FCF - Earnings call transcript Q3 2021 | First Commonwealth Financial Corporation

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Operator

Good afternoon. My name is David and I will be your conference operator today. At this time, I’d like to welcome everyone to the First Commonwealth Financial Corporation 3Q 2021 Earnings Release Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. instructions] Thank Relations, Finance you of President Ryan and Vice conference. Investor Thomas, your may begin

Ryan Thomas

Credit you, Karrip, and Commonwealth Bank Revenue afternoon, today Thank today's Jane call Officer. financial good Grebenc, for Mike on our Reske, and us Price, Officer Chief be joining Officer; President results. everyone. Participating Chief to Jim Corporation's and President Financial Thanks First Chief and will Brian third CEO; quarter discuss David, Financial

a the reminder, earnings top can link a today's As copy to release the be of on logging fcbanking.com at of page. accessed Investor by the and selecting Relations

slide with have information referenced that included a Investor call. our be supplemental presentation We financial website Relations will also today's on during

financial these to contain also differ results found caution call risks description our the the our forward-looking should need to in with this And non-GAAP and appendix of statement. Page turn to call refer a that I with prepared will today's reported forward-looking the actual Non-GAAP reconciliation alternative to those Please measures as over be statements Mike. slide measures. financial addition results could that will call to be disclaimer forward-looking on will viewed for, of materially Today's in uncertainties the from A X listeners GAAP. slide begin, presentation. reflected accordance measures and not we for can statements. include of in an of in presentation that, Before cause I

Mike Price

Ryan, Thank and you, everyone. afternoon Okay. good

X.XX% for include, with a core home lending, X.XX%. strength share million return X.X% earnings quarter and PPP very pre-provision ROA was by of of growth solid and commercial accompanied income indirect good quarter lending, mortgage lending. in excluding credit and net pay-offs, $XXX.X $XX.X pre-tax pleased are loan equity of per or quarter core in the growth Commonwealth third quarter with core first, Third loan ongoing of on profitability, First assets of This with we headlines $X.XX million for metrics. Other the lending produced

broad lending become is based the increasingly growth Our commercial and and years. disciplines granular has between over retail

the As over has line an benefited quarters – yet not of over aside, loan higher few from credit the last first growth utilization. our

loan the improved $X.X the growth million add more increase million. a will income and net quarter-over-quarter with Second, interest net enable margin interest Jim on color margin. in $XX.X

Third, on mortgage wealth higher non-interest management grew sale SBA as million of fees well and the as income improvement income. million gain or quarter-over-quarter $X.X in $XX.X to on strength income,

interchange fee $X.X card-related in generated our income. million Importantly,

higher has incentive primarily to in better entry-level been clients. Fourth, regional a to to fee efficiency Our ratio increased collaboration business model as to personnel our income a expense $X.X deliver enabling accruals in core work us rose solutions of some for with increased set noninterest strong positions broader upon higher expense production, contributor due our team including based higher million, XX.XX% wages, particularly growth are credit in year driven and of of half is It happening. and nearing increasingly XXXX clear of to equipment pressure, the second hospitalization by that’s then last we hiring quarter what higher credit headwinds importantly side, in finance division. the the team the that stronger current environment. Fifth, the inflationary to on the we exactly metrics guided the is in expense expense management

reserves the general quarter. million in provision with down of in credits, charge-offs nine loan for in coupled improvement a to lowest $X.X our represented quarter specific just from in second a economic conditions troubled quarters, $XXX,XXX, decrease third The

in of non-performing to now that basis through Our the the a in end third regional be XXXX. loans. SBA quarter items resolved from at is loan early lender and the ending origination points million follow, Subsequent X.X% Similarly, was model The team million selection In just accomplishment quarter reserves our points total results. partnership solutions in enabled XX $X.X non-performing third year alluded with assets. of the October, loans business significantly notable $XX.X credit XX PPP lending to stand of assets loans. will TM the quarter, to excluding in total a new of quarter of troubled of million in or as a transform business quarter Pittsburgh First cash reflected both the SBA continue of significantly reflective earlier. at for management end, quarter Other loans million basis QX Commonwealth now system, and second of $XX.X in well represent XXX% non-performing technologies September a improved total number level $XX the by earned one fiscal XX, third the the or to solutions introducing for clients. several coupled ranking This we and new our talent the as our

