First Commonwealth Announces Second Quarter 2023 Earnings; Declares Quarterly Dividend

First Commonwealth Financial Corporation

INDIANA, Pa., July 25, 2023 (GLOBE NEWSWIRE) -- First Commonwealth Financial Corporation (NYSE: FCF) today announced financial results for the second quarter of 2023.

Financial Summary

(dollars in thousands,	For the Three Months Ended												For the Six Months Ended
except per share data)	June 30,				March 31,				June 30,				June 30,				June 30,
		2023				2023				2022				2023				2022
Reported Results
Net income	$	42,781			$	30,224			$	30,754			$	73,005			$	58,480
Diluted earnings per share	$	0.42			$	0.30			$	0.33			$	0.72			$	0.62
Return on average assets		1.54	%			1.17	%			1.28	%			1.36	%			1.23	%
Return on average equity		13.90	%			10.56	%			11.60	%			12.29	%			10.86	%
Operating Results (non-GAAP)(1)
Core net income	$	42,734			$	45,387			$	30,643			$	88,121			$	58,458
Core diluted earnings per share	$	0.42			$	0.45			$	0.33			$	0.87			$	0.62
Core pre-tax pre-provision net revenue	$	56,344			$	54,481			$	42,352			$	110,825			$	78,889
Provision for credit losses	$	2,790			$	(2,650	)		$	4,099			$	140			$	6,063
Provision for credit losses - acquisition day 1 non-PCD	$	—			$	10,653			$	—			$	10,653			$	—
Net charge-offs	$	8,665			$	1,173			$	1,528			$	9,838			$	2,662
Reserve build/(release)(2)	$	(339	)		$	30,979			$	2,415			$	30,640			$	1,081
Core return on average assets (ROAA)		1.54	%			1.75	%			1.28	%			1.64	%			1.23	%
Core pre-tax pre-provision ROAA		2.03	%			2.11	%			1.77	%			2.06	%			1.66	%
Return on average tangible common equity		20.68	%			15.75	%			16.81	%			18.30	%			15.64	%
Core return on average tangible common equity		20.66	%			23.42	%			16.75	%			21.99	%			15.63	%
Core efficiency ratio		52.80	%			52.41	%			55.87	%			52.61	%			57.61	%
Net interest margin (FTE)		3.85	%			4.01	%			3.38	%			3.93	%			3.29	%

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

Second Quarter 2023 Highlights

• Net income of $42.8 million and diluted earnings per share of $0.42 represented an increase of $12.6 million, or $0.12 per share, from the prior quarter and an increase of $12.0 million, or $0.09 per share, from the second quarter of 2022

  • The results from the previous quarter included $19.2 million of merger-related expenses, including $8.5 million of noninterest expense and impacts to the provision for credit losses of $10.7 million, related to the Company’s acquisition of Centric Financial Corporation (Centric) on January 31, 2023

• Core pre-tax pre-provision net revenue (PPNR)⁽¹⁾ totaled $56.3 million, an increase of $1.9 million from the previous quarter and an increase of $14.0 million from the second quarter of 2022

• Total loans increased $148.1 million, or 6.9% annualized, from the previous quarter, driven by strong commercial loan growth, including $44.9 million growth in Equipment Finance loans

  • Average loans increased $387.6 million, or 18.7% annualized, from the previous quarter, due in part to the inclusion of acquired loan balances on the Company’s balance sheet for the entirety of the second quarter, as compared to only two months of the first quarter

• Average deposits increased $433.5 million, or 20.0% annualized, compared to the prior quarter, due in part to the inclusion of acquired deposit balances on the Company’s balance sheet for the entirety of the second quarter, as compared to only two months of the first quarter

  • Excluding deposits acquired in the Centric acquisition, average deposits increased by $221.4 million, or 10.8% annualized

  • End of period deposits decreased $88.7 million compared to the prior quarter

  • 82.0% of deposits were insured or secured as of June 30, 2023

• The loan-to-deposit ratio increased 250 basis points to 96.4% at the end of the second quarter of 2023

  • Loans and available for sale (AFS) securities as a percentage of total deposits was 105.0% as of June 30, 2023

• Record net interest income (FTE) of $98.1 million increased $3.5 million from the previous quarter and increased $24.2 million from the second quarter of 2022

• Noninterest income of $24.5 million increased $1.6 million from the previous quarter due in part to higher gain on sale of mortgage loans

• Noninterest expense (excluding merger-related expense) of $66.0 million increased $3.2 million from the previous quarter due primarily to elevated hospitalization expenses

