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First Commonwealth Announces Record Fourth Quarter and Full Year 2022 Revenue; Declares Quarterly Dividend

INDIANA, Pa., Jan. 24, 2023 (GLOBE NEWSWIRE) — First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the fourth quarter and full year of 2022.

Financial Summary

(dollars in thousands, For the Three Months Ended   For the Years Ended
except per share data) December 31,   September 30,   December 31,   December 31,   December 31,
    2022       2022       2021       2022       2021  
Reported Results                  
Net income $ 35,733     $ 33,968     $ 34,776     $ 128,181     $ 138,257  
Diluted earnings per share $ 0.38     $ 0.36     $ 0.37     $ 1.37     $ 1.44  
Return on average assets   1.47 %     1.41 %     1.45 %     1.34 %     1.47 %
Return on average equity   13.61 %     12.67 %     12.36 %     11.99 %     12.55 %
                   
Operating Results (non-GAAP)(1)                  
Core net income $ 36,750     $ 34,353     $ 34,753     $ 129,561     $ 138,518  
Core diluted earnings per share $ 0.39     $ 0.37     $ 0.37     $ 1.38     $ 1.45  
Core pre-tax pre-provision net revenue $ 55,289     $ 48,860     $ 40,868     $ 183,038     $ 171,771  
Provision expense $ 9,120     $ 5,923     $ (2,729 )   $ 21,106     $ (1,376
Net charge-offs $ 2,014     $ 2,461     $ (1,064   $ 7,137     $ 8,410  
Reserve build/(release)(2) $ 6,813     $ 2,490     $ (1,663 )   $ 10,384     $ (8,787 )
Core return on average assets (ROAA)   1.51 %     1.43 %     1.45 %     1.35 %     1.47 %
Core pre-tax pre-provision ROAA   2.28 %     2.03 %     1.71 %     1.91 %     1.83 %
Return on average tangible common equity   19.77 %     18.28 %     17.56 %     17.30 %     17.95 %
Core return on average tangible common equity   20.32 %     18.48 %     17.55 %     17.49 %     17.98 %
Core efficiency ratio   50.00 %     54.06 %     57.06 %     54.59 %     54.69 %
Net interest margin (FTE)   3.99 %     3.76 %     3.23 %     3.58 %     3.26 %

(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.

        

Fourth Quarter 2022 Highlights

  • Net income of $35.7 million and diluted earnings per share totaled $0.38, an increase of $1.8 million, or $0.02 per share from the previous quarter and an increase of $1.0 million, or $0.01 per share from the fourth quarter of 2021
  • Record core pre-tax pre-provision net revenue (PPNR)(1) totaled $55.3 million, an increase of $6.4 million from the previous quarter and an increase of $14.4 million from the fourth quarter of 2021
  • Total loans increased $291.3 million, or 15.7% annualized, from the previous quarter, driven by broad-based growth in nearly all commercial and consumer categories
    • Average loans increased $229.6 million, or 12.5% annualized, from the previous quarter
  • Record net interest income (FTE) of $88.3 million increased $5.7 million from the previous quarter and $17.8 million from the fourth quarter of 2021
  • Noninterest income of $24.3 million decreased $1.6 million from the previous quarter due to a $1.6 million decrease in commercial swap fee income
  • Noninterest expense (excluding $1.3 million of merger and COVID-19 related expenses) of $57.0 million decreased $2.4 million from the previous quarter
  • Average deposits decreased $75.2 million, or 3.7% annualized, compared to the prior quarter
  • Total shareholders’ equity increased $29.5 million from the previous quarter due to a $24.5 million increase in retained earnings and a $4.6 million increase in accumulated other comprehensive income (AOCI)
  • Tangible book value per share grew 16.7% annualized compared to the prior quarter
  • The Bank was named the #1 Small Business Association (SBA) lender in the SBA’s designated Pittsburgh District for the second consecutive year and ranked #2 overall in the state of Pennsylvania

Profitability

  • Core return on average assets (ROAA) improved eight basis points to 1.51% compared to the previous quarter
  • Core pre-tax pre-provision ROAA(1) for the quarter ended December 31, 2022 was 2.28% as compared to 2.03% in the prior quarter and 1.71% in the fourth quarter of 2021
  • The net interest margin of 3.99% increased 23 basis points from the prior quarter and increased 76 basis points from the fourth quarter of 2021
  • The core efficiency ratio(1) of 50.00% decreased 406 basis points from the previous quarter and decreased 706 basis points from the fourth quarter of 2021

Strong capital position

  • Bank-level Tier 1 Capital ratio of 11.3%, which represents $261.5 million in excess capital above the regulatory “well capitalized” requirement of 8.0%
  • There were no shares repurchased during the fourth quarter of 2022. The remaining repurchase capacity under the current program was $5.9 million as of December 31, 2022