our annualized is mobile an App, new at We which of with continue of adoption XX%. rate pleased banking growing be to our

most commercial trajectory As three we year and do this we’ll broad that of investors, I company of based of share our, across plan, our might work would to focus growth first three and relevant organic be areas accelerates it strategic six consumer our through primarily both loan loans. the our through growth

brand satisfaction, operating customer-facing offset identity, expense horizon. and investment And drive digital increase of multiyear to customer over through technologies. use and leverage relevance primarily anticipate third, the a continued to continue and pressure Second, ease to maintain

long realize in negatively finance we will because from impact businesses operating ground at new run. can the building this first like up of powerful operating equipment leverage it a impact leverage think the I on

many received equipment Regarding questions growth, efforts. finance about our we good

update our let an provide progress. me on So

June list track did Philadelphia year the of the a out with a twenty As we team larger of you bank for performance. recall, record in

on with professional trucks, primary trailers, we represent business commercial tool and tools, service ticket lathe and nationwide its been be a industries As type. machine we has the basis. half of more equipment packaging highway that The manufacturing The to included than their business. manufacturing and equipment. run construction truck diversified equipment needs would across equipment use a business enter group’s and a used industries expect small loans essential leases experience of good essential originations on equipment small like example fund, types by industry. A a utility Primary equipment machine and

charge-offs to in in according books $XXX to in $XX,XXX XX average plan, hitting goes to We that, will size average equipment in this ticket I ranging end be $XXX XXXX term some X% to million we X% an team generate to months. can before mid historical And expect the really XX the of range about turn the yields basis stride performance the of and from all on range we XX expect Based and mid points. million with typically spreads If XXXX. of finance Jim. of believe we XXXX our on our over by that with it assets the

Jim Reske

Mike. Thanks,

can were as books September performance interest a up $X.X with be Hopefully, our this already wasn’t The that in points of fee the income GAAP growth and X you by annualized. impacted margin, X% I pleased in provide income we And of X.XX%. more with of we As Mike little to by quarter margin million, million this PPP on expanded recognized. income expenses. organic loan by Total net XX, driven $XXX last PPP quarter. by detail expansion strong quarter. basis over our $X.X financial mentioned, had with third net interest fee remains only NIM was expansion on The $XXX,XXX the to million from PPP. just NIM remaining quarter

the should core securities million way be calculated excess which in the think we and help out redeploy quarter. purchased from on securities, last expect NIM the that we The excluded $XXX money in balances basis the cash, in based the dropped of We effects of NIM. just NIM point excess fourth PPP the X.XX% quarter, would only cash which NIM to we left the core drift will X.XX% as cash and and the from have We not this has because exclude here we X.XX%. most that into should would cash, forgiven quarter loans. remaining core upwards to that PPP NIM, have calculation core of and quarter X we the on calculate to by the sit gap bottomed purchased fell we Had the

point of third cost October of in cost only totaling save million deposits down of points. report to was a a repriced $XX will NIM. that pleased XX, and in am That X quarter a on high X.XX% subsequent our quarter I alone cost million to us about basis interest add Our expense deposits tranche of the $X at end. remaining year last nearly

points, time behind the three With starting us, by XX reap at the the will a in in deposits of that of benefit about we quarter. XXXX. $XXX will We cost of which fourth basis end that are mature down remaining quarters to of million

repricing us very deposit remains, opportunity In taken leaving rate some calculations. far risk along well of rates The that revising are could XX picture interest point at if we very in rise. With the sensitivity work book our positioned repricing deposit while we’ve in entire mind, hard assumptions beta our are interest deposit So, our in the be rate we risk environment. first a rate sensitivity be result our we to ability the light liquidity, to reflect accurate current the pre-tax. to deposit our of levels basis for of believe increases asset assumptions lag will more unprecedented what