• Total shareholder’s equity increased $7.4 million from the previous quarter due to a $29.9 million increase in retained earnings, partially offset by a $14.0 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

  • Tangible book value per share increased $0.11, or 5.3% annualized, from the previous quarter

  • AOCI as a percentage of tangible common equity increased 157 basis points to 16.4% in the second quarter of 2023

• First Commonwealth Bank (the Bank) has been recognized for the fifth consecutive year by Forbes as one of the World’s Best Banks for 2023

Profitability

• The core efficiency ratio⁽¹⁾ of 52.8% increased 39 basis points from the previous quarter, but improved 306 basis points from the second quarter of 2022

• The return on average assets (ROA) improved 37 basis points to 1.54% compared to previous quarter

  • The core return on average assets⁽¹⁾ decreased 22 basis points to 1.54% compared to the previous quarter but improved 26 basis points from the second quarter of 2023

• Core pre-tax pre-provision ROA⁽¹⁾ for the quarter ended June 30, 2023 was 2.03% as compared to 2.11% in the prior quarter and 1.77% in the second quarter of 2022

• The net interest margin of 3.85% decreased 16 basis points compared to the prior quarter and increased 47 basis points as compared to the second quarter of 2022

  • Centric purchasing accounting marks contributed 14 basis points to the margin in the second quarter, an increase of 8 basis points from the prior quarter

  • The retention of approximately $250 million of additional cash on the Bank’s balance sheet for liquidity purposes had a negative impact on the net interest margin of 10 basis points in the second quarter
    

Asset quality

• The provision for credit losses was $2.8 million, a decrease of $5.2 million compared to the previous quarter

  • Provision expense in the prior quarter included $10.7 million related to day-1 Non-Purchase Credit Deteriorated (PCD) loans resulting from the Centric acquisition

• The allowance for credit losses as a percentage of end-of-period loans was 1.52%, a decrease of 3 basis points from the previous quarter

• Total criticized loans increased $17.2 million from the previous quarter, from $189.9 million, or 2.2% of total loans and leases, to $207.1 million, or 2.3% of total loans and leases

  • Total nonperforming assets of $49.3 million increased $4.1 million from the previous quarter
    

Net charge-offs on loans totaled $8.7 million, an increase of $7.5 million from the previous quarter due to the resolution of $7.6 million of acquired loans, of which $7.1 million was reserved for through purchase accounting marks

• Net charge-offs as a percentage of average loans outstanding was 0.40% in the second quarter of 2023 as compared to 0.06% in the previous quarter, 0.35% of which was attributable to the aforementioned charge off of acquired loans
  

Strong capital and liquidity positions

• Total available liquidity of $4.3 billion at June 30, 2023

  • Cash and AFS securities as a percentage of total assets increased 26 basis points to 10.9%

  • Total available liquidity represented 258% of uninsured/unsecured deposits, and combined with cash represented 285% of uninsured/unsecured deposits

• On April 24, 2023, the Board of Directors authorized a 4.2% increase in the quarterly cash dividend to shareholders

• Bank-level Tier 1 Capital ratio of 10.7%, which represents $245.7 million in excess capital above the regulatory “well capitalized” requirement of 8.0%

• A total of 766,393 shares at a weighted average price of $11.92 were repurchased during the second quarter of 2023 under the Company’s previously authorized share repurchase program. The remaining repurchase capacity under the current program was $21.1 million as of June 30, 2023

“I’m pleased with our progress this quarter, as we continue to grow the company strategically while posting a core efficiency ratio of 52.8% and a return on average assets of 1.54%,” stated T. Michael Price, President and Chief Executive Officer. “Our asset quality remains solid despite an uptick in net charge-offs stemming from loans that were marked with the acquisition of Centric Bank, which was completed in the first quarter of 2023.” Price continued, "While we expect the higher interest rate environment to continue to pressure funding costs, we believe our granular core deposit base positions us well to manage through any market uncertainty and continue to carry out our mission to improve the financial lives of our neighbors and their businesses.”

Earnings

Net income for the second quarter of 2023 was $42.8 million, or $0.42 per share, compared to $30.2 million, or $0.30 per share in the first quarter of 2023, and $30.8 million, or $0.33 per share for the second quarter of 2022.

Net Interest Income and Net Interest Margin

Net interest income (FTE) of $98.1 million increased $3.5 million from the previous quarter and increased $24.2 million from the prior year quarter. The increase from the previous quarter was primarily due to a $643.2 million increase in average interest-earning assets, which includes $604.3 million in average interest-earning assets from the Centric acquisition.

