First Commonwealth Announces First Quarter 2022 Earnings; Increases Quarterly Dividend
04/26/2022 - 07:00 AM
INDIANA, Pa., April 26, 2022 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the first quarter of 2022.
Financial Summary
(dollars in thousands, For the Three Months Ended except per share data) March 31, December 31, March 31, 2022 2021 2021 Reported Results Net income $ 27,726 $ 34,776 $ 39,770 Diluted earnings per share $ 0.29 $ 0.37 $ 0.41 Return on average assets 1.18 % 1.45 % 1.77 % Return on average equity 10.15 % 12.36 % 14.98 % Operating Results (non-GAAP) (1) Core net income $ 27,814 $ 34,753 $ 39,855 Core diluted earnings per share $ 0.29 $ 0.37 $ 0.41 Core pre-tax pre-provision net revenue $ 36,537 $ 40,868 $ 45,046 Provision expense $ 1,964 ($ 2,729 ) ($ 4,390 ) Net charge-offs $ 1,134 ($ 1,064 ) $ 3,270 Reserve build/(release)(2) ($ 1,334 ) ($ 1,663 ) ($ 4,546 ) Core return on average assets (ROAA) 1.18 % 1.45 % 1.77 % Core pre-tax pre-provision ROAA 1.56 % 1.71 % 2.00 % Return on average tangible common equity 14.52 % 17.56 % 21.58 % Core return on average tangible common equity 14.57 % 17.55 % 21.63 % Core efficiency ratio 59.47 % 57.06 % 53.18 % Net interest margin (FTE) 3.19 % 3.23 % 3.40 %
(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.
First Quarter 2022 Highlights
Financial results
Net income of $27.7 million and diluted earnings per share totaled $0.29, a decrease of $7.1 million , or $0.08 per share from the previous quarter Core pre-tax pre-provision net revenue (PPNR)(1) totaled $36.5 million , a decrease of $4.3 million from the previous quarter and a decrease of $8.5 million from the first quarter of 2021, primarily as a result of declines in income related to the Paycheck Protection Program (PPP) and noninterest income PPNR ROAA was 1.55% in the first quarter of 2022 as compared to 1.71% in the previous quarter Net interest income (FTE) of $68.4 million decreased $2.1 million from the previous quarter and $1.3 million from the first quarter of 2021 as a result of a decline in PPP income Total fees and interest recognized from PPP loans totaled $1.8 million in the first quarter of 2022, a decrease of $2.3 million from the previous quarter and a decrease of $6.2 million from the first quarter of 2021 Approximately $42.4 million of PPP loans were forgiven in the first quarter of 2022, resulting in total remaining PPP loan balances at March 31, 2022 of $28.9 million Noninterest income of $24.0 million decreased $2.1 million from the previous quarter due primarily to a $0.7 million decrease in gain on sale of Mortgage loans, a $0.6 million decrease in card-related interchange income, a $0.6 million decrease in the derivative mark-to-market adjustment on interest rate swaps, and a $0.4 million decrease in fee income related to new interest rate swaps Noninterest expense of $55.7 million increased $0.3 million from the previous quarter Total loans (excluding PPP loans) increased $147.2 million , or 8.8% annualized from the previous quarter Average deposits increased $69.9 million , or 3.6% annualized compared to the prior quarter despite $21.0 million in intentional time deposit runoff End of period deposits grew by $189.3 million from the previous quarter, or 9.6% annualized Total shareholder’s equity decreased $41.8 million from the previous quarter due to a $59.4 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 has been recognized for the fourth consecutive year by Forbes as one of the World’s Best Banks for 2022 Profitability
The net interest margin of 3.19% declined 4 basis points compared to the prior quarter The core net interest margin( 1) (adjusted for PPP income and excess cash) improved 5 basis points to 3.22% The core efficiency ratio(1) increased by 241 basis points to 59.47% compared to the prior quarter The return on average assets (ROAA) declined 27 basis points to 1.18% compared to the prior quarter Core pre-tax pre-provision ROAA(1) (which is not adjusted for PPP) for the quarter ended March 31, 2022 was 1.56% as compared to 1.71% in the prior quarter and 2.00% in the prior year 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 $257.5 million in excess capital above the regulatory “well capitalized” requirement of 8.0% There were no shares repurchased during the first quarter of 2022. As previously announced on October 26, 2021, the Board of Directors authorized a $25 million share repurchase program. The remaining capacity under the current program was $20.0 million as of March 31, 2022. Asset quality