asset throughout effectively that margin since our any further. a be give could than chart XXXX once a ever, the expand of first the cash driven above can of in roughly leading rotation IRR you do remain net rise excess we asset portfolio. double so level explain a believe sensitivity wanted the parallel assets will higher our in the earning by lower should previous if point income interest ones. holds the stable the change. in redeployment XXXX story in by rise, hike without we This show XXX this relatively X%. XX-Q flow year that preview, then deposit increase our That’s the will securities loan the even we earning You’ll rate cash in see funded an in and basis rotates to in especially the tables, the rates on rates from would published in don’t end for and XXXX kick be NIM Even if will of This balances growth even loans cash sensitivity benefit in over

at our approximately continues income in more fee increased mortgage of SBA million underappreciated. mortgage in but of Turning us that have of heightened that in levels. last another that Fee a record us after engine and $XX.X behind consistently the our income over related quarter. now income with continues off mostly $XXX,XXX be on levels customer quarter is quarter Card for sale deposit fee CETX and year, is to gain PPP momentum now bright to the topic for million. is returned income quarter will There $X actually last sale pace to slowdown new gain spot of gain a cash up on $X.X is on interchange $XXX,XXX service normalized due SBA income. levels by to to assets company the charges million pandemic accounts much the by and income

Turning $XX costs, to at to in expense, like the expense $XX non-interest million and described. people our came Mike million was guidance related to benefits. experiencing quarter, many mostly peers, we reasons last million of $XX are our for Like salaries and pressures we

some quarter-to-quarter, current levels. difficult to are normal there While falling from see costs NIE it's in variability

can of Fortunately, our loan outpace confidence the our revenue gives expense growth. pace us that growth

shares XXX,XXX of quarter during an of $XX.XX. average repurchased we the Finally, price stock at third

questions While $XX.X Board authorization that authorized an remaining authorization, million have. that repurchase so announce with fourth the we share we generation also excess take authorization, share available any redeploy the of we'll our quarter additional yesterday. could with and next may repurchase $XX repurchase to that, quarter year. $XX million the to increased pleased in We expected approximately into our we have authority ended capital are And million you

Operator

first we'll And Instructions] our [Operator from Mike question KBW. take Perito with

Michael Perito

afternoon, questions. guys. Thanks good my for taking Hey,

Mike Price

afternoon. Good

Michael Perito

growth and of what piece. range kind upward step-up. think to upward do then a like it's kind to lot, a the million just try to of lot sizable the items is that start, off we but mean, It mean, stay. guide, year. kind annualized between that the I mean, might the Or kind it's runrate obviously, of $XX of as year-on-year an then there not is this expenses? this next cost I Jim, describe we of quarterly the that basis? a just I you here can qualitative on is - of type maybe there for I do think low I you kind growth full of guess, wanted see on to sounds of extrapolate single-digits pressure more fairly

Mike Price

expense and expense and in continue sure equipment entry here side on operating realize invest side, – the seven the then of It's unexpected. for vital It latter customer make We're our lot finance we'll like – significant plan us a platform over for have eight million little yes, bit have the lower really $XX position, the The absolutely impacts and and that our we could going or is feel tuck service. in a to to nip next we make which On expenses huge be half sure some revenue number. kind of year. to we does I a new as level things a of have we that. leverage a do and to years, blip last and done

and capacity of to would the have ago. Our bank. XX the XX it than has to are call just center But higher digital blossomed supports anticipated months the costs and boomed we X

So that's really the foundation.

I are sorting think through we it a just bit.

$XX are next make year time-to-time $XX costs forgive at million think me. not we Jim's from And invariably, through we we we that to are that statement for time. million I something announce are but anything coming prepared get we and with is working do grips plans like up to and this - but things sure that that

Michael Perito

Okay.

ahead. Go Sorry.

