First Commonwealth Announces Third Quarter 2022 Earnings; Declares Quarterly Dividend
10/25/2022 - 05:00 PM
INDIANA, Pa., Oct. 25, 2022 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the third quarter of 2022.
Financial Summary
(dollars in thousands, For the Three Months Ended For the Nine Months Ended except per share data) September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Reported Results Net income $33,968 $30,754 $34,092 $92,448 $103,481 Diluted earnings per share $ 0.36 $ 0.33 $ 0.36 $ 0.98 $ 1.08 Return on average assets 1.41 % 1.28 % 1.42 % 1.29 % 1.48 % Return on average equity 12.67 % 11.60 % 12.14 % 11.47 % 12.62 % Operating Results (non-GAAP) (1) Core net income $34,353 $30,643 $34,131 $92,811 $103,764 Core diluted earnings per share $ 0.37 $ 0.33 $ 0.36 $ 0.99 $ 1.08 Core pre-tax pre-provision net revenue $48,860 $42,352 $42,913 $127,749 $130,903 Provision expense $5,923 $4,099 $330 $11,986 $1,353 Net charge-offs $2,461 $1,528 $2,277 $5,123 $9,474 Reserve build/(release)(2) $2,490 $2,415 ($2,853 ) $3,571 ($7,124 ) Core return on average assets (ROAA) 1.43 % 1.28 % 1.43 % 1.30 % 1.48 % Core pre-tax pre-provision ROAA 2.03 % 1.77 % 1.79 % 1.79 % 1.87 % Return on average tangible common equity 18.28 % 16.81 % 17.28 % 16.51 % 18.08 % Core return on average tangible common equity 18.48 % 16.75 % 17.30 % 16.58 % 18.13 % Core efficiency ratio 54.06 % 55.87 % 55.27 % 56.32 % 53.90 % Net interest margin (FTE) 3.76 % 3.38 % 3.23 % 3.45 % 3.27 %
(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 busi ness 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) fro m the prior period.
Third Quarter 2022 Highlights
Net income of $34.0 million and diluted earnings per share totaled $0.36, an increase of $3.2 million , or $0.03 per share from the previous quarter and unchanged from the third quarter of 2021 Core pre-tax pre-provision net revenue (PPNR)(1) totaled $48.9 million , an increase of $6.5 million from the prior quarter and an increase of $5.9 million from the third quarter of 2021 Operating leverage was positive during the third quarter of 2022 Core revenue(1) grew $10.2 million , or 10.3% , from the prior quarter Core noninterest expense(1) increased $3.7 million , or 6.8% , from the prior quarter Total loans (excluding Paycheck Protection Program (PPP) loans) increased $238.1 million , or 13.3% annualized from the previous quarter, driven by strong commercial real estate, equipment finance and consumer loan categories Year-to-date loan growth (excluding PPP loans) was $571.3 million , or 11.3% annualized Average loans (excluding PPP loans) increased $238.7 million , or 13.5% annualized, from the previous quarter Total PPP loans decreased $8.0 million from the previous quarter, resulting in a total PPP loan balance at September 30, 2022 of $4.9 million Record net interest income (FTE) of $82.6 million increased $8.7 million from the previous quarter due in part to a 38 basis point increase in the net interest margin, driven by a 35 basis point increase in the yield on loans (excluding PPP), which significantly offset a one basis point increase in the bank’s cost of funds Noninterest income of $25.9 million (excluding net security gains) (non-GAAP) increased $1.4 million from the previous quarter and decreased $1.3 million from the third quarter of 2021 Noninterest expense (excluding merger and acquisition, branch consolidation and COVID-19 related expenses) (non-GAAP) of $59.4 million increased $3.6 million from the previous quarter and increased $4.4 million from the third quarter of 2021 Average deposits decreased $98.7 million , or 4.8% annualized compared to the prior quarter, partially offset by a $34.8 million , or 5.1% annualized increase in noninterest-bearing deposits End of period deposits grew $24.1 million , or 1.2% annualized, from the previous quarter Total shareholders’ equity decreased $26.6 million from the previous quarter due to a $45.3 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, partially offset by a $22.8 million increase in retained earnings On August 30, 2022, the Company announced the signing of a definitive agreement to acquire Harrisburg, PA based Centric Financial Corporation (Centric) First Commonwealth Bank (the Bank) has been recognized for the fourth consecutive year by Forbes as one of the World’s Best Banks for 2022 The Bank was recently named the #1 Small Business Association (SBA) lender in the SBA’s designated Pittsburgh District for the second year in a row and ranked #2 overall across the state of Pennsylvania Profitability
