First Commonwealth Announces Second Quarter 2022 Earnings; Declares Quarterly Dividend

Rhea-AI Summary

First Commonwealth Financial Corporation (NYSE: FCF) reported a net income of $30.8 million for Q2 2022, achieving $0.33 per diluted share, a rise from $0.29 in Q1 2022. The company witnessed a 10.8% annualized increase in total loans, with core revenue growing 27.5% quarter-over-quarter. The net interest income (FTE) rose to $73.9 million, up $5.5 million from the prior quarter. The core efficiency ratio improved to 55.87%. However, total shareholder's equity dropped by $18.5 million due to higher interest rates impacting the investment portfolio.

Positive

• Net income increased by $3.0 million from the prior quarter.
• Total loans (excluding PPP) increased by $186.0 million, or 10.8% annualized.
• Net interest income (FTE) rose to $73.9 million, up $5.5 million from Q1 2022.
• Core revenue grew $6.3 million, or 27.5% annualized, from the prior quarter.
• Core efficiency ratio improved to 55.87%, indicating better cost management.

Negative

• Total shareholder’s equity decreased by $18.5 million due to changes in accumulated other comprehensive income.
• Provision for credit losses increased by $2.1 million, reflecting potential risks.

INDIANA, Pa., July 26, 2022 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the second quarter of 2022.

Financial Summary

(dollars in thousands,	For the Three Months Ended												For the Six Months Ended
except per share data)	June 30,				March 31,				June 30,				June 30,				June 30,
		2022				2022				2021				2022				2021
Reported Results
Net income	$30,754				$27,726				$29,619				$58,480				$69,389
Diluted earnings per share	$0.33				$0.29				$0.31				$0.62				$0.72
Return on average assets		1.28%				1.18%				1.26%				1.23%				1.51%
Return on average equity		11.60%				10.15%				10.82%				10.86%				12.87%
Operating Results (non-GAAP)(1)
Core net income	$30,643				$27,814				$29,777				$58,458				$69,632
Core diluted earnings per share	$0.33				$0.29				$0.31				$0.62				$0.72
Core pre-tax pre-provision net revenue	$42,352				$36,537				$42,943				$78,889				$87,989
Provision expense	$4,099				$1,964				$5,413				$6,063				$1,023
Net charge-offs	$1,528				$1,134				$3,927				$2,662				$7,197
Reserve build/(release)(2)	$2,415				($1,334)				$275				$1,081					($4,271)
Core return on average assets (ROAA)		1.28%				1.18%				1.26%				1.23%				1.51%
Core pre-tax pre-provision ROAA		1.77%				1.56%				1.82%				1.66%				1.91%
Return on average tangible common equity		16.81%				14.52%				15.54%				15.64%				18.50%
Core return on average tangible common equity		16.75%				14.57%				15.62%				15.63%				18.56%
Core efficiency ratio		55.87%				59.47%				53.21%				57.61%				53.20%
Net interest margin (FTE)		3.38%				3.19%				3.17%				3.29%				3.29%

⁽¹⁾   Core operating results are a non-GAAP measure used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. A full reconciliation of non-GAAP financial measures can be found at the end of the financial statements which accompany this release.
⁽²⁾   Reserve build/(release) represents the net change in the Company's allowance for credit losses (ACL) from the prior period.

Second Quarter 2022 Highlights

• Net income of $30.8 million and diluted earnings per share totaled $0.33, an increase of $3.0 million, or $0.04 per share from the prior quarter and an increase of $1.1 million, or $0.02 from the second quarter of 2021
• Core pre-tax pre-provision net revenue (PPNR)⁽¹⁾ totaled $42.4 million, an increase of $5.8 million from the previous quarter and a decrease of $0.6 million from the second quarter of 2021
• The Company achieved positive operating leverage during the second quarter of 2022
  • Core revenue⁽¹⁾ grew $6.3 million, or 27.5% annualized, from the prior quarter
  • Core noninterest expense⁽¹⁾ increased $0.2 million, or 1.5% annualized, from the prior quarter
• Total loans (excluding Paycheck Protection Program (PPP) loans) increased $186.0 million, or 10.8% annualized from the previous quarter, driven by strong consumer loan growth
  • Year-to-date annualized loan growth (excluding PPP loans) was 9.9%
  • Average loans (excluding PPP loans) increased $173.4 million, or 10.2% annualized, from the previous quarter
• Net interest income (FTE) of $73.9 million increased $5.5 million from the previous quarter and increased $5.4 million from the second quarter of 2021
• Noninterest income of $24.5 million (excluding net security gains) increased $0.5 million from the previous quarter, but decreased $1.6 million from the second quarter of 2021 due to lower gain on sale of mortgage loans
• Noninterest expense of $55.7 million was unchanged from the previous quarter
• Total PPP loans decreased $15.9 million from the previous quarter, resulting in a total PPP loan balance at June 30, 2022 of $12.9 million
• Average deposits increased $133.1 million, or 6.7% annualized compared to the prior quarter
  • Average noninterest-bearing deposits grew $65.9 million, or 10.0% annualized, compared to the prior quarter
• Total shareholder’s equity decreased $18.5 million from the previous quarter due to a $28.9 million decrease in accumulated other comprehensive income (AOCI) resulting from the impact of higher interest rates on the fair value of the company’s available for sale investment portfolio and interest rate swap agreements
• First Commonwealth Bank (the Bank) has been recognized for the fourth consecutive year by Forbes as one of the World’s Best Banks for 2022