The net interest margin for the second quarter of 2023 was 3.85%, a decrease of 16 basis points from the previous quarter and an increase of 47 basis points from the second quarter of 2022. The decrease from the previous quarter was due primarily to a 42 basis point increase in the cost of deposits partially offset by a 31 basis point increase in the yield on loans. The total cost of funds was 1.38% in the second quarter of 2023, which represents an increase of 48 basis points from the previous quarter.

Total average deposits grew $433.5 million in the second quarter of 2023 as compared to the previous quarter, due in part to the inclusion of acquired deposit balances on the Company’s balance sheet for the entirety of the second quarter, as compared to only two months of the first quarter. Total average deposits (excluding acquired deposits) grew $221.4 million in the second quarter of 2023 as compared to the previous quarter. Average interest-bearing demand and savings deposits (excluding acquired deposits) grew $156.2 million and average time deposits (excluding acquired deposits) grew $200.5 million, which was partially offset by a $137.6 million decrease in average noninterest-bearing deposits (excluding acquired deposits).   Approximately 93% of the acquired Centric deposits at the time of acquisition have been retained through June 30, 2023, within expectations.

Asset Quality

Provision expense in the second quarter of 2023 totaled $2.8 million as compared to $8.0 million in the previous quarter, which included $10.7 million of day-1 Non-PCD provision expense resulting from the Centric acquisition. The increase in the provision expense for the non-acquired portfolio was primarily driven by strong loan growth and the economic forecast, which resulted in a $5.4 million increase in the quantitative portion of the allowance for credit losses (ACL). The quantitative forecast was impacted by changes in various inputs such as the unemployment rate and the Gross Domestic Product forecast.

The allowance for credit losses in the second quarter of 2023 totaled $133.5 million as compared to $133.9 million in the previous quarter. The decrease from the previous quarter was the result of $8.7 million in net charge-offs ($7.6 million of which was related to acquired loans that had been the subject of purchase accounting marks in the first quarter as part of the Centric acquisition); a $5.1 million increase in reserves due to increases in provisional purchase accounting marks of loans acquired in the Centric acquisition; and $3.2 million in provision expense; all of which was partially offset by a negative $0.4 million provision for unfunded commitments.

The allowance for credit losses as a percentage of end-of-period loans in the second quarter of 2023 was 1.52% as compared to 1.55% in the previous quarter.

At June 30, 2023, nonperforming loans totaled $48.0 million, an increase of $3.8 million from the previous quarter. The increase in nonperforming loans was primarily due to the migration of $2.9 million in loans acquired in the Centric acquisition into nonaccrual status.

Nonperforming loans represented 0.54% of total loans for the period ended June 30, 2023 as compared to 0.51% and 0.50% for the periods ended March 31, 2023 and June 30, 2022, respectively.

During the second quarter of 2023, net charge-offs were $8.7 million as compared to $1.2 million in the previous quarter and $1.5 million in the second quarter of 2022. The increase from the prior period was primarily due to the charge off of $7.6 million in commercial loans that were acquired in the Centric acquisition, for which the allowance was created in the prior quarter through purchase accounting marks at the time of the acquisition.

Net charge-offs as a percentage of average loans were 0.40%, 0.06% and 0.09% for the periods ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

Noninterest Income and Noninterest Expense

Noninterest income totaled $24.5 million for the second quarter of 2023, as compared to $23.0 million for the first quarter of 2023 and $24.5 million for the second quarter of 2022.

The $1.5 million increase from the previous quarter was primarily due to a $0.6 million increase in gain on sale of mortgage loans, a $0.5 million increase in card-related interchange income and a $0.4 million increase in service charges on deposit accounts.

Noninterest expense (excluding ($60) thousand of merger-related expense) totaled $66.0 million for the second quarter of 2023, as compared to $62.8 million for the first quarter of 2023 and $55.7 million for the second quarter of 2022. Expense increased in comparison with the prior quarter primarily due to a $2.5 million increase in salaries and benefits (primarily driven by a $1.7 million increase in hospitalization expense) and a $0.7 million increase in incentives due to an accrual adjustment in the first quarter for unpaid incentives from the previous year. In addition, other operating expenses increased $1.2 million partially due to $0.5 million in expense for additional deposit customer disclosures indirectly related to crossing over $10 billion in total assets.

The core efficiency ratio was 52.8% during the second quarter of 2023 as compared to 52.4% in the previous quarter and 55.9% in the second quarter of 2022.

Full time equivalent staff was 1,483 at June 30, 2023, 1,536 at March 31, 2023, and 1,409 at June 30, 2022.

