 INDIANA, Pa., July 28, 2020 GLOBE NEWSWIRE -- First Commonwealth Financial Corporation NYSE: FCF today announced financial results for the second quarter of 2020. Financial Summarydollars in thousands,For the Three Months Ended For the Six Months Ended except per share dataJune 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019 Reported Results Net income23,851 4,727 27,280 28,578 51,869 Diluted earnings per share0.24 0.05 0.28 0.29 0.53 Return on average assets 1.06 0.23 1.37 0.66 1.32 Return on average equity 8.95 1.77 10.84 5.36 10.48 Operating Results non-GAAP1 Core net income23,851 4,727 27,307 28,578 51,896 Core diluted earnings per share0.24 0.05 0.28 0.29 0.53 Pre-tax pre-provision net revenue36,101 37,123 37,258 73,223 72,343 Provision expense6,859 30,967 2,835 37,826 6,930 Net charge-offs4,493 3,529 1,427 8,022 3,633 Reserve build22,366 27,438 1,408 29,804 3,297 Core return on average assets 1.06 0.23 1.37 0.66 1.32 Return on average tangible common equity 13.13 2.92 15.47 8.03 15.04 Core return on average tangible common equity 13.13 2.92 15.48 8.03 15.05 Core efficiency ratio 57.20 58.21 56.80 57.71 57.47 Net interest margin FTE 3.29 3.65 3.75 3.46 3.75 1 Core operating results are a non-GAAP measure used by management to measure performance in operating the business that management believes enhances investors ability to better understand the underlying business performance and trends related to core business activities. A full reconciliation of non-GAAP financial measures can be found at the end of the financial statements which accompany this release. 2 Reserve build represents the amount by which the provision for credit losses exceeds net charge-offs, while reserve release represents the amount by which net charge-offs exceed the provision for credit losses. Second Quarter 2020 HighlightsFinancial results Net income of 23.9 million and diluted earnings per share of 0.24, an increase of 19.1 million or 0.19 per share from the previous quarter Provision for loan losses of 6.9 million decreased 24.1 million from the previous quarter Pre-tax pre-provision net revenue PPNR1 was 36.1 million Net interest income of 67.0 million decreased 1.1 million from the previous quarter due to a 36 basis point decline in the net interest margin, partially offset by a 678.6 million increase in average interest-earning assets Noninterest income of 21.8 million increased 2.5 million from the previous quarter on improved mortgage gain on sale Noninterest expense of 52.8 million increased 2.5 million from the previous quarter due to a 3.4 million increase in expense for reserves for unfunded loan commitments Total period-end loans increased 612.8 million from the previous quarter and includes 570.9 million in loans made through the SBA Paycheck Protection Program PPP -- Excluding PPP loans, total period-end loans grew 41.9 million, or 2.7 annualized from the previous quarter Average deposits increased 758.2 million or 44.8 annualized and period-end deposits increased 859.1 million or 49.6 annualized from the previous quarter due to deposit growth associated with PPP loan funds and consumer stimulus checks -- Noninterest-bearing deposits increased by 536.8 million or 122.6 annualized and comprised 29.4 of total deposits at June 30, 2020Asset quality Nonaccrual loans of 48.6 million decreased 3.1 million from the previous quarter Net charge-offs on loans totaled 4.5 million, 2.9 million of which represents the charge off of specific reserves provided for in prior periods Reserve build2 of 29.8 million or 0.43 of total loans excluding PPP on a year-to-date basis, bringing reserves to total loans adjusted for PPP to 1.28, and reserves to total originated loans adjusted for PPP to 1.34 The Company continues to defer its adoption of CECL in accordance with relief provided under the U.S. Coronavirus Aid, Relief, and Economic Security CARES ActStrong liquidity and capital positions Total available liquidity of 3.8 billion Bank-level Tier 1 Capital ratio of 11.3, which represents 223.4 million in excess capital above the regulatory well capitalized requirement of 8.0 The Company temporarily suspended share repurchases in March 2020Operational Update In response to the current operating environment and evolving customer preferences, the Company is implementing a profitability initiative termed Project THRIVE with a goal of growing our business, maintaining adequate capital, protecting against further NIM compression and reducing operating expenses. A targeted 20 reduction in retail locations will occur prior to December 31, 2020 During the second quarter of 2020, the Company processed 4,920 PPP loan applications representing 606 million approved and 588 