Asset quality

  • The provision for credit losses was $9.1 million, an increase of $3.2 million compared to the previous quarter due primarily to additional reserves associated with the $291.3 million increase in loans during the fourth quarter of 2022
  • The allowance for credit losses as a percentage of end-of-period loans was 1.35% compared to 1.31% in the previous quarter
  • Total criticized loans decreased $6.4 million from the previous quarter
  • Net charge-offs on loans totaled $2.0 million, a decrease of $0.4 million from the previous quarter
    • Net charge-offs as a percentage of average loans outstanding (excluding PPP loans, annualized) were 0.11% in the fourth quarter of 2022 as compared to 0.13% in the previous quarter

Full Year 2022 Highlights

Franchise Growth

  • On August 30, 2022, the Company announced its planned expansion into Central and Eastern Pennsylvania with the acquisition of Centric Financial Corporation (OTCPK: CFCX). The legal close of this transaction is expected to be completed on January 31, 2023
  • Total loans grew $863.2 million, or 12.7% compared to the prior year (excluding Paycheck Protection Program “PPP” loans)
  • Average deposits grew $190.1 million, or 2.4% compared to the prior year, including $128.1 million, or 5.0%, in average noninterest-bearing deposits
    • End of period deposits grew $23.0 million, or 0.3% compared to the prior year, including $11.7 million, or 0.4%, in average noninterest-bearing deposits

Earnings

  • For the year ended December 31, 2022, net income was $128.2 million, or $1.37 diluted earnings per share
    • Core net income(1) was $129.6 million, or $1.38 diluted earnings per share, compared to $138.5 million, or $1.45 diluted earnings per share in the prior year
  • Record core pre-tax pre-provision income(1) of $183.0 million grew $11.3 million, or 6.6% from the prior year, despite a $20.5 million decrease in PPP income
  • Operating leverage was positive for the year ended December 31, 2022
    • Core revenue(1) grew $27.6 million, or 7.2%, from the prior year despite the aforementioned decrease in PPP revenue
    • Core noninterest expense(1) increased $14.7 million, or 7.0%, from the prior year

Profitability

  • The core efficiency ratio(1) improved 10 basis points to 54.59% compared to the prior year
  • The return on average assets (ROAA) for the year ended December 31, 2022 was 1.34%
    • Core ROAA(1) for the year ended December 31, 2022 was 1.35% as compared to 1.47% in the prior year
    • Core pre-tax pre-provision ROAA(1) for the year ended December 31, 2022 was 1.91% as compared to 1.83% in the prior year

“Our results for the quarter were strong, resulting in a record 2.28% Core Pre-Tax, Pre-Provision ROAA and a healthy 1.51% Core ROAA,” stated T. Michael Price, President and Chief Executive Officer.   “Loans grew by 15.7% annualized in the fourth quarter, with broad-based production in all of our regions as well as our commercial and consumer portfolios.”   Price continued, “As we look to the year ahead, we are excited about the integration of Centric Bank into our franchise as well as the opportunities that exist with an enhanced presence in their markets.   In addition, our de novo Equipment Finance business is on pace to contribute meaningfully to our growth and augment our commercial lending business.   And our ongoing investments in talent, technology and our regional business model continue to position us well – all to the benefit of our clients, employees, communities and shareholders.”

Earnings

Net income for the fourth quarter of 2022 was $35.7 million, or $0.38 per share, compared to $34.0 million, or $0.36 per share in the third quarter of 2022 and $34.8 million, or $0.37 per share for the fourth quarter of 2021.

Net income for the year ended December 31, 2022 was $128.2 million, or $1.37 per share, compared to $138.3 million, or $1.44 per share for the same period in 2021.

Net Interest Income and Net Interest Margin

Net interest income (FTE) of $88.3 million increased $5.7 million from the previous quarter and increased $17.8 million from the prior year quarter.   The increase from the previous quarter was primarily due to a $7.9 million increase in income on variable and adjustable rate loans, partially offset by a $3.0 million increase in deposit costs.

The net interest margin for the fourth quarter of 2022 was 3.99%, an increase of 23 basis points from the previous quarter and an increase of 76 basis points from the fourth quarter of 2021.   Loan yields increased 44 basis points from the previous quarter primarily due to the aforementioned increase in income on variable and adjustable rate loans, and, together with a $229.6 million increase in average loans, more than offset a 15 basis point increase in the cost of deposits and a $162.9 million increase in average short-term borrowings.