Profitability

• The core efficiency ratio⁽¹⁾ of 55.87% improved 360 basis points from the previous quarter and increased 266 basis points from the second quarter of 2021
• The return on average assets (ROA) improved 10 basis points to 1.28% compared to previous quarter
• Core pre-tax pre-provision ROA⁽¹⁾ for the quarter ended June 30, 2022 was 1.77% as compared to 1.56% in the prior quarter and 1.82% in the second quarter of 2021
• The net interest margin of 3.38% increased 19 basis points compared to the prior quarter and increased 21 basis points as compared to the second quarter of 2021

Asset quality

• The provision for credit losses was $4.1 million, an increase of $2.1 million compared to the previous quarter
• The allowance for credit losses as a percentage of end-of-period loans (excluding PPP loans) was 1.32%, which was unchanged from the previous quarter
• Total criticized loans decreased $27.3 million from the previous quarter
  • Total nonperforming assets of $36.4 million decreased $2.1 million from the previous quarter
• Net charge-offs on loans totaled $1.5 million, an increase of $0.4 million from the previous quarter
  • Net charge-offs as a percentage of average loans outstanding (excluding PPP loans, annualized) was 0.09% in the second quarter of 2022 as compared to 0.07% in the previous quarter

Strong capital and liquidity positions

• On April 25, 2022, the Board of Directors authorized a 4.3% increase in the quarterly cash dividend to shareholders
• Bank-level Tier 1 Capital ratio of 11.5%, which represents $262.4 million in excess capital above the regulatory “well capitalized” requirement of 8.0%
• A total of 715,307 shares at a weighted average price of $13.50 were repurchased during the second quarter of 2022 under the company’s previously authorized share repurchase program.   The remaining repurchase capacity under the current program was $10.3 million as of June 30, 2022
  

“I am encouraged by our results this quarter.   As expected, our loan growth accelerated and was primarily led by our reinvigorated consumer categories, bringing our year-to-date annualized loan growth to 9.9% (excluding PPP) and well within our high single-digit target,” stated T. Michael Price, President and Chief Executive Officer.   “We remain committed to achieving positive operating leverage in 2022 despite revenue headwinds from slowing Mortgage banking income as our asset sensitive balance sheet and stable funding sourced deposit franchise are expected to further benefit from the rising interest rate environment.   And while our current credit costs reflect a benign economic environment, with a lower-risk, more diversified loan portfolio and enhanced credit administration function, we believe we are well positioned to navigate the potential challenges of a recessionary environment while continuing to enhance shareholder value.”

Earnings

Net income for the second quarter of 2022 was $30.8 million, or $0.33 per share, compared to $27.7 million, or $0.29 per share in the first quarter of 2022 and $29.6 million, or $0.31 per share for the second quarter of 2021.

Net Interest Income and Net Interest Margin

Net interest income (FTE) of $73.9 million increased $5.5 million from the previous quarter and increased $5.4 million from the prior year quarter.   The increase from the previous quarter was primarily due to a 19 basis point increase in the yield on interest-earning assets due to higher yields on variable and adjustable rate loans and $1.2 million in deferred interest and fees recognized from a nonaccrual loan that was resolved during the quarter, which was offset by a $1.2 million decrease in fees and interest on PPP loans.   Interest and fee income recognized on PPP loans totaled $0.6 million in the second quarter of 2022 as compared to $1.8 million in the prior quarter.  

The net interest margin for the second quarter of 2022 was 3.38%, an increase of 19 basis points from the previous quarter and an increase of 21 basis points from the second quarter of 2021.   The increase from the previous quarter was due primarily to a 22 basis point increase in the yield on loans (excluding PPP loans) and a 6 basis point impact due to the aforementioned interest and fees recognized from the resolution of a nonaccrual loan, partially offset by a 192 basis point decrease in the yield on PPP loans (inclusive of loan forgiveness).   The total cost of funds was 0.15% in the second quarter of 2022, which was unchanged from the previous quarter.

Total average deposits grew $133.1 million in the second quarter of 2022 as compared to the previous quarter.   Average noninterest bearing deposits grew $65.9 million and offset a $20.1 million decrease in average time deposits.  

