First Commonwealth Financial : 1Q 2024 Earnings Release Webcast Presentation

NYSE: FCF

1Q 2024 Earnings Release Webcast Presentation

April 24, 2024

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1Q 2024 Earnings Release Webcast Presentation

FIRST QUARTER 2024 HIGHLIGHTS

Highlights

$50.8 million

Core Pre‐tax pre‐provision income(1)

1.77%

Core PTPP ROAA(1)

1.32%

Reserve coverage ratio

$5.0 billion

Available liquidity

$286.7 million

Excess capital(2)

8.4%

TCE ratio

Diversified balance sheet and revenue streams continue to improve the fundamental earnings of the company

• Core EPS of $0.37 which is a decrease of $0.07 from a record $0.44 in the previous quarter
• • Provision expense was $4.2 million, which represented a $6.1 million increase from last quarter's $1.9 million release of reserves
  • Spread income decreased by $3.4 million as strong deposit gathering activity drove higher interest expense
• End of period deposits grew $254.1 million, or 11.1% annualized from the previous quarter
• • Average deposits grew $51.7 million, or 2.3% annualized from the previous quarter
• Net interest margin was 3.52%
• Total loans grew $33.2 million, or 1.5% annualized from the previous quarter, led by our Equipment Finance business
• Core noninterest expense of $65.5 million increased $0.4 million from the previous quarter; core efficiency ratio of 55.05%
• Tangible book value per share increased $0.17, or 7.5% annualized from the previous quarter
• Total risk based capital ratio increased 34 basis points

(1)	Please refer to the appendix for a reconciliation of non-GAAP measures
(2)	Represents excess capital above the bank-level Tier 1 Capital regulatory "well capitalized" requirement of 8.0%	4

1Q 2024 Earnings Release Webcast Presentation

NET INTEREST INCOME AND NET INTEREST MARGIN

Net Interest Income(1)

Yield/Cost Trends(1)

• Net interest income (FTE) of $92.6 million decreased $3.4 million to LQ and $2.0 million YoY
• Net interest margin of 3.52% decreased 13bps from LQ and decreased 49bps YoY
• • Yield on loans increased 6bps to LQ
  • Cost of deposits was 1.90% in the current quarter compared to 1.65% LQ
  • Cost of funds was 2.13% during the current quarter compared to 1.94% LQ
• Approximately $4.6 billion, or 51%, of the $9.0 billion loan portfolio is variable
• • Average duration of the loan portfolio is 2.9 years
  • $25 million of floating rate macro swaps mature in June 2024 and $50 million mature in December 2024

$ in millions	5
(1) Taxable equivalent

1Q 2024 Earnings Release Webcast Presentation

LOANS

Average Loans(1)

(2)

Average

• Average loans increased $24.0 million from LQ and $697.2 million YoY
• The yield on loans increased 6bps from LQ

Period-end

	Period-end Loans(1)		 Total loans(1) increased $33.2 million from
$8,668	$8,999	$9,032	the previous quarter, or 1.5% annualized
 Equipment finance loans increased $47.0
			million and commercial real estate loans
			increased $37.8 million
			 Mortgage loans decreased $12.8 million,
			and consumer real estate construction loans
			decreased $17.1 million

(3)		 Indirect auto and RV loans were flat to LQ
$ in millions
(1)	Includes loans held for sale	6
(2)	Taxable equivalent yield

1. Includes $280, $232 million and $109 million Equipment Finance Loans in 1Q24, 4Q23 and 1Q23, respectively

1Q 2024 Earnings Release Webcast Presentation

DEPOSITS

Average Deposits

Average

 Average deposits increased $51.7 million, or 2.3% annualized, from LQ

 Average time deposits grew $169.6 million, partially offset by a $132.2 million decrease in noninterest bearing deposits

 The total cost of deposits increased 25bps from LQ

Period-end Deposits

Period-end

 Total period-end deposits increased $254.1 million, or 11.1% annualized from

LQ

 Noninterest-bearing deposits currently comprise 24.7% of total deposits

$ in millions

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1Q 2024 Earnings Release Webcast Presentation