James Reske

No.

third few that to were always add, it's in quarter-to-quarter. the costs, this. to hard a There were do variability time every give but many. quarter things exactly, not one-time is There Just some we

some kind of there is that's there. – So guidance it’s general like

Michael Perito

Yes. many going mean in out a I it's maybe was of ways. I come say, was to XXXX slightly differently. anomaly obviously bit

that think to do not wage been of pressures the be You that about some below better as are you may call think on efficiency relative PPP at XXXX, it because but year-to-date mean I guys, think XX% comes and XXXX, mean investments for XXXX out, to XX%. it? I of a, right, finance of if it's to I equipment probably you'll just we're I where that ratio way But reasonable we you've the the a be pace mean, year. frame some to

Mike Price

Yes.

Jim Reske

ahead. Go

Mike Price

its we account business platforms, I so. we'll in we also state, current not mean, to other business but think invest the the in invest future. that I is, and think I for only long-term that to reality how have think is about continue the of origination digital tools at platforms

So to really it find – to level we the have in other top on had the investment continue costs opportunity five of and we've and of pressure. years last inflationary find general

but a a that a it’s three to to – plan there is always isn't that changing. year is lot in – needs that be there So and lot be done –

we've it's of We'll at changes to you look the company three business, our every significantly do maintaining Our pretty platforms is but in your leverage It’s of plans if question. two. it terms operating a that years two into there. broadened a year lot continue the long-winded relevance we will how digital them, That's cryptic there. or a next answer, go to not to over invest answer

Michael Perito

helpful. No, now that's

then, know, I was and on the could activities M&A thank wondering like on XX wanted the guys I bit provide then but was last, and forward. expand was last moving me have you update the just on - appetite than maybe a the kind So any capital still an little reported? that of over piece, bit some talk for changes if for a Mike, days environment you to it buyback expecting. you. don't little is more And sounds I others, just,

James Reske

million, remaining capital. about a $XX of I Yes. simple. No, generating mean, it's we're just lot we had sure, but authorization pretty

of think quarter. loan really fourth So we'll We generate in over $XX is growth working. million capital excess the

out so, that of a good run chance is And there we authorization. would

the ready buying case and market dips. so that on stock, to We Board that And and have it's just it'd increase the went the to the so And do back in back we buy we and think prudent accelerate authorization authorization. happens. the way wanted into to go smart to the we we be said

So, there speculative been this prospect is buybacks, in taxes also that's that's perhaps but on at news. point, but of the not the

these background capital by do motivation some now, to but is there driven excess generation. speculative, that's really buybacks So highly

Mike Price

Yes.

had mean, have M&A I the think and five. the Jim over On shared, the front, XX I I we've irons in to do years, over fire

those it have deals path to do us, them. been want of So tended deals. strategically with work deals to has see and of one a we lower every that And type to criteria risk both for we've worked rather smaller those We and nice and financially. our than something have larger execution for kind

our the that's that something making a air, so but between in MO. big There is And announcement. difference is always an there and

Michael Perito

Appreciated. guys. my questions. it. you Thank Got taking for Helpful

Mike Price

Thanks, Mike.

Operator

with And go RBC next, to we'll Capital Steven Markets. Duong

Steven Duong

guys. Hey, good afternoon,

Mike Price

afternoon. Good

Steven Duong

by it? Mike, just $XXX,XXX curious yes, – did environment it the to before. we SBA led good up quarter. was just the pretty I you about was to – what the it Yes, and like gains, that now guess, there jump in $X.X to strong anything are this performance something I specific is million means what guess, are those looks that I business? like, one It

Mike Price

Just sale in we've to made these $X.X intentional. now. million, at was the $XXX,XXX, to $X.X eight $X.X sales We've you very or $X.X that seven up million, soon or It the investments in takes the equipment force. been were to invested several the million, added million million, capacity. like last $XXX,XXX years We've and And quarters, I back past to mean, in over $X.X the be mortgage to if gain and investment major year, platforms. income you finance, SBA on realize go

we game exactly we're business. say business. as just And run. some was in to some Credit our of Jeff hit Brian to they've Officer, run the stride and team comes feel but beginning bigger an we've environment, And that Rosen That's done, from a from crawl, and his runs like likes SBA for who kind to bank to walk, crown what is go SBA platforms intention Jeff real business. of exception this Our Chief large Karrip, kind business a larger this banks.