The provision for credit losses was $2.0 million , an increase of $4.7 million from the previous quarter Reserve build/(release)(2) was $(1.3) million , bringing reserves to total loans (excluding PPP) down to 1.32% from 1.37% in the previous quarter Nonperforming loans of $37.5 million decreased $17.7 million from the previous quarter Net charge-offs on loans totaled $1.1 million , an increase of $2.2 million from the previous quarter Net charge-offs/(recoveries) as a percentage of average loans outstanding (annualized) was 0.07% in the first quarter of 2022, an increase from (0.06% ) in the previous quarter “We delivered a strong quarter of broad-based loan growth and solid financial results in the first quarter,” stated T. Michael Price, President and Chief Executive Officer. “Growth in commercial and consumer real estate lending along with a resilient indirect auto business produced annualized loan growth of 8.8% . While we did experience an anticipated slowdown in fee income from record levels in our Mortgage business, our asset sensitive balance sheet is well positioned for a rising interest rate environment. I am also pleased to report our de novo Equipment Finance business booked its first loans during the quarter. We expect this business to serve as another source of growth and an added benefit for our clients and shareholders for years to come.”
Earnings
Net income for the first quarter of 2022 was $27.7 million , or $0.29 per share, compared to $34.8 million , or $0.37 per share in the fourth quarter of 2021 and $39.8 million , or $0.41 per share for the first quarter of 2021.
Net Interest Income and Net Interest Margin
Net interest income (FTE) of $68.4 million decreased $2.1 million from the previous quarter and $1.3 million from the prior year quarter. The decrease from the prior quarter was primarily due to a $2.3 million decrease in fees and interest on PPP loans. Interest and fee income recognized on PPP loans totaled $1.8 million in the first quarter as compared to $4.1 million in the prior quarter.
The net interest margin for the first quarter of 2022 was 3.19% , a decrease of four basis points from the previous quarter and a decrease of 21 basis points from the first quarter of 2021. The decrease from the fourth quarter of 2021 was due primarily to the aforementioned decrease in interest and fees on PPP loans partially offset by an eight basis point increase in the yield on investment securities and a two basis point decrease in the cost of interest-bearing demand and savings deposits.
Total average deposits grew $69.9 million in the first quarter of 2022 as compared to the previous quarter. Average interest-bearing demand and savings deposits grew $98.1 million , which was partially offset by a $21.0 million decrease in average time deposits.
Asset Quality
Provision expense in the first quarter of 2022 totaled $2.0 million , an increase of $4.7 million from a negative provision of ($2.7 million ) in the previous quarter.
The allowance for credit losses (ACL) as a percentage of end-of-period loans (excluding PPP loans) was 1.32% in the first quarter of 2022 as compared to 1.37% in the previous quarter.
At March 31, 2022, nonperforming loans totaled $37.5 million , a decrease of $17.7 million from the previous quarter and a decrease of $12.9 million from the previous year quarter. Nonperforming loans represented 0.54% of total loans (excluding PPP) as of March 31, 2022, down from 0.81% and 0.80% for the periods ended December 31, 2021 and March 31, 2021, respectively.
At March 31, 2022, criticized loans totaled $174.1 million , a decrease of $24.1 million from the previous quarter.
During the first quarter of 2022, net charge-offs/(recoveries) were $1.1 million , compared to ($1.1) million in the prior quarter and $3.3 million in the first quarter of 2021. Net charge-offs were 0.07% , (0.06% ) and 0.20% of average loans (annualized) for the periods ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.
