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Jun 30, 2021
First Commonwealth Q2 2021 Earnings Report
Announced second quarter 2021 earnings.
Key Takeaways
First Commonwealth Financial Corporation reported a net income of $29.6 million and diluted earnings per share of $0.31 for the second quarter of 2021. The company experienced loan growth, an increase in net interest income, and a decrease in noninterest expense.
Net income of $29.6 million and diluted earnings per share totaled $0.31, an increase of $5.8 million, or $0.07 per share from the second quarter of 2020
Core pre-tax pre-provision net revenue totaled $42.9 million, an increase of $6.8 million from the second quarter of 2020.
Portfolio loans (excluding Paycheck Protection Program (PPP) loans) increased $189.7 million, or 12.1% annualized from the previous quarter.
The core efficiency ratio of 53.21% improved 352 basis points from the second quarter of 2020 and was relatively unchanged from the previous quarter
First Commonwealth
First Commonwealth
First Commonwealth Revenue by Segment
Revenue by Segment
Trust Income Revenue
CapyFin.comService Charges on Deposit Accounts Revenue
CapyFin.comInsurance and Retail Brokerage Commissions Revenue
CapyFin.comIncome from Bank Owned Life Insurance Revenue
CapyFin.comGain on Sale of Mortgage Loans Revenue
CapyFin.comGain on Sale of Other Loans and Assets Revenue
CapyFin.comCard-Related Interchange Income Revenue
CapyFin.comDerivative Mark-to-Market Revenue
CapyFin.comSwap Fee Income Revenue
CapyFin.comOther Income Revenue
CapyFin.com Forward Guidance
The CEO expressed satisfaction with the second quarter results, highlighting loan growth and commitment to operating leverage despite net interest margin compression. The company aims to continue controlling expenses while investing in future growth, including entering the equipment finance business.
Positive Outlook
- Loan growth accelerated in multiple categories.
- Year-to-date annualized loan growth is within the mid-single-digit long-term target.
- Commitment to achieving positive operating leverage.
- Continued track record of controlling expenses.
- Entry into the equipment finance business to diversify earnings.
Challenges Ahead
- Revenue headwinds from net interest margin compression.
- Decrease from the previous quarter was primarily due to a $2.4 million decrease in fees and interest on PPP loans
- The provision for credit losses was $5.4 million, an increase of $9.8 million compared to the previous quarter when the provision for credit losses was ($4.4) million
- The $1.2 million decrease from the previous quarter was primarily due to a $2.0 million decrease in gain on sale of mortgage loans due to an increase in new mortgage originations being retained in the Bank's loan portfolio and a $1.7 million decrease in the derivative mark-to-market adjustment on interest rate swaps as a result of changes in fair value due to movement in bond spreads, swap rates and counterparty credit risk, which negatively impacted noninterest income.
- Net charge-offs in the second quarter of 2021 were negatively impacted by a $3.6 million charge-off related to an individual commercial borrower.