Total average deposits decreased $75.2 million in the fourth quarter of 2022 as compared to the previous quarter.   A $68.0 million decrease in average interest-bearing demand and savings deposits was partially offset by a $9.4 million increase in time deposits.   

Total end-of-period deposits decreased $72.2 million, or 3.5% annualized, from the previous quarter.  

Asset Quality

Provision expense in the fourth quarter of 2022 totaled $9.1 million as compared to $5.9 million in the previous quarter.   The increase in provision expense during the quarter was primarily driven by strong loan growth that drove a $4.6 million increase in the allowance for credit losses (ACL). The ACL was also impacted by an increase of $3.7 million in reserves due to various inputs such as the forecasted U.S. unemployment rate, the Gross Domestic Product (GDP) forecast and changes in estimated prepayment speeds.

Nonperforming loans totaled $35.5 million, a decrease of $0.2 million from the previous quarter and a decrease of $19.7 million from the fourth quarter of 2021.   Nonperforming loans represented 0.46% of total loans (excluding PPP loans) as compared to 0.49% and 0.81% for the periods ended September 30, 2022 and December 31, 2021, respectively.

At December 31, 2022, criticized loans totaled $132.9 million, a decrease of $6.4 million from the previous quarter.  

During the fourth quarter of 2022, net charge-offs were $2.0 million as compared to net charge-offs of $2.5 million in the previous quarter and ($1.1) million in the fourth quarter of 2021.  

Net charge-offs as a percentage of average loans (excluding PPP, annualized) were 0.11%, 0.13% and (0.06%) for the periods ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $24.3 million for the fourth quarter of 2022, as compared to $25.9 million for the third quarter of 2022 and $26.1 million for the fourth quarter of 2021.   The $1.6 million decrease from the previous quarter was primarily due to a $1.6 million decrease in commercial swap fee income.  

For the year ended December 31, 2022, noninterest income totaled $98.7 million, a decrease of $8.0 million from the prior year.   The decrease from the prior year was due to an $8.3 million decrease in gain on sale of Mortgage loans and a $2.0 million decrease in derivative mark-to-market, partially offset by a $2.1 million increase in swap fee income and a $1.7 million increase in service charges on deposit accounts.

Noninterest expense (excluding $1.3 million of merger, branch consolidation, and COVID-19 related expenses) totaled $57.0 million for the fourth quarter of 2022, as compared to $59.4 million for the third quarter of 2022 and $55.5 million for the fourth quarter of 2021. The $2.4 million decrease from the previous quarter was primarily the result of a $0.9 million adjustment in the present value of future BOLI obligations (which is included in salaries and employee benefits) and a $0.6 million decrease in Pennsylvania state shares tax as the result of tax credits from prior periods.

The core efficiency ratio was 50.00% during the fourth quarter of 2022 as compared to 54.06% in the previous quarter and 57.06% in the fourth quarter of 2021.

For the year ended December 31, 2022, noninterest expense (excluding $1.7 million of merger, branch consolidation and COVID-19 related expenses) totaled $227.9 million, as compared to $213.5 million in the prior year. The $14.4 million increase from the prior year was primarily driven by a $6.5 million increase in salaries and benefits, a $1.5 million increase in data processing expense and a $1.5 million increase in occupancy expense.  

The core efficiency ratio was 54.59% for the year ended December 31, 2022 as compared to 54.69% in the previous year.

Full time equivalent staff was 1,424 at December 31, 2022, 1,422 at September 30, 2022, and 1,426 at December 31, 2021.  

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 fourth quarter of 2021. The cash dividend is payable on February 17, 2023 to shareholders of record as of February 3, 2023. This dividend represents a 3.4% projected annual yield utilizing the January 23, 2023 closing market price of $14.06.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at December 31, 2022 were 14.4%, 12.0%, 10.2% and 11.1%, 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 fourth quarter and full year 2022 on Wednesday, January 25, 2023 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 119 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 Years Ended
  December 31,   September 30,   December 31,   December 31,   December 31,
    2022       2022       2021       2022       2021  
SUMMARY RESULTS OF OPERATIONS                  
Net interest income $ 88,027     $ 82,360     $ 70,254     $ 312,221     $ 278,541  
Provision for credit losses   9,120       5,923       (2,729 )     21,106       (1,376 )
Noninterest income   24,309       25,914       26,071       98,708       106,757  
Noninterest expense   58,334       59,901       55,428       229,638       213,857  
Net income   35,733       33,968       34,776       128,181       138,257  
Core net income(5)   36,750       34,353       34,753       129,561       138,518  
Earnings per common share (diluted) $ 0.38     $ 0.36     $ 0.37     $ 1.37     $ 1.44  
Core earnings per common share (diluted)(6) $ 0.39     $ 0.37     $ 0.37     $ 1.38     $ 1.45  
KEY FINANCIAL RATIOS                  
Return on average assets   1.47 %     1.41 %     1.45 %     1.34 %     1.47 %
Core return on average assets(7)   1.51 %     1.43 %     1.45 %     1.35 %     1.47 %
Return on average assets, pre-provision, pre-tax   2.22 %     2.01 %     1.71 %     1.89 %     1.82 %
Core return on average assets, pre-provision, pre-tax   2.28 %     2.03 %     1.71 %     1.91 %     1.83 %
Return on average shareholders’ equity   13.61 %     12.67 %     12.36 %     11.99 %     12.55 %
Return on average tangible common equity(8)   19.77 %     18.28 %     17.56 %     17.30 %     17.95 %
Core return on average tangible common equity(9)   20.32 %     18.48 %     17.55 %     17.49 %     17.98 %
Core efficiency ratio(2)(10)   50.00 %     54.06 %     57.06 %     54.59 %     54.69 %
Net interest margin (FTE)(1)   3.99 %     3.76 %     3.23 %     3.58 %     3.26 %
                   