Noninterest Income and Noninterest Expense
Noninterest income totaled $24.0 million for the first quarter of 2022, as compared to $26.1 million for the fourth quarter of 2021 and $27.4 million for the first quarter of 2021 (excluding net securities gains). There were no material securities gains during the current or comparable quarters.
The $2.1 million decrease from the previous quarter was primarily driven by a $0.7 million decline in Mortgage gain on sale income and a $0.6 million seasonal decrease in card-related interchange income from the previous quarter, as well as a $0.6 million decrease in the derivative mark-to-market adjustment on interest rate swaps (as a result of changes in fair value due to movement in bond spreads, swap rates and counterparty credit risk) and a $0.4 million decrease in fee income related to new interest rate swaps (due to lower commercial demand). These declines were partially offset by a $0.5 million increase in the gain on sale of Small Business Administration (SBA) loans.
Noninterest expense totaled $55.7 million for the first quarter of 2022, as compared to $55.4 million for the fourth quarter of 2021 and $51.9 million for the first quarter of 2021. The $0.3 million increase from the previous quarter was primarily the result of an $0.8 million increase in net occupancy expense due, in part, to seasonally higher snow removal expense partially offset by a $0.5 million decrease in salaries and benefits due to lower hospitalization and incentive payouts.
The core efficiency ratio was 59.47% during the first quarter of 2022 as compared to 57.06% in the previous quarter and 53.18% in the first quarter of 2021.
Full time equivalent staff was 1,432 at March 31, 2022, 1,426 at December 31, 2021, and 1,387 at March 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 previous quarter. The cash dividend is payable on May 20, 2022 to shareholders of record as of May 6, 2022. This dividend represents a 3.3% projected annual yield utilizing the April 25, 2022 closing market price of $14.41.
First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at March 31, 2022 were 14.7% , 12.2% , 9.8% and 11.3% 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 first quarter of 2022 on Wednesday, April 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 web.
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: JLongwill@fcbanking.com
Investor Relations:
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data) For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 SUMMARY RESULTS OF OPERATIONS Net interest income $ 68,172 $ 70,254 $ 69,442 Provision for credit losses 1,964 (2,729 ) (4,390 ) Noninterest income 23,976 26,071 27,355 Noninterest expense 55,724 55,428 51,859 Net income 27,726 34,776 39,770 Core net income (5) 27,814 34,753 39,855 Earnings per common share (diluted) $ 0.29 $ 0.37 $ 0.41 Core earnings per common share (diluted) (6) $ 0.29 $ 0.37 $ 0.41 KEY FINANCIAL RATIOS Return on average assets 1.18 % 1.45 % 1.77 % Core return on average assets (7) 1.18 % 1.45 % 1.77 % Return on average assets, pre-provision, pre-tax 1.55 % 1.71 % 2.00 % Core return on average assets, pre-provision, pre-tax 1.56 % 1.71 % 2.00 % Return on average shareholders' equity 10.15 % 12.36 % 14.98 % Return on average tangible common equity (8) 14.52 % 17.56 % 21.58 % Core return on average tangible common equity (9) 14.57 % 17.55 % 21.63 % Core efficiency ratio (2)(10) 59.47 % 57.06 % 53.18 % Net