First Commonwealth Financial(FCF) - 2025 Q1 - Quarterly Report

PART I Financial Information This section provides a comprehensive overview of the company's financial performance and position Financial Statements and Supplementary Data This section presents the unaudited consolidated financial statements for First Commonwealth Financial Corporation for the period ended March 31, 2025, including detailed notes on accounting policies and key financial areas Consolidated Statements of Financial Condition Total assets grew to $11.79 billion as of March 31, 2025, from $11.58 billion at year-end 2024, driven by an increase in net loans and leases Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2025 (in billions) | December 31, 2024 (in billions) | | :--- | :--- | :--- | | Total Assets | $11.79 | $11.58 | | Net Loans and Leases | $8.97 | $8.86 | | Total Liabilities | $10.34 | $10.18 | | Total Deposits | $9.86 | $9.68 | | Total Shareholders' Equity | $1.45 | $1.41 | Consolidated Statements of Income For the three months ended March 31, 2025, net income was $32.7 million, a decrease from $37.5 million in the same period of 2024, primarily due to lower net interest income and higher noninterest expense Quarterly Income Statement Summary (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (in millions) | Three Months Ended Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | Net Interest Income | $95.52 | $92.30 | | Provision for credit losses | $5.74 | $4.24 | | Total noninterest income | $22.50 | $23.99 | | Total noninterest expense | $71.25 | $65.57 | | Net Income | $32.70 | $37.55 | | Diluted Earnings per Share | $0.32 | $0.37 | Consolidated Statements of Comprehensive Income Comprehensive income for the first quarter of 2025 was $54.0 million, a significant increase from $30.2 million in the prior year's quarter, driven by a positive swing in other comprehensive income due to unrealized gains on securities Comprehensive Income Summary (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (in millions) | Three Months Ended Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | Net Income | $32.70 | $37.55 | | Total other comprehensive income (loss) | $21.34 | $(7.34) | | Comprehensive Income | $54.04 | $30.21 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased from $1.405 billion at the end of 2024 to $1.447 billion at March 31, 2025, primarily due to net income and other comprehensive income - Key drivers for the change in shareholders' equity in Q1 2025 were net income of $32.7 million and other comprehensive income of $21.3 million, partially offset by cash dividends of $13.2 million and treasury stock acquisitions of $1.8 million[11] Consolidated Statements of Cash Flows For the first quarter of 2025, net cash provided by operating activities was $55.9 million, while net cash used in investing activities was $213.6 million, resulting in a net increase in cash and cash equivalents of $7.9 million Cash Flow Summary (Unaudited) | Activity | Three Months Ended Mar 31, 2025 (in millions) | Three Months Ended Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $55.89 | $39.65 | | Net cash used in investing activities | $(213.56) | $(64.24) | | Net cash provided by financing activities | $165.62 | $187.97 | | Net increase in cash and cash equivalents | $7.95 | $163.37 | Notes to the Unaudited Consolidated Financial Statements The notes provide detailed explanations of the financial statements, covering accounting policies, recent acquisitions, credit quality, financial instruments, and other material information - On December 18, 2024, the company entered an agreement to acquire CenterGroup Financial, Inc. (CGFI), which will add approximately $341.6 million in assets and $302.5 million in loans, with the all-stock transaction completed on April 30, 2025[16] - Commitments to extend credit stood at $2.33 billion as of March 31, 2025, an increase from $2.25 billion at year-end 2024, with the liability for credit risk on these commitments increasing to $5.7 million from $4.1 million[24][26] - In Q1 2025, the company sold its VISA Class B-2 shares, which had a zero basis, resulting in a $5.1 million gain[36] - Total non-pass loans (rated OAEM, Substandard, or Doubtful) decreased to $190.5 million as of March 31, 2025, from $224.2 million at December 31, 2024[69][72] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the financial results for the first quarter of 2025, highlighting a decrease in net income to $32.7 million from $37.5 million year-over-year, primarily due to higher noninterest expense - Q1 2025 net income decreased to $32.7 million ($0.32 per diluted share) from $37.5 million ($0.37 per diluted share) in Q1 2024, primarily caused by a $5.7 million increase in noninterest expense[184] - Net interest margin (fully taxable equivalent) expanded to 3.62% in Q1 2025 from 3.52% in Q1 2024, driven by a 10 basis point decrease in the cost of interest-bearing liabilities and a 3 basis point increase in the yield on interest-earning assets[186][187] - Card-related interchange income fell by $3.0 million year-over-year due to the company becoming subject to the Durbin Amendment on July 1, 2024, after its assets exceeded $10.0 billion[206][207] - Noninterest expense rose by $5.7 million (9%) year-over-year, mainly due to a $5.1 million increase in salaries and benefits, which included higher incentive expense and hospitalization costs[210] Quantitative and Qualitative Disclosures About Market Risk This section incorporates by reference the 'Market Risk' discussion from Item 2, detailing the company's exposure to interest rate risk through gap analysis and net interest income sensitivity models - The information regarding market risk is incorporated by reference from the 'Market Risk' section within Item 2 of this report[268] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures are effective in ensuring timely and accurate reporting of required information - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[270] PART II Other Information This section covers legal proceedings, risk factors, equity sales, and other material disclosures Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 6 of the financial statements, with management anticipating no material ultimate liability - The company refers to Note 6 for details on legal proceedings, stating that the range of reasonably possible losses beyond any recorded liability is between $0 and $1 million[27][272] Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the company's 2024 Form 10-K[273] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported[274] Other Information The company disclosed that James Reske, Executive Vice President and Chief Financial Officer, entered into a Rule 10b5-1 trading arrangement on March 20, 2025 - On March 20, 2025, CFO James Reske established a Rule 10b5-1 trading plan to sell 39,774 shares for diversification between August 2025 and March 2027[274] Exhibits This section lists the exhibits filed with the Form 10-Q, including incentive plans, executive agreements, and CEO/CFO certifications - Exhibits filed include new incentive plans for 2025, executive agreements, and required CEO/CFO certifications[275]