can't the the it do you have when lifetime. And noninterest of about excited a done quite we really this and a it execute them. think deal get a for who core our make over we that, helps our So, customer you part to income. get we're borrowers And really because the for too, hump have to vision

So we, over quite was frankly our we is PPP communities we thing X,XXX which the just capacity onset $XXX was for and day, of felt we really of like mean, think at did I our business. with And in appropriately so. I the end the PPP, clients. support million, to the appropriate loans with other the our

not it's is fleeting each in this have oars then business had in that the this we're or So, a to now have year. water we I going more one have thing. we a business – two mean and we three

Steven Duong

business? is there business? also, just this any business That's business, the And guess a you not is the something around anybody investments made on it that is bit say of a I in? with and business ground moat continue these jump all growing that Alright. guys you just is the that hit And little just just to can you something the great hear. Or it's there to fair to that it's cyclicality the the

Mike Price

You question? I – Grebenc. do this on Jane to you have going Jeff and know works Jane turn Officer, business. the Revenue Chief Steven's team with closely you our answer and it she and President can over am what, to She's

Jane Grebenc

Sure. you, Steven. Thank

with run Keith about clever pros I SBA said And that we Jeff that platforms. with some been representation. much the business, between have things with important and Possano, have the larger Rosen Mike that done as oversight we've think we've integrating local market very

arguing mutually BDOs and is where think client. got everybody's local our no for So our the structure right about There of interests the aligned. regions no no are are we've fighting, we bickering, what's compensation part

because replicate, too work it's so is all And to but it has nothing tough it to that's fancy, together.

Mike Price

the about about barriers the great A question, to entry. Steve,

banking a right with to it I James two you're think year has be it's three that's with then, integrated and and with or credit important the with tight and loans, our profound a – so that floors That's to we them. local that's we real or talent. SBA and is, there And pretty said the something doing the integration like and get model regional feel markets. business between commercial

Steven Duong

like to is the That's hear. or it mortgage less great And is any cyclical? cyclicalities business there

Jane Grebenc

apologize. I

to up XX% harder think the I it'll work be cyclical to like I because we're going But have think will back I double XX% we are and will that – guarantee. mortgage. on. did of fine. do lot last year going lose next we year. it year, think little more we're pipelines I a to from a have do bit not think regardless normalized by that Last The PPP going guarantee just go to probably today

So closing very underwriting. and in healthy we have pipelines

Steven Duong

Got it.

this business that that such hear forward really a listening I that. rise. on just then higher yes, XXX put great, if if two that's that going a third like that a the great recurring at the so basis and assumptions have It's the there beta a rate sensitivity hike. point data looked beta am Does to number? that is the the helpful, about, I you – And Now then, to rate zero? plus that just hike, sounds And maybe guys wonderful reading what basis point it's with and income appreciate lag first XX or spoke on you you this on mean really right, it fee to the and so, it some beta is it’s rate

James Reske

question. Good Yes, no.

means is on shifts, and The for, when XXX you time. beta then XXX and number beta for as been lag well. parallel hikes to data two you X% click beta. six, XX% seven point do first rate three, XX% beta then four And the studies point a five, the basis our we've the just basis and like historic the and XX% using based deposit for clarify, its to Just some

Steven Duong

Got it.

Okay.