interest margin (FTE) (1) 3.19 % 3.23 % 3.40 % Book value per common share $ 11.32 $ 11.77 $ 11.30 Tangible book value per common share (11) 7.99 8.43 8.01 Market value per common share 15.16 16.09 14.37 Cash dividends declared per common share 0.115 0.115 0.110 ASSET QUALITY RATIOS Nonperforming loans as a percent of end-of-period loans and leases(3) 0.54 % 0.80 % 0.75 % Nonperforming loans as a percent of end-of-period loans and leases, excluding PPP loans (3) 0.54 % 0.81 % 0.80 % Nonperforming assets as a percent of total assets (3) 0.40 % 0.59 % 0.55 % Nonperforming assets as a percent of total assets, excluding PPP loans (3) 0.40 % 0.59 % 0.58 % Net charge-offs as a percent of average loans and leases (annualized) (4) 0.07 % (0.06) % 0.20 % Net charge-offs as a percent of average loans and leases,, excluding PPP loans (annualized) (4) 0.07 % (0.06) % 0.21 % Allowance for credit losses as a percent of nonperforming loans (4) 243.38 % 167.67 % 192.06 % Allowance for credit losses as a percent of end-of-period loans and leases (4) 1.31 % 1.35 % 1.44 % Allowance for credit losses as a percent of end-of-period loans and leases, excluding PPP loans (4) 1.32 % 1.37 % 1.55 % CAPITAL RATIOS Shareholders' equity as a percent of total assets 11.1 % 11.6 % 11.5 % Tangible common equity as a percent of tangible assets (12) 8.1 % 8.6 % 8.5 % Tangible common equity as a percent of tangible assets, excluding PPP loans (12) 8.1 % 8.7 % 8.9 % Leverage Ratio 9.8 % 9.7 % 9.7 % Risk Based Capital - Tier I 12.2 % 12.2 % 12.6 % Risk Based Capital - Total 14.7 % 14.6 % 15.3 % Common Equity - Tier I 11.3 % 11.3 % 11.6 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data) For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 INCOME STATEMENT Interest income $ 71,244 $ 73,530 $ 74,061 Interest expense 3,072 3,276 4,619 Net Interest Income 68,172 70,254 69,442 Provision for credit losses 1,964 (2,729 ) (4,390 ) Net Interest Income after Provision for Credit Losses 66,208 72,983 73,832 Net securities gains 2 — 6 Trust income 2,713 2,771 2,516 Service charges on deposit accounts 4,615 4,857 4,047 Insurance and retail brokerage commissions 2,272 2,134 2,172 Income from bank owned life insurance 1,508 1,487 1,951 Gain on sale of mortgage loans 1,282 1,940 5,046 Gain on sale of other loans and assets 2,319 1,849 1,690 Card-related interchange income 6,490 7,069 6,427 Derivative mark-to-market 347 973 1,430 Swap fee income 453 828 146 Other income 1,975 2,163 1,924 Total Noninterest Income 23,976 26,071 27,355 Salaries and employee benefits 30,932 31,422 28,671 Net occupancy 4,787 3,972 4,773 Furniture and equipment 3,730 3,776 3,948 Data processing 3,188 2,933 3,052 Pennsylvania shares tax 1,005 1,257 832 Advertising and promotion 1,226 1,154 1,324 Intangible amortization 862 900 866 Other professional fees and services 1,221 1,351 751 FDIC insurance 698 565 696 Litigation and operational losses 600 700 479 Loss on sale or write-down of assets 75 80 9 COVID-19 related 17 92 74 Branch consolidation 98 (121 ) 40 Other operating expenses 7,285 7,347 6,344 Total Noninterest Expense 55,724 55,428 51,859 Income before Income Taxes 34,460 43,626 49,328 Income tax provision 6,734 8,850 9,558 Net Income $ 27,726 $ 34,776 $ 39,770 Shares Outstanding at End of Period 94,299,039 94,233,152 96,248,476 Average Shares Outstanding Assuming Dilution 94,311,324 95,020,353 96,233,647