Dividends and Capital

First Commonwealth declared a common stock quarterly dividend of $0.125 per share, which represents a 4.2% increase from the second quarter of 2022. The cash dividend is payable on August 18, 2023 to shareholders of record as of August 4, 2023. This dividend represents a 3.5% projected annual yield utilizing the July 24, 2023 closing market price of $14.15.

First Commonwealth’s capital ratios for Total, Tier I, Leverage and Common Equity Tier I at June 30, 2023 were 13.7%, 11.5%, 9.8% and 10.8%, respectively. First Commonwealth’s current capital levels exceed the fully phased-in Basel III capital requirements issued by U.S. bank regulators.

Conference Call

First Commonwealth will host a quarterly conference call to discuss its financial results for the second quarter of 2023 on Wednesday, July 26, 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 126 community banking offices in 30 counties throughout western and central Pennsylvania and throughout Ohio, as well as commercial lending operations in Pittsburgh and Harrisburg, 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) volatility and disruption in national and international financial markets; (2) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (3) inflation, interest rate, commodity price, securities market and monetary fluctuations; (4) 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; (5) the soundness of other financial institutions; (6) political instability; (7) impairment of First Commonwealth’s goodwill or other intangible assets; (8) acts of God or of war or terrorism; (9) the timely development and acceptance of new products and services and perceived overall value of these products and services by users; (10) changes in consumer spending, borrowings and savings habits; (11) changes in the financial performance and/or condition of First Commonwealth’s borrowers; (12) technological changes; (13) acquisitions and integration of acquired businesses; (14) First Commonwealth’s ability to attract and retain qualified employees; (15) changes in the competitive environment in First Commonwealth’s markets and among banking organizations and other financial service providers; (16) the ability to increase market share and control expenses; (17) 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; (18) the reliability of First Commonwealth’s vendors, internal control systems or information systems; (19) 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 (20) 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.