James Reske

just is suggest the feather little second some a I and looked We third, gets too terms the could there – and like in think assumption there of think I a banks of much is We some and with other liquidity that the hike is would in in you lot helpful a we us it complicated. first actually a and at rate that a think accurate hike of more scenario. bit just for this picture it's do rising what

Steven Duong

agree, all guys Yes, mean, one the that deposits appreciate first you you on anybody I totally imagine hikes. considering, can't taking are Well, guys the Thank first yes, rate I I the for is - having questions. for it or right I that's deposits now. taking really really me. you. two the

Mike Price

you. Thank

Operator

And next, Tamayo Daniel James. Raymond we'll with go to

Daniel Tamayo

good from there I explained fees, probably the the is but understood in you sure which quarter, quarter. everyone. the excess in you because And want the that make contracted I for quarter. I you've calculation my core PPP not from expansion of that in come the calculation? excluded talked hear This something the margin past, you core cash was afternoon, Thanks correctly - just taking NIM being that but third question. figure, did said did X.XX% to the the Hey, in about NIM

James Reske

a NIM. look, And core standard is industry we've for Yes. there recognized real that no

and is on Investor available be to We website that careful and try all release reconciliation. our to disclosed supplement want So that the we the things understood numbers, a the so these could do earnings website. give full that It's be differently. of about do kind pretty calculation in of portion publish But of thing. PowerPoint Relations the properly. you about you it We

of PPP the to it trying well, balances. behind because while. will in soon. are as happened NIM. will the the and probably on the then cash, linger distorted the earnings never from PPP effects pretty the And cash numerator denominator us both even for exclude But the are And a if excess We be as the those

practice So through publish we'll a reconciliation next probably year. keep that probably and

Daniel Tamayo

to then, excess in sure for just this assume that. the as are your liquidity What on assumptions, heard sheet? find does said correctly XXXX. Thank And want I'll great. flat make the that going Okay, well, to you. deposits balance I be

James Reske

assumption of comes excess the spent. of mean, I be finally will the part that liquidity from Yes. that idea some

not studies seen We it's spending And the some less in a of we have we looked think idea last normal of got some growth that haven't that behind always deposits that. that noninterest-bearing industry show in down complicated. It's that basic will We quarter. X% deposits at this lot start people I liquidity. it, growth

roughly earning good deposit there So, will is there some each offset but as spend and the deposits down in those that steady. other offset normally two growth that's for and us, - can and both reach higher like redeploy because growing loans. that balances means of the asset excess we sheet, balance sides the or into the cash instead of That's take just idea. And

Daniel Tamayo

all That's catching Thank Understood. putting I have. up me speed. you. Well I and appreciate to you

Mike Price

you. Thank

Operator

& we'll go to [Operator Russell D.A. Company. with Next Instructions] Gunther Davidson

Russell Gunther

Hey. Good afternoon, guys.

Mike Price

Russell. Hey,

Russell Gunther

organic on tracking shakes of a the that rate. Want quarters minute outlook depending last mid-single-digit the on have really XQ spend been above guys couple that front outperforming growth for how to you on out,

equipment you mentioned finance low-end to, start. the that in quite a a million. $XXX quite I mean, Mike, you As that's layer even head look

overall then thinking look and expectations be growth are equipment both the to I call this that outside finance rate into year? you, of it about to how but to layering within, on as you next core So, core don't you is top want FCF, going growth

Mike Price

got I'll a I our me. clean Jane, some up after comments and Yes. report. President make let

Chief from a side. busy. on I call. start Brian got the pretty right been commercial before our Karrip, Let's Credit the The Officer report loan have committees

last left newer real with multifamily and activity a climbed particularly mature, our lot early and May that estate, nice still construction portfolio. industrial are We commitments commitments have commercial really warehouse. turn tailwind are the these and months in seeing several some since over the And nice the but low new utilization in will some projects in outstandings of there as approvals, the

we business As used whether than really at we look quarter are branches the a I feel ago. XX% or because businesses nicely, mean, up then the better it's two it's when commercial magnitude and their less and so. business activity. Jane the look last each order very stride. the there of at And about over we SBA as we or C&I, decade we in it's it to the indirect or And probably lot that like lending have the activity, our mentioned I pipelines pipelines than really chunky de-risk year-over-year. even consumer really we our a in hitting strong good consumer the move be, activity, so been

team you and fundamentally, we and have It's we're focused. really I to feel finance. improve. I future where am the just It's Jane, next I Jane what business productivity. just the has training. increased And Jane, – So, missing? lending continue the at think the about year not of equipment over sexy. would anything that? add It's It's course to notwithstanding good mean, the with

