<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-11242
First Commonwealth Financial Corporation
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1428528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 North Sixth Street Indiana, PA 15701
(Address of principal executive offices) (Zip Code)
724-349-7220
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No .
Number of shares outstanding of issuer's common stock, $1.00 Par Value as
of May 12, 1998 was 22,096,719.
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Included in Part I of this report: PAGE
First Commonwealth Financial Corporation and
Subsidiaries Consolidated Balance Sheets . . . . . 3
Consolidated Statements of Income. . . . . . . . . 4
Consolidated Statements of Changes in
Shareholders' Equity . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows. . . . . . . 6
Notes to Consolidated Financial Statements . . . . 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK . . . . . . . . . . . . . . . . . . . . . . . . 22
PART II - OTHER INFORMATION
Other Information . . . . . . . . . . . . . . . . . . . . . . 23
Signatures . . . . . . . . . . . . . . . . . . . . Signature Page
<PAGE>
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
March 31, December 31,
1998 1997
ASSETS
Cash and due from banks on demand.... $ 73,605 $ 60,109
Interest-bearing deposits with banks. 6,370 4,985
Federal funds sold .................. -0- 2 880
Securities available for sale, at
market.............................. 586,472 396,631
Securities held to maturity, at cost,
(market value $452,126 in 1998 and
$462,086 in 1997).................. 449,992 460,063
Loans................................ 1,983,394 1,937,744
Unearned income.................... (13,797) (16,841)
Allowance for possible credit losses (20,140) (19,766)
Net loans....................... 1,949,457 1,901,137
Property and equipment............... 33,225 32,578
Other real estate owned.............. 1,914 1,788
Other assets......................... 72,441 69,144
TOTAL ASSETS.................... $3,173,476 $2,929,315
LIABILITIES
Deposits (all domestic):
Noninterest-bearing................ $ 150,170 $ 150,426
Interest-bearing................... 2,100,093 2,092,052
Total deposits.................. 2,250,263 2,242,478
Short-term borrowings................ 243,461 193,918
Other liabilities.................... 30,512 28,031
Long-term debt....................... 374,404 193,054
Total liabilities............... 2,898,640 2,657,481
SHAREHOLDER'S EQUITY
Preferred stock, $1 par value per
share, 3,000,000 shares authorized,
none issued........................ -0- -0-
Common stock $1 par value per share,
100,000,000 shares authorized;
22,436,628 shares issued; 22,095,035
and 22,046,326 shares outstanding in
1998 and 1997 respectively......... 22,437 22,437
Additional paid-in capital........... 75,854 76,171
Retained earnings.................... 184,093 181,137
Accumulated other comprehensive income 965 1,632
Treasury stock (341,593 shares at
March 31, 1998 and 390,302 at
December 31, 1997, at cost)........ (6,220) (7,107)
Unearned ESOP shares................. (2,293) (2,436)
Total shareholders' equity......... 274,836 271,834
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY.......... $3,173,476 $2,929,315
The accompanying notes are an integral part of these consolidated financial
statements.
3 <PAGE>
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except per share data)
For the 3 Months
Ended March 31,
1998 1997
Interest Income
Interest and fees on loans........ $40,252 $37,518
Interest and dividends on investments:
Taxable interest................ 13,171 8,890
Interest exempt from Federal
income taxes................... 1,116 898
Dividends....................... 326 350
Interest on Federal funds sold.... 2 3
Interest on bank deposits......... 29 87
Total Interest Income.......... 54,896 47,746
Interest Expense
Interest on deposits.............. 23,147 21,399
Interest on short-term borrowings. 2,771 1,602
Interest on long-term debt........ 3,924 655
Total Interest Expense......... 29,842 23,656
Net interest income................. 25,054 24,090
Provision for possible credit losses 1,800 1,241
Net interest income after provision
for possible credit losses........ 23,254 22,849
Other Income
Net securities gains.............. 982 1,758
Trust income...................... 798 691
Service charges on deposit accounts 1,309 1,397
Other income...................... 1,471 905
Total Other Income............. 4,560 4,751
Other Expenses
Salaries and employee benefits.... 9,548 9,291
Net occupancy expense............. 1,313 1,295
Furniture and equipment expense... 1,117 1,224
FDIC expense...................... 74 66
Other operating expenses.......... 4,886 4,630
Total Other Expenses........... 16,938 16,506
Income before taxes................. 10,876 11,094
Applicable income taxes........... 3,058 3,419
Net Income.......................... $ 7,818 $ 7,675
Average Shares Outstanding.......... 21,916,103 21,946,450
Average Shares Outstanding Assuming
Dilution........................... 22,123,773 21,977,681
Per Share Data:
Basic earnings per share............ $0.36 $0.35
Diluted earnings per share.......... $0.35 $0.35
Cash dividends per share............ $0.22 $0.20
The accompanying notes are an integral part of these consolidated financial
statements.