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

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

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

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
	For the Three Months Ended												For the Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
		2023				2023				2022				2023				2022
SUMMARY RESULTS OF OPERATIONS
Net interest income	$	97,824			$	94,358			$	73,662			$	192,182			$	141,834
Provision for credit losses		2,790				(2,650	)			4,099				140				6,063
Provision for credit losses — acquisition day 1 non-PCD		—				10,653				—				10,653				—
Noninterest income		24,523				22,963				24,509				47,486				48,485
Noninterest expense		65,943				71,381				55,679				137,324				111,403
Net income		42,781				30,224				30,754				73,005				58,480
Core net income(5)		42,734				45,387				30,643				88,121				58,458
Earnings per common share (diluted)	$	0.42			$	0.30			$	0.33			$	0.72			$	0.62
Core earnings per common share (diluted)(6)	$	0.42			$	0.45			$	0.33			$	0.87			$	0.62
KEY FINANCIAL RATIOS
Return on average assets		1.54	%			1.17	%			1.28	%			1.36	%			1.23	%
Core return on average assets(7)		1.54	%			1.75	%			1.28	%			1.64	%			1.23	%
Return on average assets, pre-provision, pre-tax		2.03	%			1.78	%			1.78	%			1.91	%			1.66	%
Core return on average assets, pre-provision, pre-tax		2.03	%			2.11	%			1.77	%			2.06	%			1.66	%
Return on average shareholders' equity		13.90	%			10.56	%			11.60	%			12.29	%			10.86	%
Return on average tangible common equity(8)		20.68	%			15.75	%			16.81	%			18.30	%			15.64	%
Core return on average tangible common equity(9)		20.66	%			23.42	%			16.75	%			21.99	%			15.63	%
Core efficiency ratio(2)(10)		52.80	%			52.41	%			55.87	%			52.61	%			57.61	%
Net interest margin (FTE)(1)		3.85	%			4.01	%			3.38	%			3.93	%			3.29	%
Book value per common share	$	12.03			$	11.87			$	11.20
Tangible book value per common share(11)		8.24				8.13				7.85
Market value per common share		12.65				12.43				13.42
Cash dividends declared per common share		0.125				0.120				0.120				0.245				0.235
ASSET QUALITY RATIOS
Nonperforming loans and leases as a percent of end-of-period loans and leases(3)		0.54	%			0.51	%			0.50	%
Nonperforming assets as a percent of total assets(3)		0.44	%			0.41	%			0.38	%
Net charge-offs as a percent of average loans and leases (annualized)(4)		0.40	%			0.06	%			0.09	%
Allowance for credit losses as a percent of nonperforming loans and leases(4)		278.17	%			302.67	%			262.25	%
Allowance for credit losses as a percent of end-of-period loans and leases(4)		1.52	%			1.55	%			1.31	%
CAPITAL RATIOS
Shareholders' equity as a percent of total assets		10.9	%			11.0	%			11.0	%
Tangible common equity as a percent of tangible assets(12)		7.7	%			7.8	%			8.0	%
Leverage Ratio		9.8	%			10.2	%			9.8	%
Risk Based Capital - Tier I		11.5	%			11.5	%			12.2	%
Risk Based Capital - Total		13.7	%			13.8	%			14.6	%
Common Equity - Tier I		10.8	%			10.8	%			11.2	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands, except per share data)
	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
		2023			2023			2022			2023			2022
INCOME STATEMENT
Interest income	$	131,267		$	114,589		$	76,728		$	245,856		$	147,972
Interest expense		33,443			20,231			3,066			53,674			6,138
Net Interest Income		97,824			94,358			73,662			192,182			141,834
Provision for credit losses		2,790			(2,650	)		4,099			140			6,063
Provision for credit losses - acquisition day 1 non-PCD		—			10,653			—			10,653			—
Net Interest Income after Provision for Credit Losses		95,034			86,355			69,563			181,389			135,771
Net securities gains		—			—			—			—			2
Trust income		2,532			2,486			2,573			5,018			5,286
Service charges on deposit accounts		5,324			4,918			4,886			10,242			9,501
Insurance and retail brokerage commissions		2,314			2,552			2,486			4,866			4,758
Income from bank owned life insurance		1,195			1,227			1,383			2,422			2,891
Gain on sale of mortgage loans		1,253			652			1,561			1,905			2,843
Gain on sale of other loans and assets		1,891			2,086			1,099			3,977			3,418
Card-related interchange income		7,372			6,829			7,137			14,201			13,627
Derivative mark-to-market		81			(89	)		42			(8	)		389
Swap fee income		332			245			1,154			577			1,607
Other income		2,229			2,057			2,188			4,286			4,163
Total Noninterest Income		24,523			22,963			24,509			47,486			48,485
Salaries and employee benefits		36,735			34,264			30,949			70,999			61,881
Net occupancy		4,784			5,018			4,170			9,802			8,957
Furniture and equipment		4,284			4,238			3,857			8,522			7,587
Data processing		3,763			3,404			3,470			7,167			6,658
Pennsylvania shares tax		1,173			1,252			913			2,425			1,918
Advertising and promotion		1,327			1,663			1,434			2,990			2,660
Intangible amortization		1,282			1,147			862			2,429			1,724
Other professional fees and services		1,182			1,591			1,197			2,773			2,418
FDIC insurance		1,277			1,417			702			2,694			1,400
Litigation and operational losses		894			743			629			1,637			1,229
Loss on sale or write-down of assets		6			41			86			47			161
Merger and acquisition		(60	)		8,541			—			8,481			—
Other operating expenses		9,296			8,062			7,410			17,358			14,810
Total Noninterest Expense		65,943			71,381			55,679			137,324			111,403
Income before Income Taxes		53,614			37,937			38,393			91,551			72,853
Income tax provision		10,833			7,713			7,639			18,546			14,373
Net Income	$	42,781		$	30,224		$	30,754		$	73,005		$	58,480
Shares Outstanding at End of Period		102,444,915			103,193,127			93,705,120			102,444,915			93,705,120
Average Shares Outstanding Assuming Dilution		102,760,266			99,779,816			94,245,770			101,281,899			94,273,808

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
	June 30,				March 31,				June 30,
		2023				2023				2022
BALANCE SHEET (Period End)
Assets
Cash and due from banks	$	123,095			$	113,692			$	120,267
Interest-bearing bank deposits		325,774				282,110				179,533
Securities available for sale, at fair value		784,503				786,813				877,287
Securities held to maturity, at amortized cost		439,922				451,278				492,229
Loans held for sale		16,300				11,050				12,876
Loans and leases		8,799,836				8,656,945				7,119,754
Allowance for credit losses		(133,546	)			(133,885	)			(93,603	)
Net loans and leases		8,666,290				8,523,060				7,026,151
Goodwill and other intangibles		388,451				385,998				313,449
Other assets		574,269				559,751				504,635
Total Assets	$	11,318,604			$	11,113,752			$	9,526,427
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits	$	2,624,344			$	2,698,225			$	2,726,242
Interest-bearing demand deposits		611,156				547,015				273,360
Savings deposits		4,935,124				5,127,037				4,708,868
Time deposits		975,654				862,671				345,075
Total interest-bearing deposits		6,521,934				6,536,723				5,327,303
Total deposits		9,146,278				9,234,948				8,053,545
Short-term borrowings		542,839				278,978				88,923
Long-term borrowings		187,276				187,531				181,752
Total borrowings		730,115				466,509				270,675
Other liabilities		209,792				187,281				153,049
Shareholders' equity		1,232,419				1,225,014				1,049,158
Total Liabilities and Shareholders' Equity	$	11,318,604			$	11,113,752			$	9,526,427

