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Mar 31, 2023
First Commonwealth Q1 2023 Earnings Report
First Commonwealth's financial performance was announced for the first quarter of 2023, including net income of $30.2 million and diluted earnings per share of $0.30. The results included merger-related expenses from the acquisition of Centric Financial Corporation.
Key Takeaways
First Commonwealth Financial Corporation reported a net income of $30.2 million and diluted earnings per share of $0.30 for Q1 2023. The quarter's results were impacted by merger-related expenses from the acquisition of Centric Financial Corporation. Core pre-tax pre-provision net revenue totaled $54.5 million.
Net income was $30.2 million, with diluted earnings per share at $0.30, which included merger-related expenses of $8.5 million and impacts to provision for credit losses of $10.7 million related to the Centric acquisition.
Core pre-tax pre-provision net revenue totaled $54.5 million, driven by an increase in the net interest margin and average interest-earning assets.
Average deposits increased by $713.4 million from the previous quarter, including $441.9 million in average deposits acquired from Centric. Average organic deposits grew $271.5 million, or 13.8% annualized.
The net interest margin was 4.01%, an increase of 2 basis points compared to the prior quarter.
First Commonwealth
First Commonwealth
Forward Guidance
Management expressed confidence in the company's strong capital, liquidity, and financial positions, highlighting the value of its diversified core depository.
Positive Outlook
- The company's capital, liquidity, and financial positions remain strong.
- Management believes the company's granular, diversified core depository highlights the value of its franchise.
- The geographic expansion and scaling of the de novo equipment finance business will help offset any slowdown in borrower demand.
- Organic deposit growth outstripping loan originations.
- Resilient net interest margin that overcame the most funding pressure seen since the Federal Reserve began raising rates in March of 2022.
Challenges Ahead
- Results during the first quarter of 2023 included $19.2 million, or $0.15 per share, of merger-related expenses from the Company’s acquisition of Centric Financial Corporation (Centric).
- Noninterest income of $23.0 million decreased $1.3 million from the previous quarter primarily due to a $1.6 million gain on a limited partnership investment in the previous quarter
- Noninterest expense (excluding merger-related expense) of $62.8 million increased $5.8 million from the previous quarter due primarily to higher operating costs resulting from the Centric acquisition.
- The core net interest margin (adjusted for net purchase accounting marks) decreased 4 basis points to 3.94%
- Criticized loans totaled $189.9 million, an increase of $57.0 million from the previous quarter.