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) March 31, December 31, March 31, 2022 2021 2021 BALANCE SHEET (Period End) Assets Cash and due from banks $ 120,289 $ 84,738 $ 83,989 Interest-bearing bank deposits 404,516 310,634 420,645 Securities available for sale, at fair value 946,346 1,054,218 1,056,703 Securities held to maturity, at amortized cost 512,911 541,311 407,833 Loans held for sale 10,506 18,583 20,604 Loans and leases 6,952,112 6,839,230 6,736,894 Allowance for credit losses (91,188 ) (92,522 ) (96,763 ) Net loans and leases 6,860,924 6,746,708 6,640,131 Goodwill and other intangibles 314,066 314,516 316,148 Other assets 472,566 474,385 470,936 Total Assets $ 9,642,124 $ 9,545,093 $ 9,416,989 Liabilities and Shareholders' Equity Noninterest-bearing demand deposits $ 2,719,645 $ 2,658,782 $ 2,616,303 Interest-bearing demand deposits 305,623 291,476 267,571 Savings deposits 4,782,445 4,647,197 4,501,456 Time deposits 364,134 385,043 483,926 Total interest-bearing deposits 5,452,202 5,323,716 5,252,953 Total deposits 8,171,847 7,982,498 7,869,256 Short-term borrowings 95,748 138,315 110,762 Long-term borrowings 182,012 182,269 233,012 Total borrowings 277,760 320,584 343,774 Other liabilities 124,898 132,639 116,479 Shareholders' equity 1,067,619 1,109,372 1,087,480 Total Liabilities and Shareholders' Equity $ 9,642,124 $ 9,545,093 $ 9,416,989
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) For the Three Months Ended March 31, Yield/ December 31, Yield/ March 31, Yield/ 2022 Rate 2021 Rate 2021 Rate NET INTEREST MARGIN Assets Loans and leases, excluding PPP loans (FTE)(1)(3) $ 6,842,481 3.73 % $ 6,680,346 3.73 % $ 6,292,076 3.91 % PPP Loans 51,147 13.93 % 111,544 14.44 % 489,375 6.58 % Securities and interest-bearing bank deposits (FTE) (1) 1,809,131 1.54 % 1,878,755 1.46 % 1,530,107 1.54 % Total Interest-Earning Assets (FTE) (1) 8,702,759 3.33 % 8,670,645 3.38 % 8,311,558 3.63 % Noninterest-earning assets 821,819 815,872 818,896 Total Assets $ 9,524,578 $ 9,486,517 $ 9,130,454 Liabilities and Shareholders' Equity Interest-bearing demand and savings deposits $ 4,980,390 0.04 % $ 4,882,318 0.06 % $ 4,603,822 0.10 % Time deposits 374,484 0.29 % 395,444 0.31 % 528,265 0.75 % Short-term borrowings 115,544 0.07 % 126,695 0.07 % 119,369 0.11 % Long-term borrowings 182,119 4.98 % 182,371 4.91 % 233,113 4.41 % Total Interest-Bearing Liabilities 5,652,537 0.22 % 5,586,828 0.23 % 5,484,569 0.34 % Noninterest-bearing deposits 2,645,551 2,652,812 2,413,887 Other liabilities 119,075 130,373 155,443 Shareholders' equity 1,107,415 1,116,504 1,076,555 Total Noninterest-Bearing Funding Sources 3,872,041 3,899,689 3,645,885 Total Liabilities and Shareholders' Equity $ 9,524,578 $ 9,486,517 $ 9,130,454 Net Interest Margin (FTE) (annualized) (1) 3.19 % 3.23 % 3.40 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) March 31, December 31, March 31, 2022 2021 2021 Loan and Lease Portfolio Detail Commercial Loan and Lease Portfolio: Commercial, financial, agricultural and other $ 1,092,311 $ 1,102,154 $ 1,077,218 Paycheck Protection Program 28,874 71,298 478,453 Commercial real estate 2,344,281 2,251,097 2,167,506 Equipment Finance loans and leases 2,505 — — Real estate construction 307,411 382,764 316,207 Total Commercial 3,775,382 3,807,313 4,039,384 Consumer Loan Portfolio: Closed-end mortgages 1,467,133 1,368,816 1,178,640 Home equity lines of credit 539,088 551,434 577,975 Real estate construction 91,577 111,692 88,373 Total Real Estate - Consumer 2,097,798 