4<PAGE>
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Unearned Total
Common Paid-in Retained Comprehensive Treasury ESOP Shareholders'
Stock Capital Earnings Income Stock Shares Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996.... $22,437 $76,664 $168,711 $1,309 $(4,289) $(3,474) $261,358
Comprehensive income
Net income.................... -0- -0- 7,675 -0- -0- -0- 7,675
Other comprehensive income, net
of tax: Unrealized gains
(losses) on securities:
Unrealized holding gains
(losses) arising during the
period....................... -0- -0- -0- 741 -0- -0- 741
Less: reclassification adjust-
ment for gains included in net
income....................... -0- -0- -0- (1,143) -0- -0- (1,143)
Total other comprehensive
income....................... -0- -0- -0- (402) -0- -0- (402)
Total comprehensive income.... -0- -0- 7,675 (402) -0- -0- 7,273
Cash dividends declared....... -0- -0- (4,438) -0- -0- -0- (4,438)
Decrease in unearned ESOP shares -0- -0- -0- -0- -0- 268 268
Discount on dividend reinvestment
plan purchases.............. -0- (149) -0- -0- -0- -0- (149)
Treasury stock acquired....... -0- -0- -0- -0- (182) -0- (182)
Balance at March 31, 1997....... $22,437 $76,515 $171,948 $ 907 $(4,471) $(3,206) $264,130
Balance at December 31, 1997.... $22,437 $76,171 $181,137 $1,632 $(7,107) $(2,436) $271,834
Comprehensive income
Net income.................... -0- -0- 7,818 -0- -0- -0- 7,818
Other comprehensive income, net
of tax: Unrealized gains
(losses) on securities:
Unrealized holding gains
(losses) arising during the
period..................... -0- -0- -0- (45) -0- -0- (45)
Less: reclassification adjust-
ment for gains included in net
income..................... -0- -0- -0- (622) -0- -0- (622)
Total other comprehensive
income..................... -0- -0- -0- (667) -0- -0- (667)
Total comprehensive income.... -0- -0- 7,818 (667) -0- -0- 7,151
Cash dividends declared....... -0- -0- (4,862) -0- -0- -0- (4,862)
Decrease in unearned ESOP shares -0- -0- -0- -0- -0- 143 143
Discount on dividend reinvestment
plan purchases.............. -0- (262) -0- -0- -0- -0- (262)
Treasury stock reissued....... -0- (55) -0- -0- 887 -0- 832
Balance at March 31, 1998....... $22,437 $75,854 $184,093 $ 965 $(6,220) $(2,293) $274,836
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5<PAGE>
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
For the 3 Months
Ended March 31,
1998 1997
Operating Activities
Net income....................................... $ 7,818 $ 7,675
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses............ 1,800 1,241
Depreciation and amortization................. 1,410 1,365
Net gains on sales of assets.................. (1,004) (1,779)
Increase in cash surrender value of bank owned
life insurance............................... (323) -0-
Increase in interest receivable............... (1,302) (1,727)
Increase in interest payable.................. 165 18
Increase in income taxes payable.............. 2,832 2,381
Change in deferred taxes...................... 130 755
Other-net..................................... (2,373) (2,835)
Net cash provided by operating activities... 9,153 7,094
Investing Activities
Transactions with securities held to maturity:
Proceeds from sales........................... -0- -0-
Proceeds from Maturities and redemptions...... 33,223 12,436
Purchases..................................... (23,090) (17,206)
Transactions with securities available for sale:
Proceeds from Sales........................... 48,638 7,792
Proceeds from Maturities and redemptions...... 26,754 8,681
Purchases..................................... (265,340) (11,368)
Proceeds from sales of loans and other assets.... 5,685 3,282
Changes net of acquisitions:
Net decrease in time deposits with banks......... (1,385) (4,433)
Net increase in loans............................ (55,967) (29,873)
Purchases of premises and equipment.............. (1,596) (1,100)
Net cash used by investing activities.......... (233,078) (31,789)
Financing Activities
Repayments of long-term debt..................... (18,507) (25,288)
Proceeds from issuance of long-term debt......... 200,000 36,265
Discount on dividend reinvestment plan purchases. (262) (148)
Dividends paid................................... (4,850) (4,439)
Net increase (decrease) in Federal funds
purchased....................................... 64,600 (26,075)
Net increase (decrease) in other short-term
borrowings...................................... (15,057) 10,552
Changes net of acquisitions:
Net increase in deposits......................... 7,785 34,477
Purchase of treasury stock....................... -0- (182)
Proceeds from sale of treasury stock............. 832 -0-
Net cash provided by financing activities... 234,541 25,162
Net increase in cash and cash equivalents.. 10,616 467
Cash and cash equivalents at January 1............. 62,989 69,406
Cash and cash equivalents at March 31.............. $73,605 $69,873
The accompanying notes are an integral part of these consolidated financial
statements.
6<PAGE>
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
NOTE 1 Management Representation
In the opinion of management, the unaudited interim consolidated
financial statements include all adjustments (consisting of only
normal recurring adjustments) necessary for a fair statement of
financial position as of March 31, 1998 and the results of
operations for the three month periods ended March 31, 1998 and
1997, and statements of cash flows and changes in shareholders'
equity for the three month periods ended March 31, 1998 and 1997.
The results of the three months ended March 31, 1998 and 1997 are
not necessarily indicative of the results to be expected for the
entire year. The interim consolidated financial statements
should be read in conjunction with the annual consolidated
financial statements of First Commonwealth Financial Corporation
and Subsidiaries, including the notes thereto.