Asset Quality

Provision expense in the second quarter of 2022 totaled $4.1 million as compared to $2.0 million in the previous quarter.   The increase in provision expense during the quarter was primarily driven by strong loan growth, which resulted in a $2.1 million increase in the allowance for credit losses (ACL).   The ACL was also impacted by an increase of $5.1 million in the quantitative model due to various inputs such as the unemployment rate, Gross Domestic Product (GDP) forecast, prepayment speeds and max capacity levels. This increase was largely offset by a decrease in qualitative factors of $4.6 million, primarily due to lower reserve adjustments for COVID-related high risk portfolios.  

At June 30, 2022, nonperforming loans totaled $35.7 million, a decrease of $1.8 million from the previous quarter and a decrease of $17.1 million from the second quarter of 2021.   Nonperforming loans represented 0.50% of total loans (excluding PPP loans) as compared to 0.54% and 0.82% for the periods ended March 31, 2022 and June 30, 2021, respectively.

At June 30, 2022, criticized loans totaled $146.8 million, a decrease of $27.3 million from the previous quarter.  

During the second quarter of 2022, net charge-offs were $1.5 million as compared to $1.1 million in the previous quarter and $3.9 million in the second quarter of 2021.  

Net charge-offs as a percentage of average loans (excluding PPP, annualized) were 0.09%, 0.07% and 0.25% for the periods ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

Noninterest Income and Noninterest Expense

Noninterest income (excluding net security gains) totaled $24.5 million for the second quarter of 2022, as compared to $24.0 million for the first quarter of 2022 and $26.1 million for the second quarter of 2021.  

The $0.5 million increase from the previous quarter was primarily due to a $0.7 million increase in interest rate swap fees, a $0.6 million increase in card-related interchange income, a $0.3 million increase in service charges on deposits and a $0.3 million increase in gain on sale of Mortgage loans partially offset by a $1.4 million decrease in gain on sale of SBA loans.

Noninterest expense totaled $55.7 million for the second quarter of 2022, as compared to $55.7 million for the first quarter of 2022 and $51.5 million for the second quarter of 2021.   In comparison with the prior quarter, a $0.6 million decrease in occupancy expense due to seasonally higher snow removal in the previous quarter was offset by a $0.3 million increase in data processing expense and a $0.2 million increase in marketing and promotion expense.  

The core efficiency ratio was 55.87% during the second quarter of 2022 as compared to 59.47% in the previous quarter and 53.21% in the second quarter of 2021.

Full time equivalent staff was 1,409 at June 30, 2022, 1,432 at March 31, 2022, and 1,392 at June 30, 2021.   The decrease from the prior quarter was the result of an increase in the company’s open positions in the bank’s retail branch network.

Dividends and Capital

First Commonwealth Financial Corporation declared a common stock quarterly dividend of $0.12 per share, which represents a 4.3% increase from the second quarter of 2021.   The cash dividend is payable on August 19, 2022 to shareholders of record as of August 5, 2022. This dividend represents a 3.4% projected annual yield utilizing the July 25, 2022 closing market price of $14.32.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at June 30, 2022 were 14.6%, 12.2%, 9.8% and 11.2% respectively. First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its financial results for the second quarter of 2022 on Wednesday, July 27, 2022 at 2:00 PM (ET).   The call can be accessed by dialing (toll free) 1-888-330-3181 conference ID # 4651379 or through the company’s web page, http://www.fcbanking.com/InvestorRelations.   A replay of the call will be available approximately one hour following the conclusion of the conference by dialing 1-800-770-2030 and entering the conference ID # 4651379.   A link to the webcast replay will also be accessible on the company’s webpage for 30 days.

About First Commonwealth Financial Corporation

First Commonwealth Financial Corporation (NYSE: FCF), headquartered in Indiana, Pennsylvania, is a financial services Company with 118 community banking offices in 26 counties throughout western and central Pennsylvania and throughout Ohio, as well as business banking operations in Pittsburgh, Pennsylvania, and Canton, Cleveland, Columbus and Cincinnati, Ohio. The Company also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson, and Lewis Center, Ohio.   First Commonwealth provides a full range of commercial banking, consumer banking, mortgage, equipment finance, wealth management and insurance products and services through its subsidiaries First Commonwealth Bank and First Commonwealth Insurance Agency.   For more information about First Commonwealth or to open an account today, please visit www.fcbanking.com.