2,031,942 1,844,988 Auto & RV loans 984,001 901,280 759,061 Direct installment 37,751 40,937 32,143 Personal lines of credit 52,614 52,809 55,719 Student loans 4,566 4,949 5,599 Total Other Consumer 1,078,932 999,975 852,522 Total Consumer Portfolio 3,176,730 3,031,917 2,697,510 Total Portfolio Loans and Leases 6,952,112 6,839,230 6,736,894 Loans held for sale 10,506 18,583 20,604 Total Loans and Leases $ 6,962,618 $ 6,857,813 $ 6,757,498 March 31, December 31, March 31, 2022 2021 2021 ASSET QUALITY DETAIL Nonperforming Loans: Loans on nonaccrual basis $ 20,490 $ 34,926 $ 23,056 Loans held for sale on a nonaccrual basis — — — Troubled debt restructured loans on nonaccrual basis 10,090 13,134 20,628 Troubled debt restructured loans on accrual basis 6,887 7,120 6,697 Total Nonperforming Loans $ 37,467 $ 55,180 $ 50,381 Other real estate owned ("OREO") 667 642 916 Repossessions ("Repos") 397 397 833 Total Nonperforming Assets $ 38,531 $ 56,219 $ 52,130 Loans past due in excess of 90 days and still accruing 1,921 1,606 1,079 Classified loans 75,270 77,563 72,026 Criticized loans 174,060 198,126 272,143 Nonperforming assets as a percentage of total loans and leases, plus OREO and Repos (4) 0.55 % 0.82 % 0.77 % Allowance for credit losses $ 91,188 $ 92,522 $ 96,763
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 Net Charge-offs (Recoveries): Commercial, financial, agricultural and other $ 395 $ (1,633 ) $ 479 Real estate construction — (11 ) — Commercial real estate (14 ) (5 ) 1,511 Residential real estate 110 20 68 Loans to individuals 643 565 1,212 Net Charge-offs $ 1,134 $ (1,064 ) $ 3,270 Net charge-offs as a percentage of average loans outstanding (annualized) (4) 0.07 % (0.06) % 0.20 % Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4) 0.07 % (0.06) % 0.21 % Provision for credit losses as a percentage of net charge-offs 173.19 % 256.48 % (134.25) % Provision for credit losses $ 1,964 $ (2,729 ) $ (4,390 )
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 March 31, December 31, March 31, 2022 2021 2021 Interest income $ 71,244 $ 73,530 $ 74,061 Adjustment to fully taxable equivalent basis (1) 253 266 309 Interest income adjusted to fully taxable equivalent basis (non-GAAP) 71,497 73,796 74,370 Interest expense 3,072 3,276 4,619 Net interest income, (FTE) (1) $ 68,425 $ 70,520 $ 69,751
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 March 31, December 31, March 31, 2022 2021 2021 Net Income $ 27,726 $ 34,776 $ 39,770 Intangible amortization 862 900 866 Tax benefit of amortization of intangibles (181 ) (189 ) (182 ) Net Income, adjusted for tax affected amortization of intangibles $ 28,407 $ 35,487 $ 40,454 Average Tangible Equity: Total shareholders' equity $ 1,107,415 $ 1,116,504 $ 1,076,555 Less: intangible assets 314,235 314,860 316,438 Tangible Equity 793,180 801,644 760,117 Less: preferred stock — — — Tangible Common Equity $ 793,180 $ 801,644 $ 760,117 (8) Return on Average Tangible Common Equity 14.52 % 17.56 % 21.58 %
For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 Core Net Income: Total Net Income $ 27,726 $ 34,776 $ 39,770 Net securities gains (2 ) — (6 ) Tax benefit of net securities gains — — 1 COVID-19 related 17 92 74 Tax benefit of COVID 19 related (4 ) (19 ) (16 ) Branch consolidation related 98 (121 ) 40 Tax benefit of bank consolidation related expenses (21 ) 25 (8 ) (5) Core net income $ 27,814 $ 34,753 $ 39,855 Average Shares Outstanding Assuming Dilution 94,311,324 95,020,353 96,233,647 (6) Core Earnings per common share (diluted) $ 0.29 $ 0.37 $ 0.41 Intangible amortization 862 900 866 Tax benefit of amortization of intangibles (181 ) (189 ) (182 ) Core Net Income, adjusted for tax affected amortization of intangibles $ 28,495 $ 35,464 $ 40,539 (9) Core Return on Average Tangible Common Equity 14.57 % 17.55 % 21.63 %