Book value per common share $ 11.27     $ 10.95     $ 11.77          
Tangible book value per common share(11)   7.92       7.60       8.43          
Market value per common share   13.97       12.84       16.09          
Cash dividends declared per common share   0.120       0.120       0.115       0.475       0.455  
ASSET QUALITY RATIOS                  
Nonperforming loans as a percent of end-of-period loans and leases(3)   0.46 %     0.48 %     0.80 %        
Nonperforming loans as a percent of end-of-period loans and leases, excluding PPP loans(3)   0.46 %     0.49 %     0.81 %        
Nonperforming assets as a percent of total assets(3)   0.37 %     0.38 %     0.59 %        
Nonperforming assets as a percent of total assets, excluding PPP loans(3)   0.37 %     0.38 %     0.59 %        
Net charge-offs as a percent of average loans and leases (annualized)(4)   0.11 %     0.13 %   (0.06)%        
Net charge-offs as a percent of average loans and leases, excluding PPP loans (annualized)(4)   0.11 %     0.13 %   (0.06)%        
Allowance for credit losses as a percent of nonperforming loans(4)   289.98 %     269.23 %     167.67 %        
Allowance for credit losses as a percent of end-of-period loans and leases(4)   1.35 %     1.31 %     1.35 %        
Allowance for credit losses as a percent of end-of-period loans and leases, excluding PPP loans(4)   1.35 %     1.31 %     1.37 %        
CAPITAL RATIOS                  
Shareholders’ equity as a percent of total assets   10.7 %     10.7 %     11.6 %        
Tangible common equity as a percent of tangible assets(12)   7.8 %     7.7 %     8.6 %        
Tangible common equity as a percent of tangible assets, excluding PPP loans(12)   7.8 %     7.7 %     8.7 %        
Leverage Ratio   10.2 %     10.1 %     9.7 %        
Risk Based Capital – Tier I   12.0

%     12.1 %     12.2 %        
Risk Based Capital – Total   14.4 %     14.5 %     14.6 %        
Common Equity – Tier I   11.1 %     11.2 %     11.3 %        
FIRST COMMONWEALTH FINANCIAL CORPORATION        
CONSOLIDATED FINANCIAL DATA            
Unaudited            
(dollars in thousands, except per share data)            
  For the Three Months Ended   For the Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022   2021       2022     2021  
INCOME STATEMENT            
Interest income $ 96,281   $ 85,700 $ 73,530     $ 329,953   $ 293,838  
Interest expense   8,254     3,340   3,276       17,732     15,297  
Net Interest Income   88,027     82,360   70,254       312,221     278,541  
Provision for credit losses   9,120     5,923   (2,729 )     21,106     (1,376 )
Net Interest Income after Provision for Credit Losses   78,907     76,437   72,983       291,115     279,917  
Net securities gains               2     16  
Trust income   2,455     2,777   2,771       10,518     11,111  
Service charges on deposit accounts   4,946     5,194   4,857       19,641     17,984  
Insurance and retail brokerage commissions   2,051     2,048   2,134       8,857     8,502  
Income from bank owned life insurance   1,149     1,419   1,487       5,459     6,433  
Gain on sale of mortgage loans   948     1,485   1,940       5,276     13,555  
Gain on sale of other loans and assets   1,525     1,093   1,849       6,036     8,130  
Card-related interchange income   6,996     6,980   7,069       27,603     27,954  
Derivative mark-to-market   (27 )   6   973       368     2,344  
Swap fee income   752     2,326   828       4,685     2,543  
Other income   3,514     2,586   2,163       10,263     8,185  
Total Noninterest Income   24,309     25,914   26,071       98,708     106,757  
Salaries and employee benefits   31,664     32,486   31,422       126,031     119,506  
Net occupancy   4,451     4,629   3,972       18,037     16,586  
Furniture and equipment   3,990     4,005   3,776       15,582     15,642  
Data processing   3,543     3,721   2,933       13,922     12,373  
Pennsylvania shares tax   960     1,569   1,257       4,447     4,604  
Advertising and promotion   1,093     1,278   1,154       5,031     4,983  
Intangible amortization   726     746   900       3,196     3,497  
Other professional fees and services   1,272     1,204   1,351       4,894     4,501  
FDIC insurance   675     796   565       2,871     2,529  
Litigation and operational losses   847     758   700       2,834     2,324  
Loss on sale or write-down of assets   128     54   80       343     303  
Merger and acquisition   1,254     448         1,702      
COVID-19 related   33     39   92       151     449  
Branch consolidation         (121 )     (104 )   (103 )
Other operating expenses   7,698     8,168   7,347       30,701     26,663  
Total Noninterest Expense   58,334     59,901   55,428       229,638     213,857  
Income before Income Taxes   44,882     42,450   43,626       160,185     172,817  
Income tax provision   9,149     8,482   8,850       32,004     34,560  
Net Income $ 35,733   $ 33,968 $ 34,776     $ 128,181   $ 138,257  
             