NOTE 2 Cash Flow Disclosures (dollar amounts in thousands)
1998 1997
Cash paid during the first three
months of the year for:
Interest $29,677 $23,638
Income Taxes $ -0- $ 250
Noncash investing and financing
activities:
ESOP loan reductions $ 143 $ 268
Gross decrease in market value
adjustment to securities
available for sale pursuant
to FAS No. 115 $(1,027) $ (618)
Loans transferred to other real
estate owned and repossessed
assets $ 1,098 $ 1,530
NOTE 3 New Accounting Pronouncements
Effective January 1, 1998, the Corporation adopted the Financial
Accounting Standards Board Statement No. 130 "Reporting
Comprehensive Income" ("FAS No. 130"). Comprehensive income is
defined as "the change in equity of a business enterprise during
a period from transactions and other events from nonowner
sources. Comprehensive income includes all changes in equity
except those resulting from investments by owners and
distributions to owners." Comprehensive income includes net
income and other nonowner changes in equity which qualify as
components of comprehensive income but bypass a statement of
income and are reported in a separate component of equity in a
balance sheet. FAS No. 130 does not change the calculation of
net income or earnings per share but requires companies to
provide additional disclosures for comprehensive income, as
defined and its components in financial statements for fiscal
years beginning after December 15, 1997, including interim
7<PAGE>
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FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
NOTE 3 New Accounting Pronouncements (Continued)
periods. The Corporation has elected, as permitted under FAS
No. 130, to report comprehensive income in the Statement of
Changes in Shareholders Equity and as required has reclassified
comparative financial statements for comprehensive income. For
all periods presented "other comprehensive income" (comprehensive
income excluding net income) includes only one component, which
is the change in unrealized holding gains and losses on available
for sale securities.
The following table identifies the related tax effects allocated
to each component of other comprehensive income in the Statements
of Changes in Shareholder's Equity:
<TABLE>
<CAPTION>
March 31, 1998 March 31, 1997
Tax Net of Tax Net of
Pre-tax (Expense) Tax Pre-tax (Expense) Tax
Amount Benefit Amount Amount Benefit Amount
<S> <C> <C> <C> <C> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period ($70) $25 ($45) $1,140 ($399) $741
Less: reclassification adjustment for
gains realized in net income (957) 335 (622) (1,758) 615 (1,143)
Net unrealized gains (1,027) 360 (667) (618) 216 (402)
Other comprehensive income ($1,027) $360 $(667) ($618) $216 ($402)
</TABLE>
The adoption of FAS No. 130 did not have a material impact on the
Corporation's financial condition or results of operations.
In June 1997, The Financial Accounting Standards Board ("FASB")
issued Statement No 131, "Disclosures about Segments of an
Enterprise and Related Information" ("FAS No. 131") which is
effective for financial statements for periods beginning after
December 15, 1997. FAS No. 131 redefines how operating segments
are determined and requires disclosures of certain financial and
descriptive information about a company's operating segments.
The disclosures of FAS No. 131 are not required for interim
periods in the initial year of application. Management's
determination is that, under current conditions, the Corporation
will report one business segment.
8<PAGE>
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ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Three Months of 1998 as Compared to the First Three Months
of 1997
This discussion and the related financial data are presented to
assist in the understanding and evaluation of the consolidated
financial condition and results of operations of First
Commonwealth Financial Corporation (the "Corporation") including
its subsidiaries. In addition to historical information, this
discussion and analysis contains forward-looking statements. The
forward-looking statements contained herein are subject to
certain risks and uncertainties that could cause actual results
to differ materially from those projected in the forward-looking
statements. Important factors that might cause such a difference
include, but are not limited to, those discussed in this
"Management's Discussion and Analysis of Financial Condition and
Results of Operations." Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. The
Corporation undertakes no obligation to publicly revise or update
these forward-looking statements to reflect events of
circumstances that arise after the date hereof.
Net income in the three months of 1998 was $7.8 million
reflecting an increase of $143 thousand over 1997 results of $7.7
million. Net income excluding the impact of securities
transactions reflected an increase of $647 thousand or 9.9% when
comparing the three months of 1998 to the same period of 1997.
Changes in net interest income increased earnings by $0.05 per
share during 1998 while the impact of net securities transactions
decreased earnings per share $0.04 in 1998. Return on average
assets was 1.05% and return on average equity was 11.44% during
the 1998 period, compared to 1.21% and 11.72%, respectively
during the same period of 1997.
Net interest income, the most significant component of earnings,
is the amount by which interest generated from earning assets
exceeds interest expense on liabilities. Net interest income was
$25.1 million for the three months of 1998 compared to $24.1
million for the same period of 1997. Net interest margin (net
interest income, on a tax-equivalent basis, as a percentage of
average earning assets) for the 1998 period was 3.68%, reflecting
a decrease of 42 basis points (0.42%) from 4.10% reported in
1997.
Interest and fees on loans increased $2.7 million for 1998 over
1997 levels reflecting volume increases in all loan categories as
average total loans for the three months of 1998 increased $182.7
million over 1997 averages. The most notable components of loan
growth for 1998 were an increase in average mortgage loans of
$72.6 million and an increase in average time and demand loans of
$56.4 million over 1997 averages. The increase in interest and
fees on loans for 1998 included increases due to volume of $3.1
9<PAGE>
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ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
First Three Months of 1998 as Compared to the First Three Months
of 1997 (Continued)
million and decreases due to rate of $337 thousand. Yields on
loans for the three months of 1998 decreased by 23 basis points
(0.23%) when compared to 1997 yields, as yields on mortgage loans
and installment loans decreased by 51 basis points (0.51%) and 34
basis points (0.34%), respectively. The mortgage portfolio
continues to be impacted by loan refinancings and loans maturing
at higher interest rates than current market rates as well as
loan origination during 1998 of innovative loan products
introduced during 1995 which bear lower introductory interest
rates. Loan yields on these products are expected to increase as
these products age and introductory interest rates are no longer
offered. Installment loan yields declined during the three
months of 1998 compared to the corresponding 1997 period
primarily as a result of increased utilization of indirect
automobile lending.
