Fitch Affirms and Withdraws First Commonwealth Financial's Ratings at 'BBB-'; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed and withdrawn the ratings for First Commonwealth Financial Corporation (FCF) and its principal banking subsidiary First Commonwealth Bank at 'BBB-' with a Stable Outlook. Fitch has chosen to withdraw the ratings of FCF for commercial reasons. A full list of ratings follows at the end of this release.

KEY RATING DRIVERS - IDRs, VRs AND SENIOR DEBT

FCF's ratings affirmation reflects the company's solid capital position and improving asset quality. Ratings continue to be constrained by the bank's weak profitability relative to community banking peers. Fitch notes that there has not been a material change to FCF credit profile since the company was last reviewed in September 2014 as part of Fitch' community bank peer review.

Fitch considers FCF's capital position to be a relative strength for the bank with a tangible common equity ratio totalling to 8.92% at year-end 2014. Regulatory capital ratios are also above well-capitalized standards with Tier 1 leverage and total risk based capital (RBC) totalling 9.85% and 12.79%, respectively, for year-end 2014. Fitch expects FCF to continue to manage capital to levels comparable to peers as the bank works through remaining legacy credit issues and executes additional share repurchases.

FCF's asset quality metrics continued to trend down and have improved marginally since the last review. Nonperforming assets fell to 0.99% of total assets as of year-end 2014 down from 1.15% at year-end 2013 and 1.99% at year-end 2012. Net charge-offs also fell to 0.31% of average loans for 2014 from 0.76% at year-end 2013.

FCF's earnings continue to be pressured by the prolonged low interest rate environment and elevated noninterest expenses. FCF's net interest margin (NIM) ranks was 3.27% for 2014, down from 3.39% at year-end 2013. Return on average assets (ROAA) and return on average equity (ROAE) were also below industry and community banking peer averages at 0.71% and 6.18% for 2014.

RATING SENSITIVITIES - IDRS, VRs, AND SENIOR DEBT

Rating sensitivities are no longer relevant given today's rating withdrawal.

KEY RATING DRIVERS - SUSBIDIARY AND AFFILIATED COMPANY

First Commonwealth Bank is a wholly owned subsidiary of FCF. First Commonwealth Bank's ratings are aligned with FCF reflecting Fitch's view that the bank subsidiary is core to the franchise.

RATING SENSITIVITIES - SUSBIDIARY AND AFFILIATED COMPANY

Rating sensitivities are no longer relevant given today's rating withdrawal.

KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR

FCF's Support Rating and Support Rating Floor of '5' and 'NF' reflect Fitch's view that the company is unlikely to procure extraordinary support should such support be needed.

RATING SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR

Rating sensitivities are no longer relevant given today's rating withdrawal.

KEY RATING DRIVERS - LONG- AND SHORT-TERM DEPOSITS

First Commonwealth Bank's long- and short-term deposit ratings reflect Fitch's view of how these deposits would be treated in a liquidation by the FDIC.

RATING SENSITIVITIES - LONG AND SHORT TERM DEPOSITS

Rating sensitivities are no longer relevant given today's rating withdrawal.

Fitch has affirmed and withdrawn the following ratings:

First Commonwealth Financial Corp.

--Long-term Issuer Default Rating (IDR) at 'BBB-';

--Short-term IDR at 'F3';

--Viability Rating at 'bbb-';

--Support Floor at 'NF'

--Support at '5'.

First Commonwealth Bank

--Long-term IDR at 'BBB-';

--Long-term deposit at 'BBB'';

--Short-term IDR at 'F3';

--Viability Rating at 'bbb-';

--Short-term deposit at 'F2';

--Support Floor at 'NF';

--Support at '5'.

Additional information is available on www.fitchratings.com

Applicable Criteria and Related Research

Applicable Criteria and Related Research:

--U.S. Banking Quarterly Comment: 4Q14 (Jan. 28, 2015);

--U.S. Banks: The Risks with Energy Slide (Jan. 16, 2015);

--'2015 Outlook: U.S. Banks (Growth in a Challenging Rate Environment)' (Nov. 12, 2014);

--'U.S. Banks: Implications of an Interest Rate Shock Scenario' (Oct. 30, 2014);

--'Index Trend Analysis - 4Q14 (Fitch Fundamentals Index Remains Neutral)' (January 2015);

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

U.S. Banking Quarterly Comment: 4Q14 (All Eyes on Oil Prices and Interest Rates)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=849388

U.S. Banks: The Risks with Energy Slide

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=854268

2015 Outlook: U.S. Banks (Growth in a Challenging Rate Environment)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=809228

U.S. Banks: Implications of an Interest Rate Shock Scenario

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=800748

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=981246

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Ryan Doyle
Director
+1 212-908-9162
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Jaymin Berg, CPA
Director
+1 212-908-0368
or
Committee Chairperson
Joo-Yung Lee
Managing Director
+1 212-908-0560
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Ryan Doyle
Director
+1 212-908-9162
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Jaymin Berg, CPA
Director
+1 212-908-0368
or
Committee Chairperson
Joo-Yung Lee
Managing Director
+1 212-908-0560
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com