Shares Outstanding at End of Period   93,376,314     93,377,064   94,233,152       93,376,314     94,233,152  
Average Shares Outstanding Assuming Dilution   93,489,398     93,450,259   95,020,353       93,887,447     95,840,285  
             
FIRST COMMONWEALTH FINANCIAL CORPORATION      
CONSOLIDATED FINANCIAL DATA          
Unaudited          
(dollars in thousands)          
           
  December 31,   September 30,   December 31,
    2022       2022       2021  
BALANCE SHEET (Period End)          
Assets          
Cash and due from banks $ 124,254     $ 106,153     $ 84,738  
Interest-bearing bank deposits   29,990       74,619       310,634  
Securities available for sale, at fair value   789,075       802,871       1,054,218  
Securities held to maturity, at amortized cost   461,162       474,790       541,311  
Loans held for sale   11,869       13,811       18,583  
           
Loans and leases   7,642,143       7,348,917       6,839,230  
Allowance for credit losses   (102,906 )     (96,093 )     (92,522 )
Net loans and leases   7,539,237       7,252,824       6,746,708  
           
Goodwill and other intangibles   312,533       312,950       314,516  
Other assets   537,546       540,612       474,385  
Total Assets $ 9,805,666     $ 9,578,630     $ 9,545,093  
           
Liabilities and Shareholders’ Equity          
Noninterest-bearing demand deposits $ 2,670,508     $ 2,782,654     $ 2,658,782  
           
Interest-bearing demand deposits   357,769       354,310       291,476  
Savings deposits   4,572,183       4,608,762       4,647,197  
Time deposits   405,009       331,923       385,043  
Total interest-bearing deposits   5,334,961       5,294,995       5,323,716  
           
Total deposits   8,005,469       8,077,649       7,982,498  
           
Short-term borrowings   372,694       97,932       138,315  
Long-term borrowings   181,224       181,489       182,269  
Total borrowings   553,918       279,421       320,584  
           
Other liabilities   194,205       198,985       132,639  
Shareholders’ equity   1,052,074       1,022,575       1,109,372  
Total Liabilities and Shareholders’ Equity $ 9,805,666     $ 9,578,630     $ 9,545,093  
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
  For the Three Months Ended   For the Years Ended
  December 31, Yield/ September 30, Yield/ December 31, Yield/   December 31, Yield/ December 31, Yield/
    2022 Rate   2022 Rate   2021 Rate     2022 Rate   2021 Rate
NET INTEREST MARGIN                  
                       
Assets                      
Loans and leases, excluding PPP loans (FTE)(1)(3) $ 7,486,822 4.76 % $ 7,254,594 4.30 % $ 6,680,346 3.73 %   $ 7,151,998 4.20 % $ 6,464,446 3.80 %
PPP Loans   4,530 2.89 %   7,196 14.61 %   111,544 14.44 %     20,626 12.91 %   312,746 7.41 %
Securities and interest-bearing bank deposits (FTE) (1)   1,286,561 2.08 %   1,446,315 1.92 %   1,878,755 1.46 %     1,567,266 1.78 %   1,809,417 1.46 %
Total Interest-Earning Assets (FTE) (1)   8,777,913 4.36 %   8,708,105 3.92 %   8,670,645 3.38 %     8,739,890 3.79 %   8,586,609 3.43 %
Noninterest-earning assets   863,049     825,989     815,872       835,343     807,455  
Total Assets $ 9,640,962   $ 9,534,094   $ 9,486,517     $ 9,575,233   $ 9,394,064  
                       