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

	For the Three Months Ended													For the Six Months Ended
	June 30,		Yield/		March 31,		Yield/		June 30,		Yield/			June 30,		Yield/		June 30,		Yield/
		2023	Rate			2023	Rate			2022	Rate				2023	Rate			2022	Rate
NET INTEREST MARGIN
Assets
Loans and leases (FTE)(1)(3)	$	8,689,021	5.58	%	$	8,301,449	5.27	%	$	7,036,176	3.97	%		$	8,496,305	5.43	%	$	6,965,296	3.89	%
Securities and interest-bearing bank deposits (FTE)(1)		1,535,136	2.77	%		1,279,477	2.20	%		1,734,126	1.68	%			1,408,014	2.51	%		1,771,421	1.61	%
Total Interest-Earning Assets (FTE)(1)		10,224,157	5.16	%		9,580,926	4.86	%		8,770,302	3.52	%			9,904,319	5.02	%		8,736,717	3.43	%
Noninterest-earning assets		932,756				907,982				830,167					920,437				826,016
Total Assets	$	11,156,913			$	10,488,908			$	9,600,469				$	10,824,756			$	9,562,733
Liabilities and Shareholders' Equity
Interest-bearing demand and savings deposits	$	5,595,336	1.35	%	$	5,312,086	0.88	%	$	5,067,692	0.05	%		$	5,454,494	1.13	%	$	5,024,283	0.04	%
Time deposits		930,447	3.03	%		682,144	2.34	%		354,403	0.26	%			806,981	2.74	%		364,388	0.27	%
Sh...ort-term borrowings		434,783	4.79	%		266,932	3.65	%		95,561	0.08	%			351,321	4.36	%		105,497	0.07	%
Long-term borrowings		187,379	5.03	%		185,367	5.06	%		181,859	4.96	%			186,378	5.04	%		181,988	4.97	%
Total Interest-Bearing Liabilities		7,147,945	1.88	%		6,446,529	1.27	%		5,699,515	0.22	%			6,799,174	1.59	%		5,676,156	0.22	%
Noninterest-bearing deposits		2,580,842				2,678,849				2,711,458					2,629,575				2,678,686
Other liabilities		193,292				202,476				125,646					197,860				122,379
Shareholders' equity		1,234,834				1,161,054				1,063,850					1,198,147				1,085,512
Total Noninterest-Bearing Funding Sources		4,008,968				4,042,379				3,900,954					4,025,582				3,886,577
Total Liabilities and Shareholders' Equity	$	11,156,913			$	10,488,908			$	9,600,469				$	10,824,756			$	9,562,733
Net Interest Margin (FTE) (annualized)(1)			3.85	%			4.01	%			3.38	%				3.93	%			3.29	%