Jane Grebenc

feel tightened consumer about we does I it and of we where didn't that We’ve be to don't to the is, COVID, ratio. you are. a is bit are other I that loosen take bit not manage got the the that have. does Russell all means couple day, that think our But good but little efficiency But yet. did little thinking loan about extra we it so anything, any the a make And tricky missing businesses add, have businesses I always only don't it during problem would I'd the We've thing – on a side Mike. of growth expenses. diversified banks

still I Delinquencies that So the the about historic still healthy pipelines and want. we're feel whole good structure books across it. getting bank. at the the we are really and growing we're lows

Russell Gunther

I appreciate that.

Jane Grebenc

business we're middle It's track. Vendors remote of But a in the about because that. I going everybody's are partners, working fine. stand pandemic, And I so up staying good tough feel good to on and be equipment think all a we're just finance. to

Russell Gunther

loosened comes Thank you, those as follow-up, stride. remix Or at is consumer back just a Okay. continue to Mike. Haven't hitting pace? or Thank similar to verticals any that I yet. mentioned you dial equipment there Jane. you, as on? there appetite guess, the you expect finance Would growth a its just

Jane Grebenc

would we that remix. too it's I say think soon to

aren’t businesses limits. to one close any segment We

are. So way going we think just I can the we can we keep

Russell Gunther

for Okay, thank was both. you it great. Well, me. That

Mike Price

Thanks, Russell.

Operator

Schiraldi with go And next, we'll to Piper Sandler. Frank

Frank Schiraldi

Hi, everyone.

Mike Price

Hey, Frank.

Frank Schiraldi

terms James. then Is it - buybacks, if on remind is earnback? the the there? in where a sort you follow-up could the parameters just is of an around buyback on Just us threshold And wonder of attractive. I where

James Reske

by a of XXb-X it's that's that's by long people it’s say for not under We really understand it – an an but that. in now, not the because I'd not Yes, driven marketplace, we look the and earnback do earnback at rather that the authorization. earnback and we the driven calculation. calculations Right current arrangement, arrangement are in us really blackout, will have

So, $XX. we back buying at below are, right any now, price

under three the with we're we regression authorization, of now out a multiple where of right and our that higher We even trading like With – manager on should And we come price driven not basis, new undervalued. just teams that view at at now, at authorization we are bank look increase had that though we think we we ROE may from be when they're have. days it's analysis fundamentally really as undervalued. say banks shows a blackout the our kind and we're up that with remaining that the that earning we trading are saying by always still than

we that's at more level, that back bought at come back stock, and room think there So, as had because to the buy trading long there'll we're much a look case, this wish is level. day when higher we'll a as we

buyback, the we've past. and accretive the better flexible. in pause an do the that merger, done instead that nice and a we deploy it's is can to there capital like the buyback it's now, the If opportunity So thing is

table, always the just this redeploy the is on to that's way a But well. capital. as So,

other ratios, make The so, underleveraged. thing we're to we not generating because capital, and is up the capital so sure creeping keep we are much want

like at the earnings it. think ex the where we we I is release published probably common of ratio end the tangible higher the in X.X%, PPP range at

plenty our capital to buybacks. So, excess that's deploy of there and in kind philosophy of is

Frank Schiraldi

it. Got

thinking Okay. about to in my sure And of make just then, just it lastly, terms right I'm want modeling.

the of securities given are next does the core just XX kind take guys loan about any that that the expecting, talked purchases, over does loss wondering, bottoming purchases? of cash excess securities additional You you months? NIM and out care Or the assume

James Reske

driven idea that – Frank, through cash had Thanks we securities. loans excess the for redeployed by We, generated cash. and programs into the stimulus excess clarify. and the the really forgiven into as we we We've asking, to pandemic, the through some government gives deployed of some PPP growth. loan the conversion that been of that’s me the chance cash of redeployed a The have in

can about point, our At has its right the sheet maintain that's the in securities So you the mostly portfolios this probably grown, see portfolio security level will course. that at. but it's we run at balance

the from is cash But months. next keep the redeploy and end remaining books, growth should which loan idea level. the more $XXX quarter profitable we was that on it the We at as around close portfolio will to over have we to reinvest the XX into be cash securities that that flow million