Interest income on investments increased $4.5 million for the
three months of 1998 compared to the corresponding period of 1997
primarily as a result of increases due to volume of $3.7 million
and increases due to rate of $610 thousand in U.S. government
agency securities. Average balances of U.S. government agency
securities for the first quarter of 1998 increased $231.4 million
over 1997 averages as part of a leveraging strategy whereby
borrowings from the Federal Home Loan Bank classified as long-
term debt were invested in U.S. government agencies. Yields on
investments for the 1998 period reflected an increase of 43 basis
points (0.43%) over 1997 yields and included an increase in
yields on U.S. government agencies of 47 basis points (0.47%) for
the three months of 1998 compared to the three months of 1997.
Interest on deposits increased $1.7 million for the 1998 period
compared to 1997, and included increases in interest on time
deposits of $1.1 million and increases in interest on total
savings deposits of $627 thousand. The most notable increase in
time deposit interest during 1998 occurred in the 24 to 35 month
maturity range which increased by $1.3 million over 1997 levels
as a result of volume increases. Average time deposits in the 24
to 35 month maturity range increased $89.4 million for the three
months of 1998 compared to 1997 averages. Volume increases have
been achieved through competitive rates and aggressive marketing
programs. Total cost of deposits for 1998 increased 10 basis
points (0.10%) over the 1997 level and included cost increases of
17 basis points (0.17%) for total savings deposits and cost
increases of 10 basis points (0.10%) for time deposits compared
to the three months of 1997. Rate increases for savings can
primarily be attributed to increased utilization by customers of
savings products bearing higher interest rates than standard
savings accounts. These savings products have been designed to
10<PAGE>
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ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
First Three Months of 1998 as Compared to the First Three Months
of 1997 (Continued)
build long-term customer relationships and are intended to
produce a favorable impact on the Corporation's net interest
margin over the long-term.
Interest expense on short-term borrowings increased $1.2 million
for the first quarter of 1998 compared to the first quarter of
1997 as average Federal Funds purchased increased $91.9 million
over 1997 averages. Interest expense on long-term debt increased
$3.3 million compared to the 1997 period as average long-term
debt for the three months of 1998 increased $233.7 million over
1997 averages. The long-term debt increase for 1998 was a result
of borrowings from the Federal Home Loan Bank with maturities of
up to 10 years to be utilized as part of the above mentioned
leveraging strategy.
The provision for possible credit losses was $1.8 million for the
three month period of 1998 compared to $1.2 million during the
1997 period. Net charge-offs against the allowance for possible
credit losses were $1.4 million in the 1998 period and $1.0
million in the 1997 period. The 1998 increase in net charge-offs
included increases in net charge-offs for commercial loans
secured by real estate and net charge-offs for auto leases
compared to 1997. See the "Credit Review" section for an
analysis of the quality of the loan portfolio.
11<PAGE>
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ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
First Three Months of 1998 as Compared to the First Three Months
of 1997 (Continued)
Below is an analysis of the consolidated allowance for possible
credit losses for the three month periods ended March 31, 1998
and 1997.
1998 1997
Balance January 1, $19,766 $19,324
Loans charged off:
Commercial, financial and
agricultural 176 6
Real estate-construction -0- -0-
Real estate-commercial 301 19
Real estate-residential 25 52
Loans to individuals 1,159 1,121
Lease financing receivables 229 -0-
Total loans charged off 1,890 1,198
Recoveries of previously
charged off loans:
Commercial, financial and
agricultural 297 41
Real estate-construction -0- -0-
Real estate-commercial 26 13
Real estate-residential 3 4
Loans to individuals 137 129
Lease financing receivables 1 9
Total recoveries 464 196
Net charge offs 1,426 1,002
Provision charged to operations 1,800 1,241
Balance March 31, 1998 $20,140 $19,563
Total other operating income, excluding securities gains
increased $585 thousand during the first quarter of 1998 compared
to the 1997 quarter. Net securities gains decreased $776
thousand during the 1998 period from $1.8 million reported in
1997. The securities gains during 1998 resulted primarily from
the sale of U.S. Treasury securities classified as securities
"available for sale" having a book value of $45.8 million with
the proceeds being reinvested in mortgage backed and other U.S.
government agency securities with similar average expected
maturities. The securities gains during 1997 resulted from the
sale of investments in Pennsylvania bank stocks classified as
equity securities "available for sale" having a book value of
$5.9 million. Trust income reflected an increase for the 1998
period of $107 thousand, as the book value of assets managed
increased over 1997 levels. Other income increased $566 thousand
for the three months of 1998 compared to 1997 including increases
in the cash surrender value of bank owned life insurance of $323
thousand and increases in fees from noncustomer use of the
Corporation's ATMs of $122 thousand.