Core return on average assets (ROAA) improved 15 basis points to 1.43% compared to the previous quarter and was unchanged from the third quarter of 2021 Core pre-tax pre-provision ROA(1) for the quarter ended September 30, 2022 was 2.03% as compared to 1.77% in the prior quarter and 1.79% in the third quarter of 2021 The net interest margin of 3.76% increased 38 basis points compared to the prior quarter and increased 53 basis points as compared to third quarter of 2021 The core efficiency ratio(1) of 54.06% decreased 181 basis points from the previous quarter and 121 basis points from the third quarter of 2021 Strong regulatory capital position
Bank-level Tier 1 Capital ratio of 11.4% , which represents $266.1 million in excess capital above the regulatory “well capitalized” requirement of 8.0% A total of 324,551 shares at a weighted average price of $13.63 were purchased during the third quarter of 2022 under the company’s previously authorized share repurchase program. The remaining repurchase capacity under the current program was $5.9 million as of September 30, 2022 Asset quality
The provision for credit losses was $5.9 million , an increase of $1.8 million compared to the previous quarter and an increase of $5.6 million from the third quarter of 2021 The allowance for credit losses as a percentage of end-of-period loans (excluding PPP loans) was 1.31% compared to 1.32% in the previous quarter Total criticized loans decreased $7.5 million from the previous quarter Total nonperforming assets increased $0.2 million from the previous quarter Net charge-offs on loans totaled $2.5 million , an increase of $0.9 million from the previous quarter Net charge-offs as a percentage of average loans outstanding (excluding PPP loans, annualized) was 0.13% in the third quarter of 2022 as compared to 0.09% in the previous quarter “Our results this quarter were highlighted by the significant expansion of our net interest margin which was enabled by our asset-sensitive balance sheet and valuable core deposit franchise. The quarter also displayed strong, well-balanced loan growth across both commercial and consumer categories,” stated T. Michael Price, President and Chief Executive Officer. “We also announced our plans to extend our footprint into Central and Southeastern Pennsylvania with the acquisition of Centric Financial Corporation. Centric is a well-led organization that aligns nicely with our culture and values, and I am excited about the future of our combined companies.” Price continued, “While the margin expansion is certainly a welcome tailwind, we are still mindful of the uncertain economic conditions that may be ahead of us and I believe we remain well positioned to turn challenges into opportunities and create long-term value for all of our stakeholders.”
Earnings
Net income for the third quarter of 2022 was $34.0 million , or $0.36 per share, compared to $30.8 million , or $0.33 per share in the second quarter of 2022 and $34.1 million , or $0.36 per share for the third quarter of 2021.
Net Interest Income and Net Interest Margin
Net interest income (FTE) of $82.6 million increased $8.7 million from the previous quarter and increased $11.7 million from the prior year quarter. The increase from the previous quarter was primarily due to a $7.2 million increase in income on variable and adjustable rate loans driven by higher interest rates.
The net interest margin for the third quarter of 2022 was 3.76% , an increase of 38 basis points from the previous quarter and an increase of 53 basis points from the third quarter of 2022. The increase from the previous quarter was due primarily to the aforementioned income on variable and adjustable rate loans and a $238.7 million increase in average loans (excluding PPP) partially offsetting a $287.8 million decrease in lower-yielding investment securities. The net interest margin was further aided by the Bank’s overall cost of funds, which were 0.16% during the third quarter of 2022 as compared to 0.15% in the previous quarter.
Total average deposits decreased $98.7 million in the third quarter of 2022 as compared to the previous quarter, partially offset by a $34.8 million increase in noninterest-bearing deposits.
Total end-of-period deposits grew $24.1 million from the previous quarter.
Asset Quality
Provision expense in the third quarter of 2022 totaled $5.9 million as compared to $4.1 million in the previous quarter. The increase in provision expense during the quarter was primarily driven by strong loan growth, which resulted in a $5.3 million increase in the allowance for credit losses (ACL). The ACL was also impacted by an increase of $3.6 million in the quantitative model due to various inputs such as the expected unemployment rate, the Gross Domestic Product (GDP) forecast, prepayment speeds and max capacity levels. This increase was largely offset by a decrease in qualitative factors of $6.6 million , primarily due to lower reserve adjustments for COVID-related high risk portfolios.