Forward-Looking Statements

Certain statements contained in this release that are not historical facts may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the Securities and Exchange Commission, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute “forward-looking statements” as well. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate” or words of similar meaning. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including uncertainties regarding the impact of the COVID-19 pandemic, and could be affected by many factors, including, but not limited to: (1) the effects of   the COVID-19 pandemic on First Commonwealth and its customers; (2) volatility and disruption in national and international financial markets; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (4) inflation, interest rate, commodity price, securities market and monetary fluctuations; (5) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which First Commonwealth or its customers must comply; (6) the soundness of other financial institutions; (7) political instability; (8) impairment of First Commonwealth’s goodwill or other intangible assets; (9) acts of God or of war or terrorism; (10) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (11) changes in consumer spending, borrowings and savings habits; (12) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (13) technological changes; (14) acquisitions and integration of acquired businesses; (15) First Commonwealth’s ability to attract and retain qualified employees; (16) changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (17) the ability to increase market share and control expenses; (18) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (19) the reliability of First Commonwealth’s vendors, internal control systems or information systems; (20) the costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals; and (21) other risks and uncertainties described in this report and in the other reports that we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K.   Further, statements about the potential effects of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, clients, third parties and us.  

In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements in this release. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media Relations:
Jonathan E. Longwill
Vice President / Communications and Media Relations
Phone: 724-463-6806
E-mail: JLongwill@fcbanking.com 

Investor Relations:
Ryan M. Thomas
Vice President / Finance and Investor Relations
Phone: 724-463-1690
E-mail: RThomas1@fcbanking.com 

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
	For the Three Months Ended												For the Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
		2022				2022				2021				2022				2021
SUMMARY RESULTS OF OPERATIONS
Net interest income	$	73,662			$	68,172			$	68,199			$	141,834			$	137,641
Provision for credit losses		4,099				1,964				5,413				6,063				1,023
Noninterest income		24,509				23,976				26,086				48,485				53,441
Noninterest expense		55,679				55,724				51,542				111,403				103,401
Net income		30,754				27,726				29,619				58,480				69,389
Core net income(5)		30,643				27,814				29,777				58,458				69,632
Earnings per common share (diluted)	$	0.33			$	0.29			$	0.31			$	0.62			$	0.72
Core earnings per common share (diluted)(6)	$	0.33			$	0.29			$	0.31			$	0.62			$	0.72
KEY FINANCIAL RATIOS
Return on average assets		1.28	%			1.18	%			1.26	%			1.23	%			1.51	%
Core return on average assets(7)		1.28	%			1.18	%			1.26	%			1.23	%			1.51	%
Return on average assets, pre-provision, pre-tax		1.78	%			1.55	%			1.81	%			1.66	%			1.90	%
Core return on average assets, pre-provision, pre-tax		1.77	%			1.56	%			1.82	%			1.66	%			1.91	%
Return on average shareholders' equity		11.60	%			10.15	%			10.82	%			10.86	%			12.87	%
Return on average tangible common equity(8)		16.81	%			14.52	%			15.54	%			15.64	%			18.50	%
Core return on average tangible common equity(9)		16.75	%			14.57	%			15.62	%			15.63	%			18.56	%
Core efficiency ratio(2)(10)		55.87	%			59.47	%			53.21	%			57.61	%			53.20	%
Net interest margin (FTE)(1)		3.38	%			3.19	%			3.17	%			3.29	%			3.29	%
Book value per common share	$	11.20			$	11.32			$	11.50
Tangible book value per common share(11)		7.85				7.99				8.22
Market value per common share		13.42				15.16				14.07
Cash dividends declared per common share		0.120				0.115				0.115				0.235				0.225
ASSET QUALITY RATIOS
Nonperforming loans as a percent of end-of-period loans and leases(3)		0.50	%			0.54	%			0.78	%
Nonperforming loans as a percent of end-of-period loans and leases, excluding PPP loans(3)		0.50	%			0.54	%			0.82	%
Nonperforming assets as a percent of total assets(3)		0.38	%			0.40	%			0.57	%
Nonperforming assets as a percent of total assets, excluding PPP loans(3)		0.38	%			0.40	%			0.59	%
Net charge-offs as a percent of average loans and leases (annualized)(4)		0.09	%			0.07	%			0.23	%
Net charge-offs as a percent of average loans and leases,, excluding PPP loans (annualized)(4)		0.09	%			0.07	%			0.25	%
Allowance for credit losses as a percent of nonperforming loans(4)		262.25	%			243.38	%			183.81	%
Allowance for credit losses as a percent of end-of-period loans and leases(4)		1.31	%			1.31	%			1.44	%
Allowance for credit losses as a percent of end-of-period loans and leases, excluding PPP loans(4)		1.32	%			1.32	%			1.50	%
CAPITAL RATIOS
Shareholders' equity as a percent of total assets		11.0	%			11.1	%			11.8	%
Tangible common equity as a percent of tangible assets(12)		8.0	%			8.1	%			8.7	%
Tangible common equity as a percent of tangible assets, excluding PPP loans(12)		8.0	%			8.1	%			9.0	%
Leverage Ratio		9.8	%			9.8	%			9.6	%
Risk Based Capital - Tier I		12.2	%			12.2	%			12.6	%
Risk Based Capital - Total		14.6	%			14.7	%			15.2	%
Common Equity - Tier I		11.2	%			11.3	%			11.6	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,		June 30,				June 30,			June 30,
		2022			2022		2021				2022			2021
INCOME STATEMENT
Interest income	$	76,728		$	71,244	$	72,051			$	147,972		$	146,112
Interest expense		3,066			3,072		3,852				6,138			8,471
Net Interest Income		73,662			68,172		68,199				141,834			137,641
Provision for credit losses		4,099			1,964		5,413				6,063			1,023
Net Interest Income after Provision for Credit Losses		69,563			66,208		62,786				135,771			136,618
Net securities gains		—			2		10				2			16
Trust income		2,573			2,713		2,706				5,286			5,222
Service charges on deposit accounts		4,886			4,615		4,310				9,501			8,357
Insurance and retail brokerage commissions		2,486			2,272		1,978				4,758			4,150
Income from bank owned life insurance		1,383			1,508		1,509				2,891			3,460
Gain on sale of mortgage loans		1,561			1,282		3,084				2,843			8,130
Gain on sale of other loans and assets		1,099			2,319		2,111				3,418			3,801
Card-related interchange income		7,137			6,490		7,406				13,627			13,833
Derivative mark-to-market		42			347		(277	)			389			1,153
Swap fee income		1,154			453		1,252				1,607			1,398
Other income		2,188			1,975		1,997				4,163			3,921
Total Noninterest Income		24,509			23,976		26,086				48,485			53,441
Salaries and employee benefits		30,949			30,932		28,347				61,881			57,018
Net occupancy		4,170			4,787		3,881				8,957			8,654
Furniture and equipment		3,857			3,730		3,866				7,587			7,814
Data processing		3,470			3,188		3,192				6,658			6,244
Pennsylvania shares tax		913			1,005		1,258				1,918			2,090
Advertising and promotion		1,434			1,226		1,355				2,660			2,679
Intangible amortization		862			862		863				1,724			1,729
Other professional fees and services		1,197			1,221		1,091				2,418			1,842
FDIC insurance		702			698		438				1,400			1,134
Litigation and operational losses		629			600		556				1,229			1,035
Loss on sale or write-down of assets		86			75		43				161			52
COVID-19 related		62			17		232				79			306
Branch consolidation		(202	)		98		(22	)			(104	)		18
Other operating expenses		7,550			7,285		6,442				14,835			12,786
Total Noninterest Expense		55,679			55,724		51,542				111,403			103,401
Income before Income Taxes		38,393			34,460		37,330				72,853			86,658
Income tax provision		7,639			6,734		7,711				14,373			17,269
Net Income	$	30,754		$	27,726	$	29,619			$	58,480		$	69,389
Shares Outstanding at End of Period		93,705,120			94,299,039		96,201,628				93,705,120			96,201,628
Average Shares Outstanding Assuming Dilution		94,245,770			94,311,324		96,282,425				94,273,808			96,255,475

