

 

 

 

 

 

 

 

     Net interest income after provision for credit losses

40,640

35,915

83,828

70,622

 

 

 

 

 

 

 

 

 

 

 

Net securities gains

0

145

485

3,995

 

 

 

Trust income

1,456

1,442

2,781

2,710

 

 

 

Service charges on deposits

4,009

3,760

7,549

6,960

 

 

 

Gain on sale of branch

3,090

0

3,090

0

 

 

 

Gain on sale of merchant services business

1,991

0

1,991

0

 

 

 

Insurance commissions

903

865

1,743

1,669

 

 

 

Income from bank owned life insurance

1,355

1,251

2,676

2,514

 

 

 

Merchant discount income

882

907

1,721

1,735

 

 

 

Card related interchange income

1,216

890

2,303

1,510

 

 

 

Other income

2,247

1,837

4,250

3,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total other income

17,149

11,097

28,589

24,680

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

17,864

17,141

36,162

33,844

 

 

 

Net occupancy expense

2,715

2,165

5,707

4,354

 

 

 

Furniture and equipment expense

2,759

2,705

5,629

5,226

 

 

 

Data processing expense

981

913

1,920

1,726

 

 

 

Pennsylvania shares tax expense

1,237

1,140

2,503

2,274

 

 

 

Intangible amortization

566

238

1,131

312

 

 

 

Merger and integration charges

0

873

0

2,164

 

 

 

Other operating expense

8,950

8,369

17,413

15,361

 

 

 

 

 

 

 

     Total other expenses

35,072

33,544

70,465

65,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

22,717

13,468

41,952

30,041

 

 

 

Applicable income taxes

4,879

1,908

8,895

5,158

 

 

 

 

 

 

 

     Net income

$17,838

$11,560

$33,057

$24,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding

69,129,387

64,455,920

69,237,454

62,614,372

 

 

 

Average shares outstanding assuming dilution

69,693,693

64,947,209

69,858,133

63,118,440

 

 

 

 

 

 

 

 

 

 

 

Per Share Data:

 

 

 

 

 

 

 

Basic earnings per share

$0.26

$0.18

$0.48

$0.40

 

 

 

Diluted earnings per share

$0.26

$0.18

$0.47

$0.39

 

 

 

Cash dividends per share

$0.165

$0.160

$0.330

$0.320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

December 31,

 

 

 

 

 

 

2005

2004

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

  Cash and due from banks on demand

$82,872

$79,591

 

 

 

 

 

  Interest-bearing bank deposits

1,188

2,403

 

 

 

 

 

  Securities available for sale, at market

2,041,415

2,162,313

 

 

 

 

 

  Securities held to maturity, at amortized cost

 

 

 

 

 

 

 

    (Market value $91,141 in 2005 and $81,886 in 2004)

87,837

78,164

 

 

 

 

 

 

 

 

 

 

 

 

 

  Loans

 

 

 

 

 

 

 

    Portfolio loans

3,597,521

3,512,774

 

 

 

 

 

    Loans held for sale

3,956

2,311

 

 

 

 

 

    Unearned income

(163)

(252)

 

 

 

 

 

    Allowance for credit losses

(41,404)

(41,063)

 

 

 

 

 

 

 

 

 

 

 

        Net loans

3,559,910

3,473,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRST COMMONWEALTH FINANCIAL CORPORATION

 

 

 

 

 

 

 

CONSOLIDATED SELECTED FINANCIAL DATA

 

 

 

 

 

 

 

(Dollar Amounts in Thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

December 31,

 

 

 

 

 

 

2005

2004

 

 

 

 

 

 

 

 

 

 

 

  Premises and equipment

60,864

56,965

 

 

 

 

 

  Other real estate owned

1,226

1,814

 

 

 

 

 

  Goodwill

122,702

123,607

 

 

 

 

 

  Amortizing intangibles, net

16,382

17,513

 

 

 

 

 

  Other assets

207,353

202,338

 

 

 

 

 

 

 

 

 

 

 

        Total assets

$6,181,749

$6,198,478

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

  Deposits (all domestic):

 

 

 

 

 

 

 

    Noninterest-bearing

$502,107

$480,843

 

 

 

 

 

    Interest-bearing

3,549,867

3,363,632

 