Frank Schiraldi

Right.

makes That Okay. sense. color. Thanks the for

Mike Price

Frank. Thanks,

Operator

Cardenas And next, to Scattergood. go & Boenning Daniel we'll with

Daniel Cardenas

question for guys. Quick afternoon. you. Hey, Good

So, improvements and your should continue in we this about reserve expect about given, or given levels last thinking And growth, provisioning ratio growth, go as charge-offs in assets you $XXX minimal should we've well? minimal continue saw loan we quarter the are Does decline as - basis a grow? match how to provisions that million think quarter. just in that on forward $XXX you loan from Should, non-performing guys? you that decline see million loss a and to to we for seen to

Mike Price

– event credit match our Chief mentioned good, are we positive. Officer. there? of answer Because Hey, Credit Brian, the Karrip, this? a Why and have you the Brian, good story our subsequent NPLs. Yes. Brian don't and million charge-offs out feel Yes. We long-term provisioning. drops we Well, on is and you that call. NPAs you're $X

So we well-positioned. are

good loans. non-performing We our coverage have of

delinquencies, We a credit low are have the with in fallen. position they good criticized categories in other with

to in So, pressure some our be modeling release there think probably reserves. I will

James Reske

I'll if Dan, Yes, with just add issues Brian. and we connectivity must have

and So then CECL loan But extra economic conditions. have kind of kind for wild for terribly the formula factors of is aging qualitative that. general of that we the But same. sorry reserving and growth for CECL about remains card the basic charge-offs

to So reserves it's to go general top like affected that economy the the our time good getting really be south, economic finding the look banks south. I'd rationales not is like we by But be color loan that, see not is is pretty could are charge-offs predicted qualitative The that, provision going does driven quality that and south, hard looks hang some asset whole that. quarter change. outlook – like only add growth. could I conversation always by expense And if on so us the have. going to It's for to reserves of on a going the looks that and is it it's good having the

justify that, getting to want have it's quality harder as able harder and and as to of much you going you will So, be probably might to, you the not reserves forward. do

Operator

line is your Brian, open.

Mike Price

Do Brian? we have

Brian Karrip

Can hear me? you Yes.

Mike Price

can We hear now. you Yes.

Brian Karrip

charge-offs. economic to and improvement don't your Okay. I portfolio very much No, in anything really Yes. I think really loan be with And loan our add. on will growth, conditions, spot have answers. around were you It

Daniel Cardenas

the that the Is you in of Great. that equipment one growth. year? last purely you then, place with guidance of the on that here question finance course additional the on factor just that gave does have throughout or in Okay. expected the the team And hires

Mike Price

next hires. that and have a course additional members more They and Board. mean, cadre on over are of it question. the sales great we people people adding in Yes, they'll brass be operations the run I the the XX of That only year. factors the today

that. be cost with some Dan? Is there'll helpful So that associated

Daniel Cardenas

sir. I'll guys. That's Great. Yes, back. have. all I Thanks, step

Mike Price

Dan. Thanks, Okay.

Operator

to additional Executive turn further back Chief At President remarks. no or closing call questions. the are over for any Officer now Price, There Mike this time, and I'll

Mike Price

fee just say deliver always know operating really be quarter both with And course interest on next that. our is broadened company. we one, but I the over think We of our in get the I a I obsessively you I. quarter, leverage. your number I'll try base appreciate story We've to about this, every businesses. of our better the where we Jim and of and

that consumer year. and commercial every We've gears the banking well. really side, a better as the is producing get on income and Our to core non-interest switched us regional growth businesses for and over care. And course you so of about quarter. – of our forward company being again the this you future look and to good but this is thank the with model fourth Take

Operator

call. conference today's concludes This

disconnect. now may You

First Commonwealth Financial (FCF) 27 Oct 212021 Q3 Earnings call transcript