At September 30, 2022, nonperforming loans totaled $35.7 million , which was unchanged from the previous quarter and a decrease of $2.4 million from the third quarter of 2021. Nonperforming loans represented 0.49% of total loans (excluding PPP loans) as compared to 0.50% and 0.58% for the periods ended June 30, 2022 and September 30, 2021, respectively.
At September 30, 2022, criticized loans totaled $139.3 million , a decrease of $7.5 million from the previous quarter.
During the third quarter of 2022, net charge-offs were $2.5 million as compared to $1.5 million in the previous quarter and $2.3 million in the third quarter of 2021. Net charge-offs as a percentage of average loans (excluding PPP, annualized) were 0.13% , 0.09% and 0.14% for the periods ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
Noninterest Income and Noninterest Expense
Noninterest income (excluding net security gains) (non-GAAP) totaled $25.9 million for the third quarter of 2022, as compared to $24.5 million for the second quarter of 2022 and $27.2 million for the third quarter of 2021.
The $1.4 million increase from the previous quarter was primarily due to a $1.2 million increase in swap fee income. This increase was partially offset by a $0.4 million decrease in insurance and retail brokerage revenue.
Noninterest expense (excluding merger and acquisition, branch consolidation and COVID-19 related expenses) (non-GAAP) totaled $59.4 million for the third quarter of 2022, as compared to $55.8 million for the second quarter of 2022 and $55.0 million for the third quarter of 2021. The $3.6 million increase from the previous quarter was primarily the result of a $1.5 million increase in salaries and employee benefits driven, by a $0.5 million increase in wages, a $0.4 million increase in hospitalization expense, a $0.4 million increase in incentives and a $0.3 million reduction in deferred loan origination expenses. The increase during the quarter was also impacted by a $0.7 million increase in Pennsylvania shares tax due to a beneficial tax credit in the prior quarter.
The core efficiency ratio was 54.06% during the third quarter of 2022 as compared to 55.87% in the previous quarter and 55.27% in the third quarter of 2021.
Full time equivalent staff was 1,422 at September 30, 2022, 1,409 at June 30, 2022, and 1,409 at September 30, 2021. The increase from the previous quarter was partially the result of filling open positions within the company.
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 third quarter of 2021. The cash dividend is payable on November 18, 2022 to shareholders of record as of November 4, 2022. This dividend represents a 3.4% projected annual yield utilizing the October 24, 2022 closing market price of $13.94.
First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at September 30, 2022 were 14.5% , 12.1% , 10.1% and 11.2% , respectively. First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.
Conference Call
First Commonwealth will host a quarterly conference call to discuss its financial results for the third quarter of 2022 on Wednesday, October 26, 2022 at 2:00 PM (ET). The call can be accessed by dialing (toll free) 1-888-330-3181 conference ID # 4651379 or through the company’s web page, http://www.fcbanking.com/InvestorRelations. A replay of the call will be available approximately one hour following the conclusion of the conference by dialing 1-800-770-2030 and entering the conference ID # 4651379. A link to the webcast replay will also be accessible on the company’s webpage for 30 days.
