# First Commonwealth Financial Corp: Form 10-Q for the period ended Mar 31, 2023

- Company: [First Commonwealth Financial Corp](/companies/fcf.md) (CIK 712537)
- Form: 10-Q
- Filed: 2023-05-10
- Accepted by EDGAR: May 10, 2023, 16:35 ET
- Period: 2023-03-31
- Accession: 0000712537-23-000091
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/712537/000071253723000091/fcf-20230331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/712537/000071253723000091/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Interest expense | 3 months, 2023-01-01 to 2023-03-31 | $20.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | $7.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $30.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.30 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.30 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 99,779,816 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | $38.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months, 2023-01-01 to 2023-03-31 | $12.4m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months, 2023-01-01 to 2023-03-31 | $1.7m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2023-03-31 | $11.11bn | us-gaap:Assets |
| Total liabilities | at 2023-03-31 | $9.89bn | us-gaap:Liabilities |
| Short-term borrowings | at 2023-03-31 | $279.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2023-03-31 | $1.23bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 5,146 characters.

Excluding the impact of Centric, real estate construction loans decreased $52.3 million, or 10.2%, due to the completion of commercial real estate projects. Residential real estate grew $40.7 million, or 1.9%, primarily due to originations of closed-end 1-4 family mortgage loans. Commercial real estate loans increased $33.8 million, or 1.4%, primarily due to growth in loans secured by nonresidential property due in part to the completion of several construction projects. Loans to individuals increased $29.8 million, or 2.3%, primarily due to growth in the indirect auto and recreational vehicle portfolio. Commercial, financial, agricultural and other loans increased $14.8 million, as a result of $29.5 million in growth in the equipment finance portfolio.

As indicated in the table below, commercial real estate and commercial, financial and agricultural and other loans represent a significant portion of the nonperforming loans as of March 31, 2023.

*(dollars in thousands)*

|  | For the Three Months Ended March 31, 2023 Net Charge- offs | % of Total Net Charge-offs | Net Charge- offs as a % of Average Loans (annualized) | As of March 31, 2023 Nonperforming Loans | % of Total Nonperforming Loans | Nonperforming Loans as a % of Total Loans |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial, financial, agricultural and other | $504 | 42.97% | 0.03% | $12,364 | 27.95% | 0.14% |
| Real estate construction | — | — | — | — | — | — |
| Residential real estate | 41 | 3.49 | — | 7,656 | 17.31 | 0.09 |
| Commercial real estate | (42) | (3.58) | — | 23,785 | 53.77 | 0.28 |
| Loans to individuals | 670 | 57.12 | 0.03 | 429 | 0.97 | — |
| Total loans and leases, net of unearned income | $1,173 | 100.00% | 0.06% | $44,234 | 100.00% | 0.51% |

Net charge-offs for the three months ended March 31, 2023 totaled $1.2 million, compared to $1.1 million for the three months ended March 31, 2022. The most significant charge-offs during the three months ended March 31, 2023 included $0.7 million related to loans to individuals, primarily indirect auto loans and personal credit lines. See discussions related to the provision for credit losses and loans for more information.

#### Capital Resources

At March 31, 2023, shareholders’ equity was $1.2 billion, an increase of $172.9 million from December 31, 2022. The increase was primarily the result of $141.4 million in stock issued as part of the Centric acquisition, $30.2 million in net income and a $13.1 million increase in the fair value of available for sale investments and interest rate swaps, which are reflected in the Other Comprehensive Income component of capital. Other items impacting capital include increases due to $2.3 million in treasury stock sales, offset by $12.4 million of dividends paid to shareholders and $1.7 million of common stock repurchases. Cash dividends declared per common share were $0.120 for the three months ended March 31, 2023.

First Commonwealth and First Commonwealth Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on First Commonwealth’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First Commonwealth and First Commonwealth Bank must meet specific capital guidelines that involve quantitative measures of First Commonwealth’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. First Commonwealth’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Effective January 1, 2015, the Company became subject to the new regulatory risk-based capital rules adopted by the federal banking agencies implementing Basel III. The most significant changes included higher minimum capital requirements, as the minimum Tier I capital ratio increased from 4.0% to 6.0% and a new common equity Tier I capital ratio was established with a minimum level of 4.5%. Additionally, the rules improved the quality of capital by providing stricter eligibility criteria for regulatory capital instruments and provide for a phase-in, beginning January 1, 2016, of a capital conservation buffer of 2.5% of risk-weighted assets. This buffer, which was fully phased-in as of January 1, 2019, provides a requirement to hold common equity Tier 1 capital above the minimum risk-based capital requirements, resulting in an effective common equity Tier I risk-weighted asset minimum ratio of 7.0% on a fully phased-in basis.

The Basel III Rules also permit banking organizations with less than $15.0 billion in assets to retain, through a one-time election, the existing treatment for accumulated other comprehensive income, which currently does not affect regulatory capital. The Company elected to retain this treatment, which reduces the volatility of regulatory capital levels.

## Market risk

As filed, 588 characters.

utilize LIBOR have been identified and have incorporated enhanced language to accommodate the transition to alternative

reference rates and the use of LIBOR has been discontinued as an index for new loans. All LIBOR based loans are expected to

be transitioned to a new index by June 30, 2023. The impact of the LIBOR transition is not expected to have a material impact

on the Company's consolidated financial statements.

PART II – OTHER INFORMATION

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, 2,022 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, 2022, except for the following risk factor.

### Risks Related to Recent Events Impacting the Financial Services Industry

Recent events impacting the financial services industry, including the failure of Silicon Valley Bank and Signature Bank, have resulted in decreased confidence in banks among some consumer and commercial depositors, other counterparties and investors, as well as significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets. These events occurred during a period of rapidly rising interest rates which, among other things, has resulted in unrealized losses in longer duration securities and loans held by banks, more competition for bank deposits and may increase the risk of a potential recession. These recent events have, and could continue to have, an adverse impact on the market price and volatility of the Company’s common stock.

These recent events may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies or result in the impositions of restrictions through supervisory or enforcement activities, including higher capital requirements, which could have a material impact on our business. Inability to access short-term funding, loss of client deposits or changes in our credit ratings could increase the cost of funding, limit access to capital markets or negatively impact our overall liquidity or capitalization. We may be impacted by concerns regarding the soundness or creditworthiness of other financial institutions, which can cause substantial and cascading disruption within the financial markets and increased expenses. The cost of resolving the recent bank failures may prompt the FDIC to increase its premiums above the recently increased levels or to issue additional special assessments.

Filed May 10, 2023.
Source: SEC EDGAR, the filing index for accession 0000712537-23-000091. Last ingested by Listed: Nov 6, 2026, 18:15 ET. No prices; not investment advice.