Liabilities and Shareholders’ Equity                      
Interest-bearing demand and savings deposits $ 4,884,236 0.29 % $ 4,952,279 0.07 % $ 4,882,318 0.06 %   $ 4,970,835 0.11 % $ 4,812,004 0.07 %
Time deposits   345,749 0.57 %   336,346 0.24 %   395,444 0.31 %     352,622 0.34 %   449,452 0.49 %
Short-term borrowings   264,987 2.86 %   102,073 0.19 %   126,695 0.07 %     144,834 1.38 %   119,801 0.08 %
Long-term borrowings   181,333 4.96 %   181,596 4.94 %   182,371 4.91 %     181,724 4.96 %   200,961 4.70 %
Total Interest-Bearing Liabilities   5,676,305 0.58 %   5,572,294 0.24 %   5,586,828 0.23 %     5,650,015 0.31 %   5,582,218 0.27 %
Noninterest-bearing deposits   2,729,716     2,746,258     2,652,812       2,708,580     2,580,460  
Other liabilities   193,685     152,208     130,373       147,871     130,007  
Shareholders’ equity   1,041,256     1,063,334     1,116,504       1,068,767     1,101,379  
Total Noninterest-Bearing Funding Sources   3,964,657     3,961,800     3,899,689       3,925,218     3,811,846  
Total Liabilities and Shareholders’ Equity $ 9,640,962   $ 9,534,094   $ 9,486,517     $ 9,575,233   $ 9,394,064  
                       
Net Interest Margin (FTE) (annualized)(1)   3.99 %   3.76 %   3.23 %     3.58 %   3.26 %
FIRST COMMONWEALTH FINANCIAL CORPORATION  
CONSOLIDATED FINANCIAL DATA      
Unaudited      
(dollars in thousands)      
  December 31, September 30, December 31,
    2022     2022     2021  
Loan and Lease Portfolio Detail      
Commercial Loan and Lease Portfolio:      
Commercial, financial, agricultural and other $ 1,127,778   $ 1,120,499   $ 1,102,154  
Paycheck Protection Program   4,254     4,930     71,298  
Commercial real estate   2,425,012     2,393,276     2,251,097  
Equipment Finance loans and leases   79,674     43,777      
Real estate construction   395,439     326,539     382,764  
Total Commercial   4,032,157     3,889,021     3,807,313  
       
Consumer Loan Portfolio:      
Closed-end mortgages   1,682,092     1,631,655     1,368,816  
Home equity lines of credit   512,577     522,249     551,434  
Real estate construction   117,662     96,151     111,692  
Total Real Estate – Consumer   2,312,331     2,250,055     2,031,942  
       
Auto & RV loans   1,210,451     1,120,838     901,280  
Direct installment   31,938     33,528     40,937  
Personal lines of credit   51,514     51,514     52,809  
Student loans   3,752     3,961     4,949  
Total Other Consumer   1,297,655     1,209,841     999,975  
Total Consumer Portfolio   3,609,986     3,459,896     3,031,917  
  Total Portfolio Loans and Leases   7,642,143     7,348,917     6,839,230  
Loans held for sale   11,869     13,811     18,583  
  Total Loans and Leases $ 7,654,012   $ 7,362,728   $ 6,857,813  
       
       
  December 31, September 30, December 31,
    2022     2022     2021  
ASSET QUALITY DETAIL      
Nonperforming Loans:      
Loans on nonaccrual basis $ 20,193   $ 20,495   $ 34,926  
Loans held for sale on a nonaccrual basis            
Troubled debt restructured loans on nonaccrual basis   8,852     8,981     13,134  
Troubled debt restructured loans on accrual basis   6,442     6,216     7,120  
    Total Nonperforming Loans $ 35,487   $ 35,692   $ 55,180  
Other real estate owned (“OREO”)   534     322     642  
Repossessions (“Repos”)   454     600     397  
    Total Nonperforming Assets $ 36,475   $ 36,614   $ 56,219  
Loans past due in excess of 90 days and still accruing   1,991     1,548     1,606  
Classified loans   44,447     45,656     77,563  
Criticized loans   132,863     139,258     198,126  
       
Nonperforming assets as a percentage of total loans and leases, plus OREO and Repos(4)   0.48 %   0.50 %   0.82 %
Allowance for credit losses $ 102,906   $ 96,093   $ 92,522  
       