About First Commonwealth Financial Corporation
First Commonwealth Financial Corporation (NYSE: FCF), headquartered in Indiana, Pennsylvania, is a financial services company with 119 community banking offices in 26 counties throughout western and central Pennsylvania and throughout Ohio, as well as commercial lending 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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 SUMMARY RESULTS OF OPERATIONS Net interest income $ 82,360 $ 73,662 $ 70,645 $ 224,194 $ 208,287 Provision for credit losses 5,923 4,099 330 11,986 1,353 Noninterest income 25,914 24,509 27,245 74,399 80,686 Noninterest expense 59,901 55,679 55,027 171,304 158,429 Net income 33,968 30,754 34,092 92,448 103,481 Core net income(5) 34,353 30,643 34,131 92,811 103,764 Earnings per common share (diluted) $ 0.36 $ 0.33 $ 0.36 $ 0.98 $ 1.08 Core earnings per common share (diluted) (6) $ 0.37 $ 0.33 $ 0.36 $ 0.99 $ 1.08 KEY FINANCIAL RATIOS Return on average assets 1.41 % 1.28 % 1.42 % 1.29 % 1.48 % Core return on average assets(7) 1.43 % 1.28 % 1.43 % 1.30 % 1.48 % Return on average assets, pre-provision, pre-tax 2.01 % 1.78 % 1.79 % 1.78 % 1.86 % Core return on average assets, pre-provision, pre-tax 2.03 % 1.77 % 1.79 % 1.79 % 1.87 % Return on average shareholders' equity 12.67 % 11.60 % 12.14 % 11.47 % 12.62 % Return on average tangible common equity(8) 18.28 % 16.81 % 17.28 % 16.51 % 18.08 % Core return on average tangible common equity(9) 18.48 % 16.75 % 17.30 % 16.58 % 18.13 % Core efficiency ratio(2)(10) 54.06 % 55.87 % 55.27 % 56.32 % 53.90 % Net interest margin (FTE)(1) 3.76 % 3.38 % 3.23 % 3.45 % 3.27 % Book value per common share $ 10.95 $ 11.20 $ 11.69 Tangible book value per common share(11) 7.60 7.85 8.38 Market value per common share 12.84 13.42 13.63 Cash dividends declared per common share 0.120 0.120 0.115 0.355 0.340 ASSET QUALITY RATIOS Nonperforming loans as a percent of end-of-period loans and leases(3) 0.48 % 0.50 % 0.56 % Nonperforming loans as a percent of end-of-period loans and leases, excluding PPP loans (3) 0.49 % 0.50 % 0.58 % Nonperforming assets as a percent of total assets(3) 0.38 % 0.38 % 0.41 % Nonperforming assets as a percent of total assets, excluding PPP loans (3) 0.38 % 0.38 % 0.42 % Net charge-offs as a percent of average loans and leases (annualized)(4) 0.13 % 0.09 % 0.13 % Net charge-offs as a percent of average loans and leases,, excluding PPP loans (annualized) (4) 0.13 % 0.09 % 0.14 % Allowance for credit losses as a percent of nonperforming loans(4) 269.23 % 262.25 % 247.30 % Allowance for credit losses as a percent of end-of-period loans and leases(4) 1.31 % 1.31 % 1.40 % Allowance for credit losses as a percent of end-of-period loans and leases, excluding PPP loans (4) 1.31 % 1.32 % 1.43 % CAPITAL RATIOS Shareholders' equity as a percent of total assets 10.7 % 11.0 % 11.7 % Tangible common equity as a percent of tangible assets(12) 7.7 % 8.0 % 8.7 % Tangible common equity as a percent of tangible assets, excluding PPP loans (12) 7.7 % 8.0 % 8.9 % Leverage Ratio 10.1 % 9.8 % 9.6 % Risk Based Capital - Tier I 12.1 % 12.2 % 12.4 % Risk Based Capital - Total 14.5 % 14.6 % 15.0 % Common Equity - Tier I 11.2 % 11.2 % 11.5 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands, except per share data) For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 INCOME STATEMENT Interest income $ 85,700 $ 76,728 $ 74,196 $ 233,672 $ 220,308 Interest expense 3,340 3,066 3,551 9,478 12,021 Net Interest Income 82,360 73,662 70,645 224,194 208,287 Provision for credit losses 