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
	June 30,				March 31,				June 30,
		2022				2022				2021
BALANCE SHEET (Period End)
Assets
Cash and due from banks	$	120,267			$	120,289			$	89,505
Interest-bearing bank deposits		179,533				404,516				194,948
Securities available for sale, at fair value		877,287				946,346				1,102,057
Securities held to maturity, at amortized cost		492,229				512,911				554,225
Loans held for sale		12,876				10,506				19,530
Loans and leases		7,119,754				6,952,112				6,740,535
Allowance for credit losses		(93,603	)			(91,188	)			(97,038	)
Net loans and leases		7,026,151				6,860,924				6,643,497
Goodwill and other intangibles		313,449				314,066				315,497
Other assets		504,635				472,566				483,143
Total Assets	$	9,526,427			$	9,642,124			$	9,402,402
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits	$	2,726,242			$	2,719,645			$	2,617,651
Interest-bearing demand deposits		273,360				305,623				269,451
Savings deposits		4,708,868				4,782,445				4,566,815
Time deposits		345,075				364,134				431,102
Total interest-bearing deposits		5,327,303				5,452,202				5,267,368
Total deposits		8,053,545				8,171,847				7,885,019
Short-term borrowings		88,923				95,748				107,372
Long-term borrowings		181,752				182,012				182,767
Total borrowings		270,675				277,760				290,139
Other liabilities		153,049				124,898				120,825
Shareholders' equity		1,049,158				1,067,619				1,106,419
Total Liabilities and Shareholders' Equity	$	9,526,427			$	9,642,124			$	9,402,402