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 March 31, December 31, March 31, 2022 2021 2021 Core Return on Average Assets: Total Net Income $ 27,726 $ 34,776 $ 39,770 Total Average Assets 9,524,578 9,486,517 9,130,454 Return on Average Assets 1.18 % 1.45 % 1.77 % Core Net Income (5) $ 27,814 $ 34,753 $ 39,855 Total Average Assets 9,524,578 9,486,517 9,130,454 (7) Core Return on Average Assets 1.18 % 1.45 % 1.77 %
For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 Core Efficiency Ratio: Total Noninterest Expense $ 55,724 $ 55,428 $ 51,859 Adjustments to Noninterest Expense: Intangible amortization 862 900 866 COVID-19 related 17 92 74 Branch consolidation related 98 (121 ) 40 Noninterest Expense - Core $ 54,747 $ 54,557 $ 50,879 Net interest income, (FTE) $ 68,425 $ 70,520 $ 69,751 Total noninterest income 23,976 26,071 27,355 Net securities gains (2 ) — (6 ) Total Revenue 92,399 96,591 97,100 Adjustments to Revenue: Derivative mark-to-market 347 973 1,430 Total Revenue - Core $ 92,052 $ 95,618 $ 95,670 (10) Core Efficiency Ratio 59.47 % 57.06 % 53.18 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES March 31, December 31, March 31, 2022 2021 2021 Tangible Equity: Total shareholders' equity $ 1,067,619 $ 1,109,372 $ 1,087,480 Less: intangible assets 314,066 314,516 316,148 Tangible Equity 753,553 794,856 771,332 Less: preferred stock — — — Tangible Common Equity $ 753,553 $ 794,856 $ 771,332 Tangible Assets: Total assets $ 9,642,124 $ 9,545,093 $ 9,416,989 Less: intangible assets 314,066 314,516 316,148 Tangible Assets $ 9,328,058 $ 9,230,577 $ 9,100,841 Less: PPP loans 28,874 71,298 478,453 Tangible Assets, excluding PPP loans $ 9,299,184 $ 9,159,279 $ 8,622,388 (12) Tangible Common Equity as a percentage of Tangible Assets 8.08 % 8.61 % 8.48 % (12) Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans 8.10 % 8.68 % 8.95 % Shares Outstanding at End of Period 94,299,039 94,233,152 96,248,476 (11) Tangible Book Value Per Common Share $ 7.99 $ 8.43 $ 8.01
For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 Pre-tax pre-provision income: Net interest income $68,172 $70,254 $69,442 Noninterest income 23,976 26,071 27,355 Noninterest expense 55,724 55,428 51,859 Pre-tax pre-provision income $ 36,424 $ 40,897 $ 44,938 Net securities gains ($2 ) $— ($6 ) COVID-19 related 17 92 74 Branch consolidation 98 (121 ) 40 Core pre-tax pre-provision income $ 36,537 $ 40,868 $ 45,046 Net charge-offs $ 1,134 ($ 1,064 ) $ 3,270
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES For the Three Months Ended March 31, December 31, March 31, 2022 2021 2021 Core Net Interest Margin: Net Interest Income (FTE) $ 68,425 $ 70,520 $ 69,751 Less: Income from PPP Loans 1,757 4,059 7,943 Less: Income from Excess Cash 108 100 74 Core Net Interest Income (FTE) $ 66,560 $ 66,361 $ 61,734 Average Interest-Earning Assets $ 8,702,759 $ 8,670,645 $ 8,311,558 Less: PPP Loans 51,147 111,544 489,375 Less: Excess Cash 277,570 241,426 329,142 Core Average Interest-Earning Assets $ 8,374,042 $ 8,317,675 $ 7,493,041 Core Net Interest Margin (Non-GAAP) 3.22 % 3.17 % 3.34 %
