# First Commonwealth Financial Corp: Form 10-Q for the period ended Jun 30, 2022

- Company: [First Commonwealth Financial Corp](/companies/fcf.md) (CIK 712537)
- Form: 10-Q
- Filed: 2022-08-09
- Accepted by EDGAR: Aug 9, 2022, 16:07 ET
- Period: 2022-06-30
- Accession: 0000712537-22-000033
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/712537/000071253722000033/fcf-20220630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/712537/000071253722000033/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Interest expense | 3 months, 2022-04-01 to 2022-06-30 | $3.1m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2022-01-01 to 2022-06-30 | $6.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-04-01 to 2022-06-30 | $7.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2022-01-01 to 2022-06-30 | $14.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-04-01 to 2022-06-30 | $30.8m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2022-01-01 to 2022-06-30 | $58.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-04-01 to 2022-06-30 | $0.33 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2022-01-01 to 2022-06-30 | $0.62 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-04-01 to 2022-06-30 | $0.33 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2022-01-01 to 2022-06-30 | $0.62 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-04-01 to 2022-06-30 | 94,245,770 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2022-01-01 to 2022-06-30 | 94,273,808 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2022-01-01 to 2022-06-30 | $60.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 6 months, 2022-01-01 to 2022-06-30 | $22.2m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2022-01-01 to 2022-06-30 | $10.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2022-06-30 | $9.53bn | us-gaap:Assets |
| Total liabilities | at 2022-06-30 | $8.48bn | us-gaap:Liabilities |
| Short-term borrowings | at 2022-06-30 | $88.9m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2022-06-30 | $1.05bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 5,768 characters.

interest income before provision expense plus noninterest income), at 74.5% and 72.0% for the six months ended June 30, 2022 and 2021, respectively.

The net interest margin on a fully taxable equivalent basis was 3.29% for both the six months ended June 30, 2022 and June 30, 2021. The net interest margin is primarily attributable to the amount and composition of interest-earning assets and interest-bearing liabilities.

The taxable equivalent yield on interest-earning assets was 3.43% for the six months ended June 30, 2022, a decrease of 6 basis points compared to the 3.49% yield for the same period in 2021. Contributing to this decrease is a $423.8 million decline in average PPP loans, which yield higher rates than the remainder of the loan portfolio. As the PPP loans paid off, due to forgiveness by the US Government, the funds were used to fund growth in the loan and investment portfolios. Also impacting the yield on interest-earning assets for the six months ended June 30, 2022 was $1.2 million in interest and loan fees recognized when a nonaccrual loan was paid off during the second quarter. The interest and fees collected on this loan increased the net interest margin for the six months ended June 30, 2022 by 3 basis points.

The loan yield for the six months ended June 30, 2022, decreased 10 basis points compared to the same period in 2021. The decrease was primarily due to a decline in average PPP loans outstanding. These loans, which were originated under the CARES Act, had an average balance of $35.6 million with a stated loan rate of 1% and a yield of 13.38% for the six months ended June 30, 2022. During the six months ended June 30, 2021, PPP loans averaged $459.5 million with a yield of 5.89%. The yield on PPP loans includes the recognition of PPP loan deferred processing fees, net of deferred origination costs, of $2.0 million for the six months ended June 30, 2022. These amounts are recognized in interest income as a yield adjustment over the life of the loan with accelerated recognition when a loan is forgiven or paid off. As of June 30, 2022, we expect to recognize additional PPP-related deferred processing fees, net of origination costs, of approximately $0.4 million as an adjustment to yield over the remaining terms of the loans. The balance of PPP loans outstanding at June 30, 2022 totaled $12.9 million. During the six months ended June 30, 2022, PPP loans generated $2.4 million in income compared to $13.4 million during the same period in 2021. For the six months ended June 30, 2022, PPP loans increased the yield on total loans and the net interest margin by 5 basis points. PPP loans increased the yield on total loans by 14 basis points and the net interest margin by 15 basis points during the six months ended June 30, 2021.

The investment portfolio yield increased 1 basis point in comparison to the prior year as a result of $103.6 million in average growth at a time when new volume rates were higher than the portfolio yield. Growth in the investment portfolio is a result of continued deposit growth as well as a decline in interest-bearing deposits with banks, which decreased from $349.7 million in 2021 to $308.5 million in 2022. The change in the level and rate paid on interest-bearing deposits with banks increased the yield on earning assets by 10 basis points for the six months ended June 30, 2022.

Decreases in the cost of interest-bearing liabilities partially offset the negative impact of lower yields on interest-earning assets. The cost of interest-bearing liabilities decreased to 0.22% for the six months ended June 30, 2022, from 0.31% for the same period in 2021. Lower market interest rates and management's efforts to reduce deposit costs resulted in the cost of interest-bearing deposits decreasing 7 basis points and short-term borrowings decreasing 3 basis points in comparison to the same period last year.

For the six months ended June 30, 2022, changes in rates negatively impacted net interest income by $1.6 million when compared with the same period in 2021. The lower yield on interest-earning assets, which was largely driven by lower income on PPP loans, negatively impacted net interest income by $2.9 million, while the decrease in the cost of interest-bearing liabilities positively impacted net interest income by $1.2 million.

Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $5.7 million for the six months ended June 30, 2022, as compared to the same period in 2021. Higher levels of interest-earning assets resulted in an increase of $4.6 million in interest income, and changes in the volume and mix of interest-bearing liabilities decreased interest expense by $1.1 million, primarily due to decreases in the cost of long-term debt and time deposits. Average earning assets for the six months ended June 30, 2022 increased $251.0 million, or 3.0%, compared to the same period in 2021. Average loans for the comparable period increased $188.7 million, or 2.8%.

Net interest income also benefited from a $136.9 million increase in average net free funds at June 30, 2022 as compared to June 30, 2021. Average net free funds are the excess of noninterest-bearing demand deposits, other noninterest-bearing liabilities and shareholders’ equity over noninterest-earning assets. The largest component of the increase in net free funds was an increase of $168.9 million, or 6.7%, in noninterest-bearing demand deposit average balances. Average time deposits for the six months ended June 30, 2022 decreased by $128.9 million compared to the comparable period in 2021, while the average rate paid on time deposits decreased 35 basis points compared to the same period in 2021.

## Market risk

As filed, 133 characters.

Information appearing in Item 2 of this report under the caption “Market Risk” is incorporated by reference in response to this item.

## Controls and procedures

As filed, 844 characters.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the Securities and Exchange Commission.

## Risk factors

As filed, 180 characters.

There have been no material changes to the risk factors previously disclosed under Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Filed Aug 9, 2022.
Source: SEC EDGAR, the filing index for accession 0000712537-22-000033. Last ingested by Listed: Nov 6, 2026, 18:15 ET. No prices; not investment advice.