5,923 4,099 330 11,986 1,353 Net Interest Income after Provision for Credit Losses 76,437 69,563 70,315 212,208 206,934 Net securities gains — — — 2 16 Trust income 2,777 2,573 3,118 8,063 8,340 Service charges on deposit accounts 5,194 4,886 4,770 14,695 13,127 Insurance and retail brokerage commissions 2,048 2,486 2,218 6,806 6,368 Income from bank owned life insurance 1,419 1,383 1,486 4,310 4,946 Gain on sale of mortgage loans 1,485 1,561 3,485 4,328 11,615 Gain on sale of other loans and assets 1,093 1,099 2,480 4,511 6,281 Card-related interchange income 6,980 7,137 7,052 20,607 20,885 Derivative mark-to-market 6 42 218 395 1,371 Swap fee income 2,326 1,154 317 3,933 1,715 Other income 2,586 2,188 2,101 6,749 6,022 Total Noninterest Income 25,914 24,509 27,245 74,399 80,686 Salaries and employee benefits 32,486 30,949 31,066 94,367 88,084 Net occupancy 4,629 4,170 3,960 13,586 12,614 Furniture and equipment 4,005 3,857 4,052 11,592 11,866 Data processing 3,721 3,470 3,196 10,379 9,440 Pennsylvania shares tax 1,569 913 1,257 3,487 3,347 Advertising and promotion 1,278 1,434 1,150 3,938 3,829 Intangible amortization 746 862 868 2,470 2,597 Other professional fees and services 1,204 1,197 1,308 3,622 3,150 FDIC insurance 796 702 830 2,196 1,964 Litigation and operational losses 758 629 589 1,987 1,624 Loss on sale or write-down of assets 54 86 171 215 223 Merger and acquisition 448 — — 448 — COVID-19 related 39 62 50 118 357 Branch consolidation — (202 ) — (104 ) 18 Other operating expenses 8,168 7,550 6,530 23,003 19,316 Total Noninterest Expense 59,901 55,679 55,027 171,304 158,429 Income before Income Taxes 42,450 38,393 42,533 115,303 129,191 Income tax provision 8,482 7,639 8,441 22,855 25,710 Net Income $ 33,968 $ 30,754 $ 34,092 $ 92,448 $ 103,481 Shares Outstanding at End of Period 93,377,064 93,705,120 95,209,685 93,377,064 95,209,685 Average Shares Outstanding Assuming Dilution 93,450,259 94,245,770 95,892,304 93,994,158 96,130,602
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) September 30, June 30, September 30, 2022 2022 2021 BALANCE SHEET (Period End) Assets Cash and due from banks $ 106,153 $ 120,267 $ 94,579 Interest-bearing bank deposits 74,619 179,533 240,095 Securities available for sale, at fair value 802,871 877,287 1,137,675 Securities held to maturity, at amortized cost 474,790 492,229 548,057 Loans held for sale 13,811 12,876 19,925 Loans and leases 7,348,917 7,119,754 6,732,580 Allowance for credit losses (96,093 ) (93,603 ) (94,185 ) Net loans and leases 7,252,824 7,026,151 6,638,395 Goodwill and other intangibles 312,950 313,449 315,092 Other assets 540,612 504,635 484,036 Total Assets $ 9,578,630 $ 9,526,427 $ 9,477,854 Liabilities and Shareholders' Equity Noninterest-bearing demand deposits $ 2,782,654 $ 2,726,242 $ 2,656,229 Interest-bearing demand deposits 354,310 273,360 265,782 Savings deposits 4,608,762 4,708,868 4,609,393 Time deposits 331,923 345,075 405,081 Total interest-bearing deposits 5,294,995 5,327,303 5,280,256 Total deposits 8,077,649 8,053,545 7,936,485 Short-term borrowings 97,932 88,923 117,754 Long-term borrowings 181,489 181,752 182,519 Total borrowings 279,421 270,675 300,273 Other liabilities 198,985 153,049 128,241 Shareholders' equity 1,022,575 1,049,158 1,112,855 Total Liabilities and Shareholders' Equity $ 9,578,630 $ 9,526,427 $ 9,477,854