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

	For the Three Months Ended													For the Six Months Ended
	June 30,		Yield/		March 31,		Yield/		June 30,		Yield/			June 30,		Yield/		June 30,		Yield/
		2022	Rate			2022	Rate			2021	Rate				2022	Rate			2021	Rate
NET INTEREST MARGIN
Assets
Loans and leases, excluding PPP loans (FTE)(1)(3)	$	7,015,886	3.95	%	$	6,842,481	3.73	%	$	6,341,805	3.80	%		$	6,929,662	3.84	%	$	6,317,078	3.86	%
PPP Loans		20,290	12.02	%		51,147	13.93	%		429,917	5.11	%			35,634	13.38	%		459,482	5.89	%
Securities and interest-bearing bank deposits (FTE)(1)		1,734,126	1.68	%		1,809,131	1.54	%		1,886,184	1.43	%			1,771,421	1.61	%		1,709,129	1.48	%
Total Interest-Earning Assets (FTE)(1)		8,770,302	3.52	%		8,702,759	3.33	%		8,657,906	3.35	%			8,736,717	3.43	%		8,485,689	3.49	%
Noninterest-earning assets		830,167				821,819				793,777					826,016				806,267
Total Assets	$	9,600,469			$	9,524,578			$	9,451,683				$	9,562,733			$	9,291,956
Liabilities and Shareholders' Equity
Interest-bearing demand and savings deposits	$	5,067,692	0.05	%	$	4,980,390	0.04	%	$	4,858,531	0.07	%		$	5,024,283	0.04	%	$	4,731,880	0.08	%
Time deposits		354,403	0.26	%		374,484	0.29	%		458,638	0.47	%			364,388	0.27	%		493,259	0.62	%
Short-term borrowings		95,561	0.08	%		115,544	0.07	%		114,966	0.09	%			105,497	0.07	%		117,155	0.10	%
Long-term borrowings		181,859	4.96	%		182,119	4.98	%		206,495	4.65	%			181,988	4.97	%		219,731	4.52	%
Total Interest-Bearing Liabilities		5,699,515	0.22	%		5,652,537	0.22	%		5,638,630	0.27	%			5,676,156	0.22	%		5,562,025	0.31	%
Noninterest-bearing deposits		2,711,458				2,645,551				2,604,695					2,678,686				2,509,818
Other liabilities		125,646				119,075				110,264					122,379				132,729
Shareholders' equity		1,063,850				1,107,415				1,098,094					1,085,512				1,087,384
Total Noninterest-Bearing Funding Sources		3,900,954				3,872,041				3,813,053					3,886,577				3,729,931
Total Liabilities and Shareholders' Equity	$	9,600,469			$	9,524,578			$	9,451,683				$	9,562,733			$	9,291,956
Net Interest Margin (FTE) (annualized)(1)			3.38	%			3.19	%			3.17	%				3.29	%			3.29	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
	June 30,			March 31,			June 30,
		2022			2022			2021
Loan and Lease Portfolio Detail
Commercial Loan and Lease Portfolio:
Commercial, financial, agricultural and other	$	1,136,593		$	1,092,311		$	1,081,822
Paycheck Protection Program		12,928			28,874			292,355
Commercial real estate		2,319,094			2,344,281			2,205,758
Equipment Finance loans and leases		21,062			2,505			—
Real estate construction		292,400			307,411			317,496
Total Commercial		3,782,077			3,775,382			3,897,431
Consumer Loan Portfolio:
Closed-end mortgages		1,567,561			1,467,133			1,259,798
Home equity lines of credit		532,640			539,088			568,985
Real estate construction		100,592			91,577			97,320
Total Real Estate - Consumer		2,200,793			2,097,798			1,926,103
Auto & RV loans		1,047,104			984,001			829,150
Direct installment		35,245			37,751			28,805
Personal lines of credit		50,249			52,614			53,720
Student loans		4,286			4,566			5,326
Total Other Consumer		1,136,884			1,078,932			917,001
Total Consumer Portfolio		3,337,677			3,176,730			2,843,104
Total Portfolio Loans and Leases		7,119,754			6,952,112			6,740,535
Loans held for sale		12,876			10,506			19,530
Total Loans and Leases	$	7,132,630		$	6,962,618		$	6,760,065
	June 30,			March 31,			June 30,
		2022			2022			2021
ASSET QUALITY DETAIL
Nonperforming Loans:
Loans on nonaccrual basis	$	19,594		$	20,490		$	22,219
Loans held for sale on a nonaccrual basis		—			—			—
Troubled debt restructured loans on nonaccrual basis		9,694			10,090			23,981
Troubled debt restructured loans on accrual basis		6,404			6,887			6,593
Total Nonperforming Loans	$	35,692		$	37,467		$	52,793
Other real estate owned ("OREO")		93			667			394
Repossessions ("Repos")		621			397			440
Total Nonperforming Assets	$	36,406		$	38,531		$	53,627
Loans past due in excess of 90 days and still accruing		3,155			1,921			903
Classified loans		46,798			75,270			55,957
Criticized loans		146,780			174,060			250,427
Nonperforming assets as a percentage of total loans and leases, plus OREO and Repos(4)		0.51	%		0.55	%		0.80	%
Allowance for credit losses	$	93,603		$	91,188		$	97,038