12<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
First Three Months of 1998 as Compared to the First Three Months
of 1997 (Continued)
Noninterest expense was $16.9 million for the three months of
1998 reflecting an increase of $432 thousand over the 1997 level
of $16.5 million. Although total noninterest expense for 1998
increased over 1997 levels total noninterest expense as a percent
of average assets declined from 2.59% for the three months of
1997 to 2.27% for the same period of 1998. Employee costs were
$9.5 million in 1998, representing 1.28% of average assets on an
annualized basis compared to $9.3 million and 1.46% of average
assets on an annualized basis for 1997. Salary and benefit
increases can be attributed to an increase in the number of full-
time equivalent employees for 1998 and an increase in health
insurance costs resulting from a rate increase. The increase in
full-time equivalent employees for 1998 included staffing of
First Commonwealth Insurance Agency which began operations in
January of 1998.
The decrease in furniture and equipment expense for the first
quarter of 1998 compared to the 1997 quarter was primarily the
result of a decrease in equipment repairs for the three months of
1998.
Other operating expenses increased $256 thousand in 1998 to $4.9
million. Advertising and printing costs reflected decreases of
$217 thousand and $47 thousand, respectively for the three months
of 1998 compared to the corresponding period of 1997. Lease
residual insurance costs, Pennsylvania capital stock and shares
taxes, and loan processing fees for 1998 reflected increases of
$124 thousand, $72 thousand and $173 thousand respectively over
1997 levels. Additional increases for 1998 totalling $137
thousand compared to 1997 levels occurred in software
maintenance, stationery and supplies and postage expense.
Income tax expense was $3.1 million for the three months of 1998
compared to $3.4 million for the same period of 1997. The
Corporation's effective tax rate was 28.1% for the 1998 period
and compared to 30.8% for 1997, reflecting an increase in tax-
free income.
13<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY
Liquidity is a measure of the Corporation's ability to
efficiently meet normal cash flow requirements of both borrowers
and depositors. In the ordinary course of business, funds are
generated from deposits (primary source), and maturity or
repayment of earning assets, such as securities and loans. As an
additional secondary source, short-term liquidity needs may be
provided through the use of overnight Federal funds purchased,
borrowings through the use of lines available for repurchase
agreements, and borrowings from the Federal Reserve Bank.
Additionally, the banking subsidiaries are members of the Federal
Home Loan Bank and may borrow under overnight and term borrowing
arrangements. The sale of earning assets may also provide an
additional source of liquidity. Net loans increased $48.3
million in the first three months of 1998. Municipal loans
accounted for over sixty percent of the increase by generating
growth of $32.4 million since year-end 1997. Municipal growth
for 1998 occurred primarily in short-term tax anticipation notes.
Residential mortgages increased by $6.3 million during the three
months of 1998 while commercial loans secured by real estate
increased by $7.7 million. The growth in residential mortgages
for 1998 was primarily the result of an increase in outstanding
home equity lines of credit.
Loan growth for the period was funded primarily by deposit growth
and net short-term borrowings. Short-term funding was obtained
through the use of Federal funds purchased which increased by
$64.6 million since year-end 1997. Increases in total savings
deposits of 14.9 million during the first quarter of 1998 were
partially offset by decreases of $6.9 million in time deposits.
Included in total savings deposit growth for the three months of
1998 was growth of $107.8 million in the Corporation's American
Dream Savings product as customers reinvested traditional savings
dollars in this innovative product which offers higher interest
rates than traditional savings accounts. This product was
designed to build long-term customer relationships and is
intended to produce a favorable impact on the Corporation's net
interest margin over the long-term. Decreases of $25.8 million
in time deposits with maturities exceeding 36 months were
partially offset by increases in shorter term time deposits and
time deposits greater than $100 thousand with maturities greater
than one year. Time deposits greater than $100 thousand with
maturities exceeding one year increased by $14.8 million during
the first three months of 1998.
Marketable securities that the Corporation holds in its
investment portfolio are an additional source of liquidity.
These securities are classified as "securities available for
sale" and while the Corporation does not have specific intentions
to sell these securities they have been designated as "available
for sale" because they may be sold for the purpose of obtaining
future liquidity, for management of interest rate risk or as part
of the implementation of tax management strategies. As of
March 31, 1998 securities available for sale had an amortized
cost of $584.8 million and an approximate fair value of $586.5
14<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY (Continued)
million. Growth of the available for sale portfolio during the
first three months of 1998 was funded by borrowings from the
Federal Home Loan Bank with maturities of up to ten years which
are classified as long-term debt.
Interest Sensitivity
The objective of interest rate sensitivity management is to
maintain an appropriate balance between the stable growth of
income and the risks associated with maximizing income through
interest sensitivity imbalances. While no single number can
accurately describe the impact of changes in interest rates on
net interest income, interest rate sensitivity positions, or
"gaps", when measured over a variety of time periods, may be
helpful.
An asset or liability is considered to be interest-sensitive if
the rate it yields or bears is subject to change within a
predetermined time period. If interest-sensitive assets ("ISA")
exceed interest-sensitive liabilities ("ISL") during the
prescribed time period, a positive gap results. Conversely, when
ISL exceeds ISA during a time period, a negative gap results.
A positive gap tends to indicate that earnings will be impacted
favorably if interest rates rise during the period and negatively
when interest rates fall during the time period. A negative gap
tends to indicate that earnings will be affected inversely to
interest rate changes. In other words, as interest rates fall, a
negative gap should tend to produce a positive effect on earnings
and when interest rates rise, a negative gap should tend to
affect earnings negatively.