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited dollars in thousands) For the Three Months Ended For the Nine Months Ended September 30, Yield/ June 30, Yield/ September 30, Yield/ September 30, Yield/ September 30, Yield/ 2022 Rate 2022 Rate 2021 Rate 2022 Rate 2021 Rate NET INTEREST MARGIN Assets Loans and leases, excluding PPP loans (FTE)(1)(3) $ 7,254,594 4.30 % $ 7,015,886 3.95 % $ 6,538,477 3.75 % $ 7,039,163 4.00 % $ 6,391,688 3.82 % PPP Loans 7,196 14.61 % 20,290 12.02 % 225,262 10.05 % 26,050 13.50 % 380,551 6.72 % Securities and interest-bearing bank deposits (FTE)(1) 1,446,315 1.92 % 1,734,126 1.68 % 1,937,385 1.43 % 1,661,862 1.70 % 1,786,050 1.46 % Total Interest-Earning Assets (FTE) (1) 8,708,105 3.92 % 8,770,302 3.52 % 8,701,124 3.39 % 8,727,075 3.59 % 8,558,289 3.45 % Noninterest-earning assets 825,989 830,167 801,377 826,007 804,619 Total Assets $ 9,534,094 $ 9,600,469 $ 9,502,501 $ 9,553,082 $ 9,362,908 Liabilities and Shareholders' Equity Interest-bearing demand and savings deposits $ 4,952,279 0.07 % $ 5,067,692 0.05 % $ 4,899,328 0.07 % $ 5,000,018 0.05 % $ 4,788,309 0.08 % Time deposits 336,346 0.24 % 354,403 0.26 % 417,274 0.36 % 354,938 0.26 % 467,653 0.54 % Short-term borrowings 102,073 0.19 % 95,561 0.08 % 118,112 0.06 % 104,343 0.11 % 117,478 0.09 % Long-term borrowings 181,596 4.94 % 181,859 4.96 % 182,623 4.92 % 181,856 4.96 % 207,225 4.64 % Total Interest-Bearing Liabilities 5,572,294 0.24 % 5,699,515 0.22 % 5,617,337 0.25 % 5,641,155 0.22 % 5,580,665 0.29 % Noninterest-bearing deposits 2,746,258 2,711,458 2,647,089 2,701,458 2,556,078 Other liabilities 152,208 125,646 124,286 132,431 129,883 Shareholders' equity 1,063,334 1,063,850 1,113,789 1,078,038 1,096,282 Total Noninterest-Bearing Funding Sources 3,961,800 3,900,954 3,885,164 3,911,927 3,782,243 Total Liabilities and Shareholders' Equity $ 9,534,094 $ 9,600,469 $ 9,502,501 $ 9,553,082 $ 9,362,908 Net Interest Margin (FTE) (annualized) (1) 3.76 % 3.38 % 3.23 % 3.45 % 3.27 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) September 30, June 30, September 30, 2022 2022 2021 Loan and Lease Portfolio Detail Commercial Loan and Lease Portfolio: Commercial, financial, agricultural and other $ 1,120,499 $ 1,136,593 $ 1,072,489 Paycheck Protection Program 4,930 12,928 152,102 Commercial real estate 2,393,276 2,319,094 2,231,890 Equipment Finance loans and leases 43,777 21,062 — Real estate construction 326,539 292,400 318,120 Total Commercial 3,889,021 3,782,077 3,774,601 Consumer Loan Portfolio: Closed-end mortgages 1,631,655 1,567,561 1,311,052 Home equity lines of credit 522,249 532,640 564,323 Real estate construction 96,151 100,592 105,896 Total Real Estate - Consumer 2,250,055 2,200,793 1,981,271 Auto & RV loans 1,120,838 1,047,104 886,367 Direct installment 33,528 35,245 32,509 Personal lines of credit 51,514 50,249 52,667 Student loans 3,961 4,286 5,165 Total Other Consumer 1,209,841 1,136,884 976,708 Total Consumer Portfolio 3,459,896 3,337,677 2,957,979 Total Portfolio Loans and Leases 7,348,917 7,119,754 6,732,580 Loans held for sale 13,811 12,876 19,925 Total Loans and Leases $ 7,362,728 $ 7,132,630 $ 6,752,505 September 30, June 30, September 30, 2022 2022 2021 ASSET QUALITY DETAIL Nonperforming Loans: Loans on nonaccrual basis $ 20,495 $ 19,594 $ 14,466 Loans held for sale on a nonaccrual basis — — — Troubled debt restructured loans on nonaccrual basis 8,981 9,694 16,210 Troubled debt restructured loans on accrual basis 6,216 6,404 7,410 Total Nonperforming Loans $ 35,692 $ 35,692 $ 38,086 Other real estate owned ("OREO") 322 93 502 Repossessions ("Repos") 600 621 453 Total Nonperforming Assets $ 36,614 $ 36,406 $ 39,041 Loans past due in excess of 90 days and still accruing 1,548 3,155 1,135 Classified loans 45,656 46,798 58,780 Criticized loans 139,258 146,780 195,791 Nonperforming assets as a percentage of total loans and leases, plus OREO and Repos(4) 0.50 % 0.51 % 0.58 % Allowance for credit losses $ 96,093 $ 93,603 $ 94,185
