First Commonwealth Announces Record Fourth Quarter and Full Year 2022 Revenue; Declares Quarterly Dividend
01/24/2023 - 05:00 PM
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: JLongwill@fcbanking.com
Investor Relations: 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 %