FIRST COMMONWEALTH FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL DATA
Unaudited
(dollars in thousands)
	June 30,			March 31,			June 30,
		2023			2023			2022
Loan and Lease Portfolio Detail
Commercial Loan and Lease Portfolio:
Commercial, financial, agricultural and other	$	1,347,842		$	1,361,858		$	1,149,521
Commercial real estate		3,004,962			2,991,930			2,319,094
Equipment Finance loans and leases		154,152			109,221			21,062
Real estate construction		474,720			422,831			292,400
Total Commercial		4,981,676			4,885,840			3,782,077
Consumer Loan Portfolio:
Closed-end mortgages		1,858,660			1,807,941			1,567,561
Home equity lines of credit		505,449			515,926			532,640
Real estate construction		100,079			119,071			100,592
Total Real Estate - Consumer		2,464,188			2,442,938			2,200,793
Auto & RV loans		1,272,557			1,244,874			1,047,104
Direct installment		28,881			30,381			35,245
Personal lines of credit		49,168			49,399			50,249
Student loans		3,366			3,513			4,286
Total Other Consumer		1,353,972			1,328,167			1,136,884
Total Consumer Portfolio		3,818,160			3,771,105			3,337,677
Total Portfolio Loans and Leases		8,799,836			8,656,945			7,119,754
Loans held for sale		16,300			11,050			12,876
Total Loans and Leases	$	8,816,136		$	8,667,995		$	7,132,630
	June 30,			March 31,			June 30,
		2023			2023			2022
ASSET QUALITY DETAIL
Nonperforming Loans and Leases:
Loans and leases on nonaccrual basis *	$	29,322		$	29,413		$	29,288
Loans on nonaccrual basis - Centric acquisition		18,687			14,821			—
Troubled debt restructured loans on accrual basis *		—			—			6,404
Total Nonperforming Loans and Leases	$	48,009		$	44,234		$	35,692
Other real estate owned ("OREO")		324			424			93
Repossessions ("Repos")		1,004			553			621
Total Nonperforming Assets	$	49,337		$	45,211		$	36,406
Loans past due in excess of 90 days and still accruing		2,474			1,440			3,155
Classified loans and leases		76,419			76,962			46,798
Criticized loans and leases		207,071			189,873			146,780
Nonperforming assets as a percentage of total loans and leases, plus OREO and Repos(4)		0.56	%		0.52	%		0.51	%
Allowance for credit losses	$	133,546		$	133,885		$	93,603
*TDR's were eliminated as of January 1, 2023 as part of implementing ASU 2022-02, Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2023			2023			2022				2023			2022
Net Charge-offs (Recoveries):
Commercial, financial, agricultural and other	$	6,582		$	504		$	430			$	7,086		$	825
Real estate construction		—			—			—				—			—
Commercial real estate		1,423			(42	)		547				1,381			533
Residential real estate		(32	)		41			(26	)			9			84
Loans to individuals		692			670			577				1,362			1,220
Net Charge-offs	$	8,665		$	1,173		$	1,528			$	9,838		$	2,662
Net charge-offs as a percentage of average loans and leases outstanding (annualized)(4)		0.40	%		0.06	%		0.09	%			0.23	%		0.08	%
Provision for credit losses as a percentage of net charge-offs		32.20	%	(225.92)%				268.26	%			1.42	%		227.76	%
Provision for credit losses	$	2,790		$	(2,650	)	$	4,099			$	140		$	6,063

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 and any other unusual items deemed by management to not be related to normal operations, such as merger, acquisition and severance costs.
(3)Includes held for sale loans.
(4)Excludes held for sale loans.
	For the Three Months Ended							For the Six Months Ended
	June 30,		March 31,		June 30,			June 30,		June 30,
		2023		2023		2022			2023		2022
Interest income	$	131,267	$	114,589	$	76,728		$	245,856	$	147,972
Adjustment to fully taxable equivalent basis(1)		305		305		244			610		498
Interest income adjusted to fully taxable equivalent basis (non-GAAP)		131,572		114,894		76,972			246,466		148,470
Interest expense		33,443		20,231		3,066			53,674		6,138
Net interest income, (FTE)(1)	$	98,129	$	94,663	$	73,906		$	192,792	$	142,332

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands, except per share data)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2023			2023			2022				2023			2022
Net Income	$	42,781		$	30,224		$	30,754			$	73,005		$	58,480
Intangible amortization		1,282			1,147			862				2,429			1,724
Tax benefit of amortization of intangibles		(269	)		(241	)		(181	)			(510	)		(362	)
Net Income, adjusted for tax affected amortization of intangibles	$	43,794		$	31,130		$	31,435			$	74,924		$	59,842
Average Tangible Equity:
Total shareholders' equity	$	1,234,834		$	1,161,054		$	1,063,850			$	1,198,147		$	1,085,512
Less: intangible assets		385,567			359,431			313,617				372,571			313,924
Tangible Equity		849,267			801,623			750,233				825,576			771,588
Less: preferred stock		—			—			—				—			—
Tangible Common Equity	$	849,267		$	801,623		$	750,233			$	825,576		$	771,588
(8)Return on Average Tangible Common Equity		20.68	%		15.75	%		16.81	%			18.30	%		15.64	%

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2023			2023			2022				2023			2022
Core Net Income:
Total Net Income	$	42,781		$	30,224		$	30,754			$	73,005		$	58,480
Net securities gains		—			—			—				—			(2	)
Merger and acquisition related expenses		(60	)		8,541			—				8,481			—
Tax benefit of merger and acquisition related expenses		13			(1,794	)		—				(1,781	)		—
COVID-19 related		—			—			62				—			79
Tax benefit of COVID-19 related		—			—			(13	)			—			(17	)
Provision for credit losses - acquisition day 1 non-PCD		—			10,653			—				10,653			—
Tax benefit of provision for credit losses - acquisition day 1 non-PCD		—			(2,237	)		—				(2,237	)		—
Branch consolidation related		—			—			(202	)			—			(104	)
Tax benefit of bank consolidation related expenses		—			—			42				—			22
(5)Core net income	$	42,734		$	45,387		$	30,643			$	88,121		$	58,458
Average Shares Outstanding Assuming Dilution		102,760,266			99,779,816			94,245,770				101,281,899			94,273,808
(6)Core Earnings per common share (diluted)	$	0.42		$	0.45		$	0.33			$	0.87		$	0.62
Intangible amortization		1,282			1,147			862				2,429			1,724
Tax benefit of amortization of intangibles		(269	)		(241	)		(181	)			(510	)		(362	)
Core Net Income, adjusted for tax affected amortization of intangibles	$	43,747		$	46,293		$	31,324			$	90,040		$	59,820
(9)Core Return on Average Tangible Common Equity		20.66	%		23.42	%		16.75	%			21.99	%		15.63	%

