Despite strong loan growth, First Commonwealth Financial Corp. in Indiana, Pa., said its fourth-quarter profits fell 24% from a year earlier, to $8.9 million, as it boosted its provision for loan losses and wrote down the value of its securities portfolio.
Earnings per diluted share declined 31%, to 11 cents, or a nickel below the average estimate of analysts polled by Thomson Reuters.
Full-year net income fell nearly 7%, to $43.1 million.
First Commonwealth's net loans rose more than 19% last year, to $4.4 billion as of Dec. 31, as it capitalized on "significant opportunities within our footprint," John J. Dolan, the $6.4 billion-asset company's president and chief executive, said in a press release Monday.
With loans increasing and borrowing costs falling as a result of the Federal Reserve Board's interest rate cuts, First Commonwealth said its fourth-quarter net interest margin rose 55 basis points, to 3.87%.
The gains were offset somewhat by weakening credit quality. First Commonwealth boosted its loss provision for the quarter more than fourfold, to $10.6 million, to reflect an increase in past due loans — primarily out-of-market commercial real estate loans in its shared national credit participation portfolio.
The company also reported $2.5 million of other-than-temporary impairment charges on certain investment securities and low-income housing partnerships.
It raised $115 million in a stock offering during the fourth quarter, so it opted not to participate in the Treasury Department's Capital Purchase Program.
By late Monday, First Commonwealth's shares had climbed 1.9% from Friday's close, to $2.45.