The primary components of ISA include adjustable rate loans and
investments, loan repayments, investment maturities and money
market investments. The primary components of ISL include
maturing certificates of deposit, money market deposits, savings
deposits, NOW accounts and short-term borrowings.
15<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY (Continued)
Interest Sensitivity (Continued)
The following table lists the amounts and ratios of assets and
liabilities with rates or yields subject to change within the
periods indicated as of March 31, 1998 and December 31, 1997.
March 31, 1998
0-90 91-180 181-365 Cumulative
Days Days Days 0-365 Days
Loans....................$ 821,089 $139,182 $257,032 $1,217,303
Investments.............. 66,200 66,671 86,723 219,594
Other interest-earning
assets.................. 127,174 8,261 5,512 140,947
Total interest-sensitive
assets................ 1,014,463 214,114 349,267 1,577,844
Certificates of deposits. 229,600 149,575 258,779 637,954
Other deposits........... 819,620 -0- -0- 819,620
Borrowings............... 239,893 521 2,560 242,974
Total interest-sensitive
liabilities........... 1,289,113 150,096 261,339 1,700,548
GAP....................$ (274,650) $ 64,018 $ 87,928 $ (122,704)
ISA/ISL.................. 0.79 1.43 1.34 0.93
Gap/Total assets......... 8.65% 2.02% 2.77% 3.87%
December 31, 1997
0-90 91-180 181-365 Cumulative
Days Days Days 0-365 Days
Loans....................$ 799,956 $125,950 $250,725 $1,176,631
Investments.............. 51,528 63,717 102,631 217,876
Other interest-earning
assets.................. 130,666 5,214 10,043 145,923
Total interest-sensitive
assets................ 982,150 194,881 363,399 1,540,430
Certificates of deposits. 252,652 161,264 225,113 639,029
Other deposits........... 804,672 -0- -0- 804,672
Borrowings............... 207,190 1,441 1,725 210,356
Total interest-sensitive
liabilities........... 1,264,514 162,705 226,838 1,654,057
GAP....................$ (282,364) $ 32,176 $136,561 $ (113,627)
ISA/ISL.................. 0.78 1.20 1.60 0.93
Gap/Total assets......... 9.64% 1.10% 4.66% 3.88%
16
<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Interest Sensitivity (continued)
Although the periodic gap analysis provides management with a
method of measuring current interest rate risk, it only measures
rate sensitivity at a specific point in time. Therefore, to more
precisely measure the impact of interest rate changes on the
Corporation's net interest income, management simulates the
potential effects of changing interest rates through computer
modeling. The income simulation model used by the Corporation
captures all assets, liabilities, and off-balance sheet financial
instruments, accounting for significant variables that are
believed to be affected by interest rates. These variables
include prepayment speeds on mortgage loans and mortgage backed
securities, cash flows of loans, deposits and investments and
balance sheet growth assumptions. The model also captures
embedded options, such as interest rate caps/floors or call
options, and accounts for changes in rate relationships as
various rate indices lead or lag changes in market rates. The
Corporation is then better able to implement strategies which
would include an acceleration of a deposit rate reduction or lag
in a deposit rate increase. The repricing strategies for loans
would be inversely related.
The Corporation's asset/liability management policy guidelines
limit interest rate risk exposure for the succeeding twenty four
month period. Simulations are prepared under the base case where
interest rates remain flat and most likely case where interest
rates were defined using projections of economic factors.
Additional simulations are produced estimating the impact on net
interest income of a 300 basis point (3.00%) movement upward or
downward from the base case scenario. The Corporation's current
asset/liability management policy indicates that a 300 basis
point (3.00%) change in interest rates up or down cannot result
in more than a 7.5% change in net interest income when compared
to a base case without Board approval and a strategy in place to
reduce interest rate risk below the established maximum level.
The analysis at March 31, 1998, indicated that a 300 basis point
(3.00%) movement in interest rates in either direction over the
next twelve months would not have a significant impact on the
Corporation's anticipated net interest income over that time
frame nor over the next twenty four months and the Corporation's
position would remain well within current policy guidelines.
The Corporation's "Asset/Liability Management Committee" ("ALCO")
is responsible for the identification, assessment and management
of interest rate risk exposure, liquidity, capital adequacy and
investment portfolio position. The primary objective of the ALCO
process is to ensure that the Corporation's balance sheet
structure maintains prudent levels of risk within the context of
currently known and forecasted economic conditions and to
establish strategies which provide the Corporation with
appropriate compensation for the assumption of those risks. The
ALCO attempts to mitigate interest rate risk through the use of
strategies such as asset disposition, asset and liability pricing
and matched maturity funding. The ALCO strategies are
established by the Corporation's senior management and are
approved by the Corporation's board of directors.
17<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
CREDIT REVIEW
The following table identifies amounts of loan losses and
nonperforming loans. Past due loans are those which were
contractually past due 90 days or more as to interest or
principal payments but were well secured and in the process of
collection. Renegotiated loans are those loans which terms had
been renegotiated to provide a reduction or deferral of principal
or interest as a result of the deteriorating financial position
of the borrower and are in compliance with the restructured
terms. Loans on a nonaccrual basis include impaired loans (see
description below).
