First Commonwealth Financial Corp. (Pennsylvania) – Value Analysis (NYSE:FCF) : November 15, 2017

Capitalcube gives First Commonwealth Financial Corp. (Pennsylvania) a score of 46.

Our analysis is based on comparing First Commonwealth Financial Corp. (Pennsylvania) with the following peers – F.N.B. Corporation, Fulton Financial Corporation, S&T Bancorp, Inc., CNB Financial Corporation, DNB Financial Corporation, AmeriServ Financial, Inc., Penns Woods Bancorp, Inc., Bryn Mawr Bank Corporation, Peoples Financial Services Corp. and Emclaire Financial Corp. (FNB-US, FULT-US, STBA-US, CCNE-US, DNBF-US, ASRV-US, PWOD-US, BMTC-US, PFIS-US and EMCF-US).

Fundamental Overview

First Commonwealth Financial Corp. (Pennsylvania) has a fundamental score of 46 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.54 is about median in its peer group.
  • The market expects FCF-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • FCF-US‘s relative capital efficiency and net profit margins are both around the median level.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • FCF-US‘s return on equity currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • While FCF-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s equity capital investment program suggests it is under-investing in a business that is producing peer median returns.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 75.59% is around peer median suggesting that FCF-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, FCF-US‘s pre-tax margin of 34.18% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 24.41% is around peer median. In addition, FCF-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 60.29x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

First Commonwealth Financial Corp. is a financial holding company, whichprovides a diversified array of consumer and commercial banking services through its bank subsidiary, First Commonwealth Bank. It also offerstrust and wealth management services and offer insurance products through FCB and its other operating subsidiaries. The firm’s consumer services include Internet, mobile, and telephone banking; an automated teller machine network; personal checking accounts; interest-earning checking accounts; savings accounts; insured money market accounts; debit cards; investment certificates; fixed and variable rate certificates of deposit; secured and unsecured installment loans; construction and real estate loans; safe deposit facilities; credit lines with overdraft checking protection; and IRA accounts. It also offers annuities, mutual funds, stock and bond brokerage services through an arrangement with a broker-dealer, and insurance brokers. The company was founded on November 15, 1982 and is headquartered in Indiana, PA.