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Net Charge-offs (Recoveries): Commercial, financial, agricultural and other $ 698 $ 430 $ 1,960 $ 1,523 $ 6,223 Real estate construction (9 ) — — (9 ) (135 ) Commercial real estate 1,003 547 12 1,536 1,529 Residential real estate 36 (26 ) (87 ) 120 (179 ) Loans to individuals 733 577 392 1,953 2,036 Net Charge-offs $ 2,461 $ 1,528 $ 2,277 $ 5,123 $ 9,474 Net charge-offs as a percentage of average loans outstanding (annualized)(4) 0.13 % 0.09 % 0.13 % 0.10 % 0.19 % Net charge-offs as a percentage of average loans outstanding, excluding PPP loans (annualized) (4) 0.13 % 0.09 % 0.14 % 0.10 % 0.20 % Provision for credit losses as a percentage of net charge-offs 240.67 % 268.26 % 14.49 % 233.96 % 14.28 % Provision for credit losses $ 5,923 $ 4,099 $ 330 $ 11,986 $ 1,353
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Interest income $ 85,700 $ 76,728 $ 74,196 $ 233,672 $ 220,308 Adjustment to fully taxable equivalent basis(1) 261 244 235 759 834 Interest income adjusted to fully taxable equivalent basis (non-GAAP) 85,961 76,972 74,431 234,431 221,142 Interest expense 3,340 3,066 3,551 9,478 12,021 Net interest income, (FTE) (1) $ 82,621 $ 73,906 $ 70,880 $ 224,953 $ 209,121
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Net Income $ 33,968 $ 30,754 $ 34,092 $ 92,448 $ 103,481 Intangible amortization 746 862 868 2,470 2,597 Tax benefit of amortization of intangibles (157 ) (181 ) (182 ) (519 ) (545 ) Net Income, adjusted for tax affected amortization of intangibles $ 34,557 $ 31,435 $ 34,778 $ 94,399 $ 105,533 Average Tangible Equity: Total shareholders' equity $ 1,063,334 $ 1,063,850 $ 1,113,789 $ 1,078,038 $ 1,096,282 Less: intangible assets 313,336 313,617 315,303 313,726 315,835 Tangible Equity 749,998 750,233 798,486 764,312 780,447 Less: preferred stock — — — — — Tangible Common Equity $ 749,998 $ 750,233 $ 798,486 $ 764,312 $ 780,447 (8) Return on Average Tangible Common Equity 18.28 % 16.81 % 17.28 % 16.51 % 18.08 %
For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Core Net Income: Total Net Income $ 33,968 $ 30,754 $ 34,092 $ 92,448 $ 103,481 Net securities gains — — — (2 ) (16 ) Tax benefit of net securities gains — — — — 3 Merger & acquisition related expenses 448 — — 448 — Tax benefit of merger & acquisition related expenses (94 ) — — (94 ) — COVID-19 related 39 62 50 118 357 Tax benefit of COVID 19 related (8 ) (13 ) (11 ) (25 ) (75 ) Branch consolidation related — (202 ) — (104 ) 18 Tax benefit of bank consolidation related expenses — 42 — 22 (4 ) (5) Core net income $ 34,353 $ 30,643 $ 34,131 $ 92,811 $ 103,764 Average Shares Outstanding Assuming Dilution 93,450,259 94,245,770 95,892,304 93,994,158 96,130,602 (6) Core Earnings per common share (diluted) $ 0.37 $ 0.33 $ 0.36 $ 0.99 $ 1.08 Intangible amortization 746 862 868 2,470 2,597 Tax benefit of amortization of intangibles (157 ) (181 ) (182 ) (519 ) (545 ) Core Net Income, adjusted for tax affected amortization of intangibles $ 34,942 $ 31,324 $ 34,817 $ 94,762 $ 105,816 (9) Core Return on Average Tangible Common Equity 18.48 % 16.75 % 17.30 % 16.58 % 18.13 %