million funded to support our business customers; PPP balances totaled 571 million as of June 30, 2020 All of our community office drive-ups are open and our lobbies are available by appointment Recent recognitions include: -- 2020 Forbes Worlds Best Banks -- Consumer Federation of America Designation of Savings Excellence -- FDIC Impactful Money Smart for Adults PartnershipOur performance in the second quarter is a reminder of the importance we play as a financial services organization and partner in the communities we serve, stated T. Michael Price, President and Chief Executive Officer, We assisted nearly 5,000 businesses secure over 600 million in PPP loans, which impacted approximately 80,000 jobs. At the same time, we originated a record 203 million in consumer mortgages in the quarter that helped roughly 800 customers finance a home. Price continued, In light of the rapidly changing operating environment and uncertain economic outlook, we have implemented Project THRIVE with the express goal of emerging on the other side of this crisis stronger than ever. First Commonwealth has a proven track record of executing on its initiatives and I am confident that Project THRIVE will benefit all of our long-term stakeholders. EarningsNet income for the second quarter of 2020 was 23.9 million, or 0.24 per share, compared to 4.7 million, or 0.05 per share for the first quarter of 2020, and 27.3 million, or 0.28 per share in the second quarter of 2019.Net income for the first six months of 2020 was 28.6 million, as compared to 51.9 million for the same period in 2019.Net Interest Income and Net Interest MarginNet interest income FTE decreased 1.1 million from the previous quarter due to loan repricing and lower replacement yields on new loans, driven by the impact of the lower interest rate environment. The net interest margin for the second quarter of 2020 was 3.29, a decrease of 36 basis points from the previous quarter and a decrease of 46 basis points from the second quarter of 2019. The decrease from the previous quarter was due primarily to a 57 basis point decrease in the yield on interest-earning assets, partially offset by a 26 basis point decrease in the cost of interest bearing liabilities.Total average interest-earning assets increased 678.6 million from the previous quarter due to a 116.3 million increase in average traditional loans along with 405.7 million in average PPP loans.Total average deposits grew 758.2 million in the second quarter of 2020 as compared to the previous quarter. Period-end deposits grew 859.1 million in the second quarter of 2020 as compared to the first quarter of 2020. Period-end growth was driven by 536.8 million of growth in noninterest-bearing demand deposits and 397.2 million of growth in savings deposits, partially offset by a 76.4 million decrease in time deposits.Asset QualityOn March 27, 2020, the CARES Act was signed into law, which provides banking organizations with optional, temporary relief from adoption of Accounting Standards Update No. 2016-13, Financial InstrumentsCredit Losses, Topic 326, Measurement of Credit Losses on Financial Instruments CECL. Due to the extraordinary economic condition and the uncertainty of economic forecasts and resulting volatility in these forecasts, the Company elected to defer its adoption of CECL and has, therefore, calculated reserves for loan losses under the incurred loss method. Provision expense in the second quarter totaled 6.9 million. Reserves for loan losses totaled 81.4 million in the second quarter of 2020, an increase of 2.4 million from the previous quarter. The increase from the previous quarter was primarily due to an increase of 5.5 million in qualitative reserves partially offset by a 2.9 million decrease in specific reserves primarily as the result of the resolution of three commercial credits reserved for in previous quarters. These qualitative reserves are intended to reflect the risks of continued weak economic conditions on our loan portfolio, but also loss estimates identified in several loan portfolios deemed to be at risk from the COVID-19 pandemic e.g., retail and hospitality and the inherent risk presented by loan forbearances as of June 30, 2020.At June 30, 2020, nonperforming loans totaled 56.0 million, a decrease of 3.1 million from the previous quarter. The decrease in nonperforming loans was primarily due to the resolution of the three aforementioned commercial credits with balances totaling 8.0 million, partially offset by a 5.5 million commercial credit placed into nonaccrual.Nonperforming loans as a percentage of total loans excluding PPP were 0.88, 0.93 and 0.59 for the periods ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively. 