3/8/25
First Commonwealth Financial Corporation (FCF) is a regional bank that has built a solid reputation over the years. Headquartered in Indiana, Pennsylvania, it serves communities throughout the Mid-Atlantic with a variety of financial services, including commercial and retail banking, wealth management, and insurance.
Regional banks like FCF don’t always make headlines, but they can be great choices for dividend investors looking for steady income and financial stability. While it may not offer the high-growth potential of larger financial institutions, FCF has a long history of conservative management and reliable dividend payments. That makes it an interesting stock to evaluate for those who prioritize income over speculative price appreciation.
Key Dividend Metrics
📈 Dividend Yield: 3.31%
💰 Annual Dividend: $0.52 per share
📊 Payout Ratio: 37.05%
📅 Ex-Dividend Date: February 7, 2025
📆 Last Dividend Payment: February 21, 2025
📉 5-Year Average Yield: 3.59%
🔁 Dividend Growth: Modest, with a steady track record
Dividend Overview
FCF’s 3.31% dividend yield provides a reasonable level of income, making it a solid option for investors looking to generate cash flow. While it’s slightly below the five-year average of 3.59%, it still offers an attractive payout relative to its industry peers.
One of the most reassuring aspects of FCF’s dividend is its payout ratio, which sits at 37.05%. This indicates the company is not overextending itself when distributing profits to shareholders. A lower payout ratio gives a company flexibility to maintain dividends even in tougher economic conditions, which is always a key consideration for income investors.
Dividend consistency is another strength. The bank has a history of making steady payouts without extreme fluctuations. The growth rate may not be particularly exciting, but for those who value reliability, FCF fits the bill.
Dividend Growth and Safety
Steady and predictable is the name of the game when it comes to FCF’s dividend growth. The company has taken a measured approach to increasing payouts over time rather than making big jumps. For income-focused investors, this kind of reliability can be more appealing than aggressive dividend growth that might not be sustainable.
Looking at the financials, FCF appears well-positioned to maintain its dividend payments. The company’s return on equity (ROE) of 10.48% and return on assets (ROA) of 1.24% suggest efficient management and profitability. Additionally, with over $174 million in cash on hand, there’s a cushion that provides further reassurance for dividend stability.
Stock volatility is another factor to consider. With a beta of 0.82, FCF tends to move less dramatically than the broader market, which is a plus for investors seeking stability in both stock price and dividend income.
Chart Analysis
Price Action and Moving Averages
The price of FCF has been on a downward trend recently, slipping below the 50-day moving average, which is also sloping downward. This suggests that short-term momentum is weakening. The 200-day moving average, however, is still trending slightly upward, indicating that the longer-term trend remains intact, but the gap between the two moving averages is narrowing.
This type of movement can be a warning sign that the stock is losing steam. It attempted to hold above the 50-day moving average for some time but was unable to sustain it, leading to a breakdown. With the current price sitting right around the 200-day moving average, this level could act as a critical support point. If it holds, the stock may stabilize, but if it breaks lower, there could be more downside ahead.
Volume and Market Participation
Looking at the volume, there was a noticeable spike in trading activity around November and again in February. These high-volume days typically indicate increased institutional activity, either buying or selling in large amounts. More recently, however, volume has tapered off, which can mean less conviction from both buyers and sellers.
Without strong buying pressure, the stock could struggle to regain its prior highs. On the other hand, the lack of heavy selling volume also suggests that there isn’t a rush to exit positions just yet. If volume starts picking up again in one direction, it will provide a clearer signal of where the stock might be headed next.
Relative Strength Index (RSI)
The RSI is showing a gradual decline, remaining below the overbought threshold and drifting closer to oversold levels. This means the stock has been losing momentum for some time, but it hasn’t quite reached the point where it’s signaling extreme weakness.
Typically, when RSI falls below 30, it suggests a stock may be oversold and due for a bounce. Right now, it isn’t quite there yet, but it’s trending in that direction. If RSI continues to slide while price stays near support, it could signal a potential buying opportunity. However, if RSI stays weak and the stock breaks lower, it may indicate further downside ahead.
Analyst Ratings
📈 Upgrades
🟢 RBC Capital Markets recently raised its price target for FCF from $18 to $19, maintaining an “Outperform” rating. This move was driven by steady loan growth, which analysts believe will support earnings per share (EPS) growth.
🟢 Another upgrade came from B. Riley in August 2024, where the firm increased its price target from $16 to $17. The reasoning behind this revision was positive trends in the bank’s loan portfolio, which continue to provide a strong earnings foundation. Analysts at B. Riley noted that FCF has been able to maintain healthy margins despite economic uncertainty.
📉 Downgrades
🔴 In July 2024, Janney took a more cautious stance, downgrading FCF from “Buy” to “Neutral” with a price target of $19. While the specific reasons weren’t fully disclosed, it likely reflected valuation concerns after a period of strong stock performance. Analysts may have viewed the risk-reward balance as less compelling at higher price levels.
🔴 Earlier, in February 2023, Raymond James also downgraded the stock from “Outperform” to “Market Perform.” This shift signaled that while FCF remains a solid financial institution, its near-term upside may be limited due to macroeconomic factors or sector headwinds.
🎯 Consensus Price Target
⭐ The latest consensus price target for FCF stands at $19.58, indicating a potential upside of around 16.33% from current levels. Analysts remain split between optimism for long-term earnings stability and caution regarding broader economic conditions.