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										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2023			2023			2022				2023			2022
Core Return on Average Assets:
Total Net Income	$	42,781		$	30,224		$	30,754			$	73,005		$	58,480
Total Average Assets		11,156,913			10,488,908			9,600,469				10,824,756			9,562,733
Return on Average Assets		1.54	%		1.17	%		1.28	%			1.36	%		1.23	%
Core Net Income(5)	$	42,734		$	45,387		$	30,643			$	88,121		$	58,458
Total Average Assets		11,156,913			10,488,908			9,600,469				10,824,756			9,562,733
(7)Core Return on Average Assets		1.54	%		1.75	%		1.28	%			1.64	%		1.23	%

	For the Three Months Ended										For the Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2023			2023			2022				2023			2022
Core Efficiency Ratio:
Total Noninterest Expense	$	65,943		$	71,381		$	55,679			$	137,324		$	111,403
Adjustments to Noninterest Expense:
Intangible amortization		1,282			1,147			862				2,429			1,724
Merger and acquisition related		(60	)		8,541			—				8,481			—
COVID-19 related		—			—			62				—			79
Branch consolidation related		—			—			(202	)			—			(104	)
Noninterest Expense - Core	$	64,721		$	61,693		$	54,957			$	126,414		$	109,704
Net interest income, (FTE)	$	98,129		$	94,663		$	73,906			$	192,792		$	142,332
Total noninterest income		24,523			22,963			24,509				47,486			48,485
Net securities gains		—			—			—				—			(2	)
Total Revenue		122,652			117,626			98,415				240,278			190,815
Adjustments to Revenue:
Derivative mark-to-market		81			(89	)		42				(8	)		389
Total Revenue - Core	$	122,571		$	117,715		$	98,373			$	240,286		$	190,426
(10)Core Efficiency Ratio		52.80	%		52.41	%		55.87	%			52.61	%		57.61	%

FIRST COMMONWEALTH FINANCIAL CORPORATION

CONSOLIDATED FINANCIAL DATA

Unaudited

(dollars in thousands)

DEFINITIONS AND RECONCILIATION OF NON-GAAP MEASURES
	June 30,			March 31,			June 30,
		2023			2023			2022
Tangible Equity:
Total shareholders' equity	$	1,232,419		$	1,225,014		$	1,049,158
Less: intangible assets		388,451			385,998			313,449
Tangible Equity		843,968			839,016			735,709
Less: preferred stock		—			—			—
Tangible Common Equity	$	843,968		$	839,016		$	735,709
Tangible Assets:
Total assets	$	11,318,604		$	11,113,752		$	9,526,427
Less: intangible assets		388,451			385,998			313,449
Tangible Assets	$	10,930,153		$	10,727,754		$	9,212,978
(12)Tangible Common Equity as a percentage of Tangible Assets		7.72	%		7.82	%		7.99	%
Shares Outstanding at End of Period		102,444,915			103,193,127			93,705,120
(11)Tangible Book Value Per Common Share	$	8.24		$	8.13		$	7.85

	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,		June 30,				June 30,		June 30,
		2023			2023		2022				2023		2022
Pre-tax pre-provision income:
Net interest income	$	97,824		$	94,358	$	73,662			$	192,182	$	141,834
Noninterest income		24,523			22,963		24,509				47,486		48,485
Noninterest expense		65,943			71,381		55,679				137,324		111,403
Pre-tax pre-provision income	$	56,404		$	45,940	$	42,492			$	102,344	$	78,916
Net securities gains	$	—		$	—	$	—			$	—	$	(2	)
Merger and acquisition related expenses		(60	)		8,541		—				8,481		—
COVID-19 related		—			—		62				—		79
Branch consolidation		—			—		(202	)			—		(104	)
Core pre-tax pre-provision income	$	56,344		$	54,481	$	42,352			$	110,825	$	78,889
Net charge-offs	$	8,665		$	1,173	$	1,528			$	9,838	$	2,662