At March 31,
1997 1996
(amounts in thousands)
Nonperforming Loans:
Loans on nonaccrual basis $ 8,865 $ 7,975
Past due loans 12,573 11,553
Renegotiated loans 55 277
Total nonperforming loans $ 21,493 $ 19,805
Other real estate owned $ 1,914 $ 1,817
Loans outstanding at end of period $1,969,597 $1,772,481
Average loans outstanding (year-to-date) $1,946,080 $1,763,331
Nonperforming loans as percent of
total loans 1.09% 1.12%
Provision for possible credit losses $ 1,800 $ 1,241
Net charge-offs $ 1,426 $ 1,002
Net charge-offs as percent of
average loans 0.07% 0.06%
Provision for possible credit losses as
percent of net charge-offs 126.23% 123.85%
Allowance for possible credit losses as
percent of average loans outstanding 1.03% 1.11%
Allowance for possible credit losses as
percent of nonperforming loans 93.70% 98.78%
18<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
CREDIT REVIEW (Continued)
The Corporation considers a loan to be impaired when, based on
current information and events, it is probable that the
Corporation will be unable to collect principal or interest due
according to the contractual terms of the loan. Loan impairment
is measured based on the present value of expected cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent.
Payments received on impaired loans are applied against the
recorded investment in the loan. For loans other than those that
the Corporation expects repayment through liquidation of the
collateral, when the remaining recorded investment in the
impaired loan is less than or equal to the present value of the
expected cash flows, income is recorded on a cash basis.
As of March 31, 1998 and 1997 the Corporation had a recorded
investment in impaired loans of $8.9 million and $8.3 million
respectively. Impaired loans include loans on a nonaccrual basis
and renegotiated loans. The average balance of impaired loans
for the three month periods ending March 31, 1998 and 1997 was
$8.5 million for both periods. An allocation of the allowance
for possible credit losses in the amount of $2.0 million relates
to $5.2 million of the impaired loans at March 31, 1998. An
allocation of the allowance for possible credit losses in the
amount of $1.9 million relates to $4.1 million of the impaired
loans at March 31, 1997. Impaired loans totalling $3.7 million
and $4.2 million at March 31, 1998 and 1997 respectively have no
allocation of the allowance, in accordance with the Financial
Accounting Standards Board Statement No. 118 "Accounting by
Creditors for Impairment of a Loan-Income Recognition and
Disclosures." Income earned on impaired loans during the first
three months of 1998 was $115 thousand compared to $13 thousand
for the related 1997 period.
Other than those described above, there are no material credits
that management has serious doubts as to the borrower's ability
to comply with the present loan repayment terms. Additionally,
the portfolio is well diversified and as of March 31, 1998, there
were no significant concentrations of credit.
Nonperforming loans at March 31, 1998 increased $1.7 million over
1997 levels and included increases in nonaccrual loans of $890
thousand and increases in past due loans of $1.0 million.
Nonaccrual loans reflected increases in commercial loans not
secured by real estate of $1.7 million which were partially
offset by decreases in commercial loans secured by real estate of
$456 thousand and decreases in residential loans secured by real
estate of $232 thousand. Past due loans reflected increases in
commercial loans secured by real estate of $1.7 million which
were partially offset by decreases in commercial loans secured by
real estate of $538 thousand and decreases in unsecured loans to
individuals of $196 thousand. Nonperforming loans as a percent
of total loans were 1.09% at March 31, 1998 compared to 1.12% at
March 31, 1997.
19<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
CREDIT REVIEW (Continued)
Net charge-offs in both dollars and as a percentage of average
loans have increased over 1997 levels. Although net charge-offs
as a percentage of average loans has historically below peer
averages this ratio exceeded peer averages based on the most
recent peer statistics published which used December 31 1997 data
for both the Corporation and peer comparisons. The peer group
was defined using the Uniform Bank Performance Report published
by the Federal Financial Institutions Examination Council.
The allowance for possible credit losses as a percent of average
loans outstanding remains below peer levels and has decreased
when compared to March 1997 and year end 1997. Since all
identified losses are immediately charged off no portion of the
allowance for possible credit losses is restricted to any
individual credit or groups of credits and the entire allowance
is available to absorb any and all credit losses. However for
analytical purposes the allowance for possible credit losses can
be thought to include an amount allocated to various loan types
and an additional unallocated amount. Based on the analysis of
the adequacy of the allowance for possible credit losses at
March 31, 1998 the unallocated portion of the allowance in
dollars has increased since year end 1997.
The Corporation's loan portfolio continues to be monitored by
senior management to identify potential portfolio risks and
detect potential credit deterioration in the early stages.
Credit risk is mitigated through the use of sound underwriting
policies and collateral requirements. Management attempts to
minimize loan losses by analyzing and modifying collection
techniques on a periodic basis. Management believes that the
allowance for possible credit losses and nonperforming loans
remain safely within acceptable levels.
CAPITAL RESOURCES
Equity capital increased $3.0 million in the first three months
of 1998. Dividends declared reduced equity by $4.9 during the
1997 period, while earnings retention was $3.0 million,
representing an earnings retention rate of 37.8%. The retained
net income remains in permanent capital to fund future growth and
expansion. Payments by the Corporation's Employee Stock
Ownership Plan (the "ESOP") to reduce debt it incurred to acquire
the Corporation's common stock for future distribution as
employee compensation, net of fair value adjustments to Unearned
ESOP shares, increased equity by $143 thousand. Amounts paid to
fund the discount on reinvested dividends and optional cash
payments reduced equity by $262 thousand. The market value
adjustment to securities available for sale decreased equity by
$667 thousand. Proceeds from the reissuance of treasury shares
to provide for stock options exercised increased equity by $832
thousand.