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Net Charge-offs (Recoveries):
Commercial, financial, agricultural and other	$	430		$	395		$	3,784			$	825		$	4,263
Real estate construction		—			—			(135	)			—			(135	)
Commercial real estate		547			(14	)		6				533			1,517
Residential real estate		(26	)		110			(160	)			84			(92	)
Loans to individuals		577			643			432				1,220			1,644
Net Charge-offs	$	1,528		$	1,134		$	3,927			$	2,662		$	7,197
Net charge-offs as a percentage of average loans outstanding (annualized)(4)		0.09	%		0.07	%		0.23	%			0.08	%		0.21	%
Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized)(4)		0.09	%		0.07	%		0.25	%			0.08	%		0.23	%
Provision for credit losses as a percentage of net charge-offs		268.26	%		173.19	%		137.84	%			227.76	%		14.21	%
Provision for credit losses	$	4,099		$	1,964		$	5,413			$	6,063		$	1,023

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
Note: Management believes that it is standard practice in the banking industry to present these non-GAAP measures. These measures provide useful information to management and investors by allowing them to make peer comparisons.
(1)Net interest income has been computed on a fully taxable equivalent basis ("FTE") using the federal income tax statutory rate of 21%.
(2)Core efficiency ratio excludes from total revenue the impact of derivative mark-to-market and excludes from "total noninterest expense" the amortization of intangibles, unfunded commitment expense and any other unusual items deemed by management to not be related to normal operations, such as merger, acquisition and severance costs.
(3)Includes held for sale loans.
(4)Excludes held for sale loans.
	For the Three Months Ended							For the Six Months Ended
	June 30,		March 31,		June 30,			June 30,		June 30,
		2022		2022		2021			2022		2021
Interest income	$	76,728	$	71,244	$	72,051		$	147,972	$	146,112
Adjustment to fully taxable equivalent basis(1)		244		253		290			498		598
Interest income adjusted to fully taxable equivalent basis (non-GAAP)		76,972		71,497		72,341			148,470		146,710
Interest expense		3,066		3,072		3,852			6,138		8,471
Net interest income, (FTE)(1)	$	73,906	$	68,425	$	68,489		$	142,332	$	138,239

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Net Income	$	30,754		$	27,726		$	29,619			$	58,480		$	69,389
Intangible amortization		862			862			863				1,724			1,729
Tax benefit of amortization of intangibles		(181	)		(181	)		(181	)			(362	)		(363	)
Net Income, adjusted for tax affected amortization of intangibles	$	31,435		$	28,407		$	30,301			$	59,842		$	70,755
Average Tangible Equity:
Total shareholders' equity	$	1,063,850		$	1,107,415		$	1,098,094			$	1,085,512		$	1,087,384
Less: intangible assets		313,617			314,235			315,776				313,924			316,105
Tangible Equity		750,233			793,180			782,318				771,588			771,279
Less: preferred stock		—			—			—				—			—
Tangible Common Equity	$	750,233		$	793,180		$	782,318			$	771,588		$	771,279
(8)Return on Average Tangible Common Equity		16.81	%		14.52	%		15.54	%			15.64	%		18.50	%

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Core Net Income:
Total Net Income	$	30,754		$	27,726		$	29,619			$	58,480		$	69,389
Net securities gains		—			(2	)		(10	)			(2	)		(16	)
Tax benefit of net securities gains		—			—			2				—			3
COVID-19 related		62			17			232				79			306
Tax benefit of COVID 19 related		(13	)		(4	)		(49	)			(17	)		(64	)
Branch consolidation related		(202	)		98			(22	)			(104	)		18
Tax benefit of bank consolidation related expenses		42			(21	)		5				22			(4	)
(5)Core net income	$	30,643		$	27,814		$	29,777			$	58,458		$	69,632
Average Shares Outstanding Assuming Dilution		94,245,770			94,311,324			96,282,425				94,273,808			96,255,475
(6)Core Earnings per common share (diluted)	$	0.33		$	0.29		$	0.31			$	0.62		$	0.72
Intangible amortization		862			862			863				1,724			1,729
Tax benefit of amortization of intangibles		(181	)		(181	)		(181	)			(362	)		(363	)
Core Net Income, adjusted for tax affected amortization of intangibles	$	31,324		$	28,495		$	30,459			$	59,820		$	70,998
(9)Core Return on Average Tangible Common Equity		16.75	%		14.57	%		15.62	%			15.63	%		18.56	%

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Core Return on Average Assets:
Total Net Income	$	30,754		$	27,726		$	29,619			$	58,480		$	69,389
Total Average Assets		9,600,469			9,524,578			9,451,683				9,562,733			9,291,956
Return on Average Assets		1.28	%		1.18	%		1.26	%			1.23	%		1.51	%
Core Net Income(5)	$	30,643		$	27,814		$	29,777			$	58,458		$	69,632
Total Average Assets		9,600,469			9,524,578			9,451,683				9,562,733			9,291,956
(7)Core Return on Average Assets		1.28	%		1.18	%		1.26	%			1.23	%		1.51	%