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
  For the Three Months Ended   For the Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022     2021       2022     2021  
Net Charge-offs (Recoveries):            
Commercial, financial, agricultural and other $ 444   $ 698   $ (1,633 )   $ 1,967   $ 4,590  
Real estate construction       (9 )   (11 )     (9 )   (146 )
Commercial real estate   182     1,003     (5 )     1,718     1,524  
Residential real estate   32     36     20       152     (159 )
Loans to individuals   1,356     733     565       3,309     2,601  
Net Charge-offs $ 2,014   $ 2,461   $ (1,064 )   $ 7,137   $ 8,410  
             
Net charge-offs as a percentage of average loans outstanding (annualized)(4)   0.11 %   0.13 % (0.06)%     0.10 %   0.12 %
Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized)(4)   0.11 %   0.13 % (0.06)%     0.10 %   0.13 %
Provision for credit losses as a percentage of net charge-offs   452.83 %   240.67 %   256.48 %     295.73 % (16.36)%
Provision for credit losses $ 9,120   $ 5,923   $ (2,729 )   $ 21,106   $ (1,376 )
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 Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022   2022   2021     2022   2021
             
Interest income $ 96,281 $ 85,700 $ 73,530   $ 329,953 $ 293,838
Adjustment to fully taxable equivalent basis (1)   290   261   266     1,049   1,100
Interest income adjusted to fully taxable equivalent basis (non-GAAP)   96,571   85,961   73,796     331,002   294,938
Interest expense   8,254   3,340   3,276     17,732   15,297
Net interest income, (FTE) (1) $ 88,317 $ 82,621 $ 70,520   $ 313,270 $ 279,641
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 Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022     2021       2022     2021  
             
Net Income $ 35,733   $ 33,968   $ 34,776     $ 128,181   $ 138,257  
Intangible amortization   726     746     900       3,196     3,497  
Tax benefit of amortization of intangibles   (152 )   (157 )   (189 )     (671 )   (734 )
Net Income, adjusted for tax affected amortization of intangibles $ 36,307   $ 34,557   $ 35,487     $ 130,706   $ 141,020  
             
Average Tangible Equity:            
Total shareholders’ equity $ 1,041,256   $ 1,063,334   $ 1,116,504     $ 1,068,767   $ 1,101,379  
Less: intangible assets   312,634     313,336     314,860       313,451     315,589  
Tangible Equity   728,622     749,998     801,644       755,316     785,790  
Less: preferred stock                      
Tangible Common Equity $ 728,622   $ 749,998   $ 801,644     $ 755,316   $ 785,790  
             
(8)Return on Average Tangible Common Equity   19.77 %   18.28 %   17.56 %     17.30 %   17.95 %
             
  For the Three Months Ended   For the Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022     2021       2022     2021  
             
Core Net Income:            
Total Net Income $ 35,733   $ 33,968   $ 34,776     $ 128,181   $ 138,257  
Net securities gains                 (2 )   (16 )
Tax benefit of net securities gains                     3  
Merger & acquisition related expenses   1,254     448           1,702      
Tax benefit of merger & acquisition related expenses   (263 )   (94 )         (357 )    
COVID-19 related   33     39     92       151     449  
Tax benefit of COVID 19 related   (7 )   (8 )   (19 )     (32 )   (94 )
Branch consolidation related           (121 )     (104 )   (103 )
Tax benefit of bank consolidation related expenses           25       22     22  
(5) Core net income $ 36,750   $ 34,353   $ 34,753     $ 129,561   $ 138,518  
Average Shares Outstanding Assuming Dilution   93,489,398     93,450,259     95,020,353       93,887,447     95,840,285  
(6) Core Earnings per common share (diluted) $ 0.39   $ 0.37   $ 0.37     $ 1.38   $ 1.45  
             
Intangible amortization   726     746     900       3,196     3,497  
Tax benefit of amortization of intangibles   (152 )   (157 )   (189 )     (671 )   (734 )
  Core Net Income, adjusted for tax affected amortization of intangibles $ 37,324   $ 34,942   $ 35,464     $ 132,086   $ 141,281  
             
(9) Core Return on Average Tangible Common Equity   20.32 %   18.48 %   17.55 %     17.49 %   17.98 %
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 Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022     2021       2022     2021  
Core Return on Average Assets:            
Total Net Income $ 35,733   $ 33,968   $ 34,776     $ 128,181   $ 138,257  
Total Average Assets   9,640,962     9,534,094     9,486,517       9,575,233     9,394,064  
Return on Average Assets   1.47 %   1.41 %   1.45 %     1.34 %   1.47 %
             
