First Commonwealth Financial (FCF) very Attractive

First Commonwealth Financial (FCF) headquartered in Indiana, PA is Pennsylvania's 6th largest bank. It has 115 brances of which 65 are in the Pittsburgh, PA area.

First Commonwealth Financial closed Wednesday's trading day at $6.37. At this price FCF is very attractive for many reasons. Tangible book value for the Pennsylvania bank is $5.57 which was it trading at 1.2 Price / Tangible book at wednesdays close. Fourth quarter earnings came in line with analyst expectations of $0.11 per share. Asset quality has continued to improve slowly but at a steady pace. Doing a secondary offering during Q3 has FCF very well capitalized. First Common wealth does not have TARP to pay back as it decided not to participate in the Treasury program.

While early in 2010 FCF was in a more defensive position due to a lower level of capital, management has since acknowledged being better capitalized has put them in a more offensive position which can allow then to have higher lending standards and continue lending in a more conservative manner. First Commonwealth also reduced their exposure to commercial real estate which is a sign of their commitment to reducing risk.

In their conference call with Sterne Agee on Thursday, management reiterated they have noticed an uptick in lending during the fourth quarter as well as continued improvement in their net interest margin.

The continued improvement First commonwealth has made over the past year and being in a region that went virtually unscathed relative to the rest of the nation during the whole credit crises makes them a very attractive takeover candidate. Management noted in their conference call that they feel they are trading at a significant discount at this price.

The Sterne Agee 2011 Financial institutions investors conference can be found on First commonwealth's website or at the following address: ir.fcbanking.com/CorporateProfile.aspx?i....



Disclosure: I am long FCF.