 

 

 

 

 

 

 

 

 

 

      Total deposits

4,051,974

3,844,475

 

 

 

 

 

 

 

 

 

 

 

 

 

  Short-term borrowings

694,830

946,474

 

 

 

 

 

  Other liabilities

35,709

35,977

 

 

 

 

 

 

 

 

 

 

 

 

 

  Subordinated debentures

108,250

108,250

 

 

 

 

 

  Other long-term debt

761,853

731,324

 

 

 

 

 

 

 

 

 

 

 

      Total long-term debt

870,103

839,574

 

 

 

 

 

 

 

 

 

 

 

        Total liabilities

5,652,616

5,666,500

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

  Common stock $1 par value per share

71,978

71,978

 

 

 

 

 

  Additional paid-in capital

174,571

175,453

 

 

 

 

 

  Retained earnings

317,342

307,363

 

 

 

 

 

  Accumulated other comprehensive income

1,808

10,002

 

 

 

 

 

  Treasury stock

(25,623)

(26,643)

 

 

 

 

 

  Unearned ESOP shares

(10,943)

(6,175)

 

 

 

 

 

 

 

 

 

 

 

        Total shareholders' equity

529,133

531,978

 

 

 

 

 

 

 

 

 

 

 

          Total liabilities and shareholders' equity

$6,181,749

$6,198,478

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued

71,978,568

71,978,568

 

 

 

 

 

Shares outstanding

69,949,652

69,868,908

 

 

 

 

 

Treasury shares

2,028,916

2,109,660

 

 

 

 

 

Book value per share

$7.56

$7.61

 

 

 

 

 

Market value per share

$13.70

$15.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Data At June 30,

 

 

 

 

 

 

 

 

2005

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual basis

$11,149

$13,285

 

 

 

 

 

Past due loans

15,258

11,085

 

 

 

 

 

Renegotiated loans

179

189

 

 

 

 

 

 

 

 

 

 

 

     Total nonperforming loans

$26,586

$24,559

 

 

 

 

 

Loans outstanding at end of period

$3,601,314

$3,468,152

 

 

 

 

 

Average loans outstanding(year-to-date)

$3,568,436

$2,983,534

 

 

 

 

 

Allowance for credit losses

$41,404

$42,664

 

 

 

 

 

Nonperforming loans as percent of total loans

0.74%

0.71%

 

 

 

 

 

Net charge-offs(year-to-date)

$4,403

$4,324

 

 

 

 

 

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

0.25%

0.29%

 

 

 

 

 

Allowance for credit losses as percent of average loans outstanding

1.16%

1.43%

 

 

 

 

 

Allowance for  credit losses as percent of nonperforming loans

155.74%

173.72%

 

 

 

 

 

Other real estate owned

$1,226 

$2,421 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profitability Ratios

 

 

 

 

 

 

 

 

For the Quarter

For 6 Months

 

 

 

 

Ended June 30,

Ended June 30,

 

 

 

 

2005

2004

2005

2004

 

 

 

 

 

 

 

Return on average assets

1.15%

0.82%

1.07%

0.92%

 

 

 

Return on average equity

13.55%

9.76%

12.51%

10.90%

 

 

 

Efficiency ratio (FTE) (a)

54.64%

63.87%

56.90%

61.66%

 

 

 

Fully tax equivalent adjustment

$3,404

$2,988

$6,671

$5,912

 

 

 

 

 

 

 

 

 

 

 

(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 registration of stock certificates, replacing lost certificates/dividend checks, or an address change, please contact First Commonwealth's transfer agent listed below (for directly registered accounts only).  If you hold shares through a brokerage firm (street name accounts), please contact your broker regarding changes to your account.



THE BANK OF NEW YORK

Shareholder Relations

Toll Free:  1-800-524-4458

 

Church Street Station

Website:   www.stockbny.com

 

P.O. Box 11258

 

 

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").  You can also download a copy of the plan prospectus and enrollment form through The Bank of New York's website, noted above (click on "Company List", then "First Commonwealth").  Copies may also be requested from The Bank of New York by phone or mail (phone number and address above).

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 Form10-K report and other documents filed with the Securities and Exchange Commission.



First

              Commonwealth

 

                         First Commonwealth

                           Financial Corporation