Core Net Income (5) $ 36,750   $ 34,353   $ 34,753     $ 129,561   $ 138,518  
Total Average Assets   9,640,962     9,534,094     9,486,517       9,575,233     9,394,064  
(7) Core Return on Average Assets   1.51 %   1.43 %   1.45 %     1.35 %   1.47 %
  For the Three Months Ended   For the Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022     2021       2022     2021  
Core Efficiency Ratio:            
Total Noninterest Expense $ 58,334   $ 59,901   $ 55,428     $ 229,638   $ 213,857  
Adjustments to Noninterest Expense:            
Intangible amortization   726     746     900       3,196     3,497  
Merger and acquisition related   1,254     448           1,702      
COVID-19 related   33     39     92       151     449  
Branch consolidation related           (121 )     (104 )   (103 )
  Noninterest Expense – Core $ 56,321   $ 58,668   $ 54,557     $ 224,693   $ 210,014  
             
Net interest income, (FTE) $ 88,317   $ 82,621   $ 70,520     $ 313,270   $ 279,641  
Total noninterest income   24,309     25,914     26,071       98,708     106,757  
Net securities gains                 (2 )   (16 )
Total Revenue   112,626     108,535     96,591       411,976     386,382  
             
Adjustments to Revenue:            
Derivative mark-to-market   (27 )   6     973       368     2,344  
  Total Revenue – Core $ 112,653   $ 108,529   $ 95,618     $ 411,608   $ 384,038  
             
(10) Core Efficiency Ratio   50.00 %   54.06 %   57.06 %     54.59 %   54.69 %
FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES    
       
  December 31, September 30, December 31,
    2022     2022     2021  
Tangible Equity:      
Total shareholders’ equity $ 1,052,074   $ 1,022,575   $ 1,109,372  
Less: intangible assets   312,533     312,950     314,516  
Tangible Equity   739,541     709,625     794,856  
Less: preferred stock            
Tangible Common Equity $ 739,541   $ 709,625   $ 794,856  
       
Tangible Assets:      
Total assets $ 9,805,666   $ 9,578,630   $ 9,545,093  
Less: intangible assets   312,533     312,950     314,516  
Tangible Assets $ 9,493,133   $ 9,265,680   $ 9,230,577  
Less: PPP loans   4,254     4,930     71,298  
Tangible Assets, excluding PPP loans $ 9,488,879   $ 9,260,750   $ 9,159,279  
       
(12)Tangible Common Equity as a percentage of Tangible Assets   7.79 %   7.66 %   8.61 %
(12)Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans   7.79 %   7.66 %   8.68 %
       
Shares Outstanding at End of Period   93,376,314     93,377,064     94,233,152  
(11)Tangible Book Value Per Common Share $ 7.92   $ 7.60   $ 8.43  
  For the Three Months Ended   For the Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022   2022   2021       2022     2021  
Pre-tax pre-provision income:            
Net interest income $ 88,027 $ 82,360 $ 70,254     $ 312,221   $ 278,541  
Noninterest income   24,309   25,914   26,071       98,708     106,757  
Noninterest expense   58,334   59,901   55,428       229,638     213,857  
Pre-tax pre-provision income $ 54,002 $ 48,373 $ 40,897     $ 181,291   $ 171,441  
             
Net securities gains $ $ $     $ (2 ) $ (16 )
Merger and acquisition related expenses   1,254   448   0       1,702     0  
COVID-19 related   33   39   92       151     449  
Branch consolidation       (121 )     (104 )   (103 )
Core pre-tax pre-provision income $ 55,289 $ 48,860 $ 40,868     $ 183,038   $ 171,771  
             
Net charge-offs $ 2,014 $ 2,461 $ (1,064 )   $ 7,137   $ 8,410  
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 Years Ended
  December 31, September 30, December 31,   December 31, December 31,
    2022     2022     2021       2022     2021  
Core Net Interest Margin:            
Net Interest Income (FTE) $ 88,317   $ 82,621   $ 70,520     $ 313,270   $ 279,641  
Less: Income from PPP Loans   33     265     4,059       2,663     23,184  
Less: Income from Excess Cash   302     538     100       1,660     390  
Core Net Interest Income (FTE) $ 87,982   $ 81,818   $ 66,361     $ 308,947   $ 256,067  
             
Average Interest-Earning Assets $ 8,777,913   $ 8,708,105   $ 8,670,645     $ 8,739,890   $ 8,586,609  
Less: PPP Loans   4,530     7,196     111,544       20,626     312,746  
Less: Excess Cash   27,091     99,707     241,426       181,568     309,626  
Core Average Interest-Earning Assets $ 8,746,292   $ 8,601,202   $ 8,317,675     $ 8,537,696   $ 7,964,237  
             
Core Net Interest Margin (Non-GAAP)   3.99 %   3.77 %   3.17 %     3.62 %   3.22 %

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