First Commonwealth Financial (FCF) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $37.1 million ($0.36 per diluted share), down from $42.8 million ($0.42 per share) in Q2 2023, with core EPS beating consensus by $0.01 and pre-tax, pre-provision net revenue up sequentially.

• Net interest margin expanded by 5 bps to 3.57%, reversing prior compression and marking the first increase since 1Q23.

• Deposit balances grew 8.7% annualized, while loan growth was modest at 0.6% annualized, led by equipment finance; tangible book value per share rose $0.30.

• Noninterest income rose to $25.2 million, driven by a $5.6 million Visa gain and higher wealth management and interchange fees, offset by $5.5 million in securities losses.

• Expenses remained controlled at $65.8 million, with an improved efficiency ratio at 53.6%.

Financial highlights

• Net interest income (FTE) was $95.3 million, up $2.7 million sequentially but down $2.8 million year-over-year.

• Core ROA was 1.29%, core pre-tax, pre-provision ROA 1.88%, and core return on tangible common equity 15.93%.

• Allowance for credit losses was $123.7 million (1.37% of loans), up 5 bps sequentially; nonperforming loans rose to $57.1 million (0.63% of loans), mainly from the Centric acquisition.

• Charge-offs were $4.4 million for the quarter; net charge-offs for the six months were $8.7 million (0.20% of average loans).

• Tangible book value per share increased $0.30 to $9.56, up 13% annualized.

Outlook and guidance

• Management expects mid-single-digit annualized loan growth by Q4 and into 2025, with pipelines building in C&I and CRE.

• NIM is forecasted to remain stable or improve slightly for the rest of 2024, with cumulative benefit from maturing swaps projected at 10–11 bps by YE 2025.

• Expenses expected to be $67M–$68M per quarter in the second half of 2024.

• Durbin Amendment will reduce interchange income by $6.9 million in H2 2024 and $13.8 million annually starting 2025.

• Dividend was raised 4% to $0.13 per share, payable August 16, 2024.