20<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CAPITAL RESOURCES (Continued)
A capital base can be considered adequate when it enables the
Corporation to intermediate funds responsibly and provide related
services, while protecting against future uncertainties. The
evaluation of capital adequacy depends on a variety of factors,
including asset quality, liquidity, earnings history and
prospects, internal controls and management caliber. In
consideration of these factors, management's primary emphasis
with respect to the Corporation's capital position is to maintain
an adequate and stable ratio of equity to assets.
The Federal Reserve Board issued risk-based capital adequacy
guidelines which are designed principally as a measure of credit
risk. These guidelines require: (1) at least 50% of a banking
organization's total capital be common and other "core" equity
capital ("Tier I Capital"); (2) assets and off-balance-sheet
items must be weighted according to risk; (3) the total capital
to risk-weighted assets ratio be at least 8%; and (4) a minimum
leverage ratio of Tier I capital to average total assets. The
minimum leverage ratio is not specifically defined, but is
generally expected to be 3-5 percent for all but the most highly
rated banks, as determined by a regulatory rating system.
The table below presents the Corporation's capital position at
March 31, 1998:
Percent
Amount of Adjusted
(in thousands) Assets
Tier I Capital $262,709 13.8%
Risk-Based Requirement 76,136 4.0
Total Capital 282,848 14.9
Risk-Based Requirement 152,272 8.0
Minimum Leverage Capital 262,709 8.7
Minimum Leverage Requirement 120,752 4.0
At March 31, 1998 the Corporation and its banking subsidiaries
are considered well capitalized as defined by the Federal Deposit
Insurance Corporation Improvement Act of 1991.
YEAR 2000 UPDATE
The Corporation's data processing subsidiary, Commonwealth
Systems Corporation continued to test or validate year 2000
compliance during the first quarter of 1998. Mainframe software
systems will be renovated or replaced throughout 1998 as the
systems are successfully tested for the ability to properly
utilize dates beyond December 31, 1999. Based upon presently
available information and time estimates the Corporation remains
on schedule to achieve its goal of implementing the majority of
the critical mainframe software systems by December 31, 1998.
21<PAGE>
<PAGE>
ITEM 2. FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
YEAR 2000 UPDATE (Continued)
The Corporation continues to evaluate significant suppliers and
outside professional service contractors to determine the extent
to which the Corporation is vulnerable to those parties failure
to remediate their own year 2000 issues. During 1998 the
Corporation has continued to utilize internal resources to
reprogram and test software for year 2000 modifications to the
extent possible. Although the Corporation's estimate for total
year 2000 project costs and estimated times for completion are
subject to certain risks and uncertainties, as of March 31, 1998
the Corporation estimates that expenditures for the year 2000
issue will not have a material impact on the Corporation's
financial condition or results of operations.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Information appearing in Item 2 of this report under the caption
"Interest Sensitivity" is incorporated herein by reference in
response to this item.
22<PAGE>
<PAGE>
FIRST COMMONWEALTH FINANCIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no material legal proceedings to which
the Corporation or its subsidiaries are a party, or
of which any of their property is the subject,
except proceedings which arise in the normal course
of business and, in the opinion of management, will
not have a material adverse effect on the
consolidated operations or financial position of the
Corporation and its subsidiaries.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
23<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRST COMMONWEALTH FINANCIAL CORPORATION
(Registrant)
DATED: MAY 13, 1998 /S/ Joseph E. O'Dell
Joseph E. O'Dell, President and
Chief Executive Officer
DATED: MAY 13, 1998 /S/ John J. Dolan
John J. Dolan, Sr. Vice President,
Comptroller, and Chief Financial
Officer
24
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<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 73,605
<INT-BEARING-DEPOSITS> 6,370
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 586,472
<INVESTMENTS-CARRYING> 449,992
<INVESTMENTS-MARKET> 452,126
<LOANS> 1,983,394
<ALLOWANCE> 20,140
<TOTAL-ASSETS> 3,173,476
<DEPOSITS> 2,250,263
<SHORT-TERM> 243,461
<LIABILITIES-OTHER> 30,512
<LONG-TERM> 374,404
0
0
<COMMON> 22,437
<OTHER-SE> 252,399
<TOTAL-LIABILITIES-AND-EQUITY> 3,173,476
<INTEREST-LOAN> 40,252
<INTEREST-INVEST> 14,613
<INTEREST-OTHER> 31
<INTEREST-TOTAL> 54,896
<INTEREST-DEPOSIT> 23,147
<INTEREST-EXPENSE> 29,842
<INTEREST-INCOME-NET> 25,054
<LOAN-LOSSES> 1,800
<SECURITIES-GAINS> 982
<EXPENSE-OTHER> 16,938
<INCOME-PRETAX> 10,876
<INCOME-PRE-EXTRAORDINARY> 7,818
<EXTRAORDINARY> 0
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<NET-INCOME> 7,818
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.35
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<LOANS-NON> 8,865
<LOANS-PAST> 12,573
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