FCF - Earnings call transcript Q1 2022 | First Commonwealth Financial Corporation

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Operator

Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the First Commonwealth Financial Q1 2022 Earnings Call. [Operator Instructions] Thank you. Ryan Thomas, Vice President, Finance and Investor Relations, you may begin.

Ryan Thomas

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

We've to slide of the the selecting Investor call. on link at a As release Relations supplemental be and a copy website reminder, a accessed will financial fcbanking.com can of also the our Investor information page. top earnings today's presentation be yesterday's by included logging on with during referenced Relations that

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

I Now Mike. will turn the to call over

Mike Price

in I'll moment. in part mortgage decline million PPP and net estimates. quarter pre-provision $X.X reflecting earnings in of million last a gain-on-sale return $X.XX share Pre-tax that or decline fee in for in down per We quarter Ryan. $X.X income, anticipated decline core to to first met pleased due income Thanks, consensus a report were PPNR income, which to largely an the from revenue was a

extent our balance commercial the sheet of PPP, lending are lesser of X.X% consistent consumer and often with as commercial This growth rate categories HELOC about consumer in by of the was granularity. the rates current in portfolio driven increasing long-term to We environment loan the and categories loan rate talk a commercial yields balanced quarter diversification strategy loan by variable and real well. rising but is our mortgage Excluding indirect, the impact first on largely estate. in growth consumer

nice example, lending the in over of increases rates indirect For ending high witnessed in quarter, a course as took the progression threes twos the of low the and the quarter effect. starting price

rate in core five of All the quarter. the March net worked further points, should interest margin net hike expansion by additional in basis to these changes margin rate and together expand result any and interest second hike the

As to I or gain quite primarily but $X.X loans. income Mortgage due on mentioned, of a quarter-to-quarter, compressed. margins are $XXX,XXX gain-on-sale actually fee noninterest million sale strong, mortgage down was originations are decrease in still income

interchange decrease last We holiday had in to decline from a benefits derivative also fourth always seasonal fully in we recorded the we swap income, shopping. quarter-over-quarter due gain income that is which expected swap interchange in $X quarter. million a mostly as $XXX,XXX quarter The

to pressure $XX.X due and company, for we bounce consistent noninterest was every battling Like up guidance. shortages. remainder our factors and other worker with $XX expense the seasonal well wage at year, $XX the previous and of slowing pressure. fee We expect income, to Core controlled given in make inflationary are million quarter of wage per back mortgage swaps million interchange million to for resulting and income

stood loans fronts. of consistent total guidance at were the million per end X.XX%. the from XX coverage expense ratio of noninterest the million to first in with basis seven quarter basis on Total expect at The fourth points. quarter fell this at quarter $XX and or charge-offs good quarter were the credit $XX.X Net this Charge-offs year, well. million the $XX quarter light, We and as between previous was hover points first multiple to end nonperforming million reserve of only $XX.X loans. a

As mortgage remainder the the mortgage rates quarter. anticipated gain-on-sale balance in interest challenges, income asset should lending in $XXX first and we purchase saw the impacted first sensitivity of of forward, be volume. continued increase lending booked impressive Alongside momentum million indirect premiums in as second quarter we $XXX over the year the an Despite Indirect positively spread quarter, look our in sheet. million inventory of healthy contract. given originations should

this and into in business Our commercial largely start carried the remainder loans type small second equity loans. to was and there teams first banking permanent good but construction as home quarter, the we momentum real and In on quarter volume some surface, CRE grew the broad-based the $XX the lending the a record to moving branch-based growth nicely, of commercial loans Ohio and were off loan well. commercial and over is million, expect growing geography year. by estate

This an uptick commercial utilization in XX% the well first quarter XX% XX. see to to started in the really in quarter on pandemic. uptick also significant this double SBA first We gain-on-sale the in more million line is figure XXXX. year-end the March is first from as since rates income of quarter the of of the $X.X in than first gain-on-sale onset income XXXX of the at

our business steadily SBA engine revenue into long-term for growing is company. Importantly, another the

after first Our quarter efforts out from novo and their new coalesced equipment platform the scratch. their finance as in yielded in being leases loans built technology first de

These such terms we pleased the yield. work in equipment but anticipated deals are is technology a company. The of for the trucks tools. machine and such progress remains, on Some size, are exciting an development well manufacturing short as our as time. made we and we've in infrastructure construction with This booked smaller-ticket as and trailers capability agriculture, term commercial included financings what

digital of path adoption our choppy the interest pressure XX% continues channel rate, a coupled the our digital how at is at a rate XXXX also active and users customers. platform and add overall some brisk mobile grew grow highlighting quarter, with to So, with our loan on growth, XX% over at the are pace. environment is revenue growing our In the I'd users broad-based to despite spreads, forward critical active that first annually, anticipated the increases.

our using our turn Lastly, regarding that, fourth an Forbes bank from firm. Reske, for the customers it Commonwealth the With has consecutive view of Jim? one Financial I'll over recognized based team. recognition our banks year, in which best upon comes of Bank the by to of independent and We're proud Three received banks. XXXX analytics customers world's of Officer. their Jim