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Core Efficiency Ratio:
Total Noninterest Expense	$	55,679		$	55,724		$	51,542			$	111,403		$	103,401
Adjustments to Noninterest Expense:
Intangible amortization		862			862			863				1,724			1,729
COVID-19 related		62			17			232				79			306
Branch consolidation related		(202	)		98			(22	)			(104	)		18
Noninterest Expense - Core	$	54,957		$	54,747		$	50,469			$	109,704		$	101,348
Net interest income, (FTE)	$	73,906		$	68,425		$	68,489			$	142,332		$	138,239
Total noninterest income		24,509			23,976			26,086				48,485			53,441
Net securities gains		—			(2	)		(10	)			(2	)		(16	)
Total Revenue		98,415			92,399			94,565				190,815			191,664
Adjustments to Revenue:
Derivative mark-to-market		42			347			(277	)			389			1,153
Total Revenue - Core	$	98,373		$	92,052		$	94,842			$	190,426		$	190,511
(10)Core Efficiency Ratio		55.87	%		59.47	%		53.21	%			57.61	%		53.20	%

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
	June 30,			March 31,			June 30,
		2022			2022			2021
Tangible Equity:
Total shareholders' equity	$	1,049,158		$	1,067,619		$	1,106,419
Less: intangible assets		313,449			314,066			315,497
Tangible Equity		735,709			753,553			790,922
Less: preferred stock		—			—			—
Tangible Common Equity	$	735,709		$	753,553		$	790,922
Tangible Assets:
Total assets	$	9,526,427		$	9,642,124		$	9,402,402
Less: intangible assets		313,449			314,066			315,497
Tangible Assets	$	9,212,978		$	9,328,058		$	9,086,905
Less: PPP loans		12,928			28,874			292,355
Tangible Assets, excluding PPP loans	$	9,200,050		$	9,299,184		$	8,794,550
(12)Tangible Common Equity as a percentage of Tangible Assets		7.99	%		8.08	%		8.70	%
(12)Tangible Common Equity as a percentage ofTangible Assets, excluding PPP loans		8.00	%		8.10	%		8.99	%
Shares Outstanding at End of Period		93,705,120			94,299,039			96,201,628
(11)Tangible Book Value Per Common Share	$	7.85		$	7.99		$	8.22

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Pre-tax pre-provision income:
Net interest income	$	73,662		$	68,172		$	68,199			$	141,834		$	137,641
Noninterest income		24,509			23,976			26,086				48,485			53,441
Noninterest expense		55,679			55,724			51,542				111,403			103,401
Pre-tax pre-provision income	$	42,492		$	36,424		$	42,743			$	78,916		$	87,681
Net securities gains	$	—		$	(2	)	$	(10	)		$	(2	)	$	(16	)
COVID-19 related		62			17			232				79			306
Branch consolidation		(202	)		98			(22	)			(104	)		18
Core pre-tax pre-provision income	$	42,352		$	36,537		$	42,943			$	78,889		$	87,989
Net charge-offs	$	1,528		$	1,134		$	3,927			$	2,662		$	7,197

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Core Net Interest Margin:
Net Interest Income (FTE)	$	73,906		$	68,425		$	68,489			$	142,332		$	138,239
Less: Income from PPP Loans		608			1,757			5,473				2,365			13,415
Less: Income from Excess Cash		644			108			88				752			162
Core Net Interest Income (FTE)	$	72,654		$	66,560		$	62,928			$	139,215		$	124,662
Average Interest-Earning Assets	$	8,770,302		$	8,702,759		$	8,657,906			$	8,736,717		$	8,485,689
Less: PPP Loans		20,290			51,147			429,917				35,634			459,482
Less: Excess Cash		324,896			277,570			352,093				301,364			340,681
Core Average Interest-Earning Assets	$	8,425,116		$	8,374,042		$	7,875,896			$	8,399,719		$	7,685,526
Core Net Interest Margin (Non-GAAP)		3.46	%		3.22	%		3.20	%			3.34	%		3.27	%

 

FAQ

What were the earnings results for FCF in Q2 2022?

First Commonwealth Financial Corporation reported a net income of $30.8 million or $0.33 per diluted share in Q2 2022.

How did total loans perform for FCF in Q2 2022?

Total loans, excluding PPP loans, increased by $186.0 million, or 10.8% annualized in Q2 2022.

What was the net interest income for FCF in Q2 2022?

Net interest income (FTE) for Q2 2022 was $73.9 million, an increase of $5.5 million from Q1 2022.

What is FCF's core efficiency ratio for Q2 2022?

The core efficiency ratio for First Commonwealth Financial Corporation improved to 55.87% in Q2 2022.

What is the outlook for FCF following the Q2 2022 results?

The company expresses optimism about achieving positive operating leverage despite revenue headwinds in the mortgage banking sector.