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Core Return on Average Assets: Total Net Income $ 33,968 $ 30,754 $ 34,092 $ 92,448 $ 103,481 Total Average Assets 9,534,094 9,600,469 9,502,501 9,553,082 9,362,908 Return on Average Assets 1.41 % 1.28 % 1.42 % 1.29 % 1.48 % Core Net Income(5) $ 34,353 $ 30,643 $ 34,131 $ 92,811 $ 103,764 Total Average Assets 9,534,094 9,600,469 9,502,501 9,553,082 9,362,908 (7) Core Return on Average Assets 1.43 % 1.28 % 1.43 % 1.30 % 1.48 %
For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Core Efficiency Ratio: Total Noninterest Expense $ 59,901 $ 55,679 $ 55,027 $ 171,304 $ 158,429 Adjustments to Noninterest Expense: Intangible amortization 746 862 868 2,470 2,597 Merger and acquisition related 448 — — 448 — COVID-19 related 39 62 50 118 357 Branch consolidation related — (202 ) — (104 ) 18 Noninterest Expense - Core $ 58,668 $ 54,957 $ 54,109 $ 168,372 $ 155,457 Net interest income, (FTE) $ 82,621 $ 73,906 $ 70,880 $ 224,953 $ 209,121 Total noninterest income 25,914 24,509 27,245 74,399 80,686 Net securities gains — — — (2 ) (16 ) Total Revenue 108,535 98,415 98,125 299,350 289,791 Adjustments to Revenue: Derivative mark-to-market 6 42 218 395 1,371 Total Revenue - Core $ 108,529 $ 98,373 $ 97,907 $ 298,955 $ 288,420 (10) Core Efficiency Ratio 54.06 % 55.87 % 55.27 % 56.32 % 53.90 %
FIRST COMMONWEALTH FINANCIAL CORPORATION CONSOLIDATED FINANCIAL DATA Unaudited (dollars in thousands) DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES September 30, June 30, September 30, 2022 2022 2021 Tangible Equity: Total shareholders' equity $ 1,022,575 $ 1,049,158 $ 1,112,855 Less: intangible assets 312,950 313,449 315,092 Tangible Equity 709,625 735,709 797,763 Less: preferred stock — — — Tangible Common Equity $ 709,625 $ 735,709 $ 797,763 Tangible Assets: Total assets $ 9,578,630 $ 9,526,427 $ 9,477,854 Less: intangible assets 312,950 313,449 315,092 Tangible Assets $ 9,265,680 $ 9,212,978 $ 9,162,762 Less: PPP loans 4,930 12,928 152,102 Tangible Assets, excluding PPP loans $ 9,260,750 $ 9,200,050 $ 9,010,660 (12) Tangible Common Equity as a percentage of Tangible Assets 7.66 % 7.99 % 8.71 % (12) Tangible Common Equity as a percentage of Tangible Assets, excluding PPP loans 7.66 % 8.00 % 8.85 % Shares Outstanding at End of Period 93,377,064 93,705,120 95,209,685 (11) Tangible Book Value Per Common Share $ 7.60 $ 7.85 $ 8.38
For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Pre-tax pre-provision income: Net interest income $ 82,360 $ 73,662 $ 70,645 $ 224,194 $ 208,287 Noninterest income 25,914 24,509 27,245 74,399 80,686 Noninterest expense 59,901 55,679 55,027 171,304 158,429 Pre-tax pre-provision income $ 48,373 $ 42,492 $ 42,863 $ 127,289 $ 130,544 Net securities gains $ — $ — $ — $ (2 ) $ (16 ) Merger and acquisition related expenses 448 0 0 448 0 COVID-19 related 39 62 50 118 357 Branch consolidation — (202 ) — (104 ) 18 Core pre-tax pre-provision income $ 48,860 $ 42,352 $ 42,913 $ 127,749 $ 130,903 Net charge-offs $ 2,461 $ 1,528 $ 2,277 $ 5,123 $ 9,474
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2022 2022 2021 2022 2021 Core Net Interest Margin: Net Interest Income (FTE) $ 82,621 $ 73,906 $ 70,880 $ 224,953 $ 209,121 Less: Income from PPP Loans 265 608 5,473 2,630 13,415 Less: Income from Excess Cash 538 644 88 1,308 162 Core Net Interest Income (FTE) $ 81,818 $ 72,654 $ 65,319 $ 221,015 $ 195,544 Average Interest-Earning Assets $ 8,708,105 $ 8,770,302 $ 8,701,124 $ 8,727,075 $ 8,558,289 Less: PPP Loans 7,196 20,290 225,262 26,050 380,551 Less: Excess Cash 99,707 324,896 352,093 233,626 340,691 Core Average Interest-Earning Assets $ 8,601,202 $ 8,425,116 $ 8,123,769 $ 8,467,399 $ 7,837,047 Core Net Interest Margin (Non-GAAP) 3.77 % 3.46 % 3.19 % 3.49 % 3.34 %