NONINTEREST INCOME

						Change from
	1Q24	4Q23	1Q23	4Q23		1Q23
Interchange
$6.7	$7.2	$6.8			($0.5)		($0.1)
Service charges	5.4	5.6	4.9			(0.2)		0.5
Trust	2.7	2.5	2.5			0.2		0.2
Retail brokerage	1.1	1.5	1.5			(0.4)		(0.4)
Insurance	1.2	1.0	1.1			0.2		0.1
BOLI	1.3	1.2	1.2			0.1		0.1
Gain on sale of mortgage loans	1.3	0.8	0.7			0.5		0.6
Gain on sale of SBA loans	1.9	1.5	2.0			0.4		(0.1)
Gain on sale of Assets	0.2	0.2	0.1			0.0		0.1
SWAP fees	0.0	0.5	0.2			(0.5)		(0.2)
Other fees	2.2	2.3	2.1			(0.1)		0.1
Total fee income	$24.0	$24.3	$23.1			($0.3)		$0.9
Gain on sale of securities	0.0	0.0	0.0			0.0		0.0
Derivative mark-to-market	0.0	(0.0)	(0.1)			0.0		0.1
Total noninterest income	$24.0	$24.3	$23.0			($0.3)		$1.0

• Fee income decreased $0.3 million from LQ and increased $0.8 million YoY
• Gain on sale of SBA loans increased $0.4 million from LQ, offset by a $0.5 million seasonal decrease in interchange income
• Gain on sale of mortgage loans increased $0.5 million from LQ and increased $0.6 million YoY due to a higher proportion of sold originations
• • 1Q24 mortgage originations of $58.1 million decreased $5.4 million from LQ and decreased $5.2 million YoY
• Fee income represented 20.6% of total operating revenue(1)

(1) Please refer to the appendix for disclosures regarding non-GAAP measures	8
$ in millions

1Q 2024 Earnings Release Webcast Presentation

NONINTEREST EXPENSE

Change from

1Q24

4Q23

1Q23

4Q23

1Q23

Salaries and benefits	$35.3	$36.2	$34.3		($0.9)
Occupancy	5.3	4.6	5.0		0.7
Furniture and equipment	4.5	4.4	4.2		0.1
PA shares tax	1.2	0.3	1.3		0.9
Data processing	3.8	4.0	3.4		(0.2)
Professional fees	1.3	1.5	1.6		(0.2)
FDIC insurance	1.6	1.6	1.4		0.0
Operational losses	1.0	1.4	0.7		(0.4)
Loss on sale or write-down of assets	0.2	0.1	0.0		0.1
Other operating expenses	10.0	9.7	9.7		0.3
Total operating expense	$64.2	$63.8	$61.7		$0.4
Intangible amortization	1.3	1.2	1.6		0.1
Merger Expenses	0.1	0.2	8.5		(0.1)
Total noninterest expense	$65.6	$65.2	$71.8		$0.4

$1.0 0.3 0.2 (0.1) 0.4 (0.3) 0.2 0.3 0.2 0.3

$2.5 (0.3) (8.4)

($6.3)

• Total noninterest expense increased $0.4 million from LQ
• PA shares tax increased $0.9 million due to an accrual adjustment for tax obligations in the prior quarter
• Occupancy increased $0.7 million from LQ due primarily to a lease termination and seasonal winter maintenance
• Salaries and benefits decreased $0.9 million from LQ due to a $1.3 million decrease in hospitalization expense
• FTEs of 1,465 decreased 10 from LQ

(1)

(1) Please refer to the appendix for disclosures regarding non-GAAP measures

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1Q 2024 Earnings Release Webcast Presentation

CREDIT QUALITY

Provision Expense and Net Charge-offs	 Provision expense of $4.2 million increased $6.1
	million from LQ primarily to provide for net charge-
	offs

 The allowance for credit losses as a percentage of end-of-period loans was 1.32%, which is an increase of 1bps from LQ

 Nonperforming assets of $44.3 million increased $3.4 million from LQ

 Net Charge-offs of $4.3 million decreased $12.0

1. million from LQ

Nonperforming Assets

Criticized and Classified Loans

(1) Net charge-offs as a percentage of period-to-date average loans, annualized

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