These mixed ratings highlight the importance of considering both the bank’s growth potential and the risks associated with a shifting financial landscape. Investors should keep an eye on future earnings reports and any macroeconomic changes that could impact the stock’s trajectory.
Earnings Report Summary
First Commonwealth Financial Corporation (FCF) just released its latest earnings report, giving investors a clear look at how the bank performed over the past quarter and the full year. While there were some strong points, there were also a few areas where results came in lower than last year.
Fourth Quarter 2024 Highlights
The company posted $35.8 million in net income for the fourth quarter, which was a slight improvement from the previous quarter’s $32.1 million. However, compared to the same period last year, earnings were down from $44.8 million. Earnings per share (EPS) came in at $0.35, showing some sequential growth but still trailing last year’s $0.44.
One key measure, return on average assets (ROAA), was 1.23 percent, an improvement from 1.08 percent in the previous quarter but lower than the 1.56 percent seen in late 2023. The return on average equity (ROAE) landed at 10.16 percent, again better than the last quarter but not as strong as the 14.11 percent from a year ago.
Full Year 2024 Performance
Looking at the full year, net income totaled $142.6 million, down from $157.1 million in 2023. EPS for the year was $1.39, compared to $1.54 in the prior year. Profitability measures also softened a bit, with ROAA at 1.22 percent and ROAE at 10.44 percent, both lower than their 2023 counterparts.
Loan Growth and Interest Margins
The bank’s net interest income for the quarter came in at $95.4 million, slightly lower than both the previous quarter and the same period last year. At the same time, the net interest margin (NIM) dipped to 3.54 percent, reflecting a bit of pressure from changing rate environments.
On the lending side, total loans grew by $23.5 million, which is a positive sign, though the growth rate was modest. Meanwhile, deposits saw a stronger increase, rising by $207.1 million compared to the prior quarter.
Credit Quality and Capital Strength
One area that needed some attention was provisions for credit losses, which came in at $6.5 million for the quarter. While that was lower than the previous quarter’s $10.6 million, it was a shift from the positive credit environment seen in late 2023. Net charge-offs totaled $13.7 million, showing an uptick in loan losses compared to the prior quarter but an improvement from a year ago.
Despite these headwinds, the bank maintained a strong capital position, with its total capital ratio at 14.6 percent and Tier 1 capital ratio at 12.9 percent, well above regulatory requirements.
Dividend Update
For income-focused investors, the bank announced a quarterly dividend of $0.13 per share, a 4 percent increase from the prior year’s fourth quarter. The dividend will be paid on February 21, 2025, to shareholders on record as of February 7, 2025. Based on recent share prices, this puts the forward dividend yield at about 3.1 percent, keeping FCF in line with its historical dividend-paying trend.
Overall, the earnings report was a mixed bag. While there were positives in loan growth, capital strength, and dividend consistency, the decline in profitability and slight pressure on margins show there are still some challenges ahead. Investors will be watching closely to see if the bank can turn things around in the coming quarters.
Financial Health and Stability
A company’s ability to sustain and grow dividends ultimately comes down to its financial strength. FCF has a solid foundation, even though there are some areas worth watching.
- Profit Margin: 31.79%
- Operating Margin: 42.72%
- Total Debt: $439.76 million
- Book Value Per Share: $13.86
Profitability metrics are strong, which is a good sign for long-term stability. However, one area of concern is the bank’s recent revenue and earnings trends. Revenue has declined 6.5% year-over-year, while earnings dropped 20%. These declines aren’t catastrophic, but they do raise questions about whether the bank will be able to return to steady growth in the near future.
On the positive side, the company generates significant operating cash flow—$129.46 million in the last 12 months—which adds another layer of protection for dividend payments.
Valuation and Stock Performance
At its current price, FCF appears fairly valued, trading at a price-to-earnings (P/E) ratio of 11.31 on a trailing basis and 10.85 forward. These levels suggest the stock isn’t overpriced, but it’s also not trading at a deep discount.
- 52-Week Range: $12.41 – $19.96
- Current Price: $15.72
- 50-Day Moving Average: $16.51
- 200-Day Moving Average: $16.38
The stock has struggled to stay above its 50-day and 200-day moving averages, which could signal some resistance. For investors looking for an entry point, a dip below $15 might present a more attractive buying opportunity, especially for those focused on maximizing yield.
Risks and Considerations
Even a well-run regional bank like FCF isn’t without risks. Investors should be aware of several potential headwinds that could impact dividends in the future.
- Declining revenue and earnings growth could put pressure on profitability if the trend continues.
- Regional banks are more exposed to local economic conditions than larger national banks. A downturn in key markets could hurt loan growth and credit quality.
- Interest rates play a big role in a bank’s ability to generate income. If rates decline significantly, net interest margin compression could reduce profitability.
- Competition from larger banks and digital financial services could erode market share over time.
- Short interest has ticked up slightly, which means some investors may be betting on further stock declines.
None of these risks are immediate red flags, but they are factors that long-term investors should keep an eye on.
Final Thoughts
First Commonwealth Financial Corporation isn’t the kind of stock that will make headlines for explosive growth, but for investors seeking a steady, reliable dividend, it’s worth considering. The 3.31% yield, combined with a reasonable payout ratio and strong financials, makes it a solid option for income-focused portfolios.
There are some concerns about recent revenue and earnings declines, but the company’s overall stability and cash flow generation provide reassurance that the dividend is secure for now. Investors who value consistency over speculation may find FCF to be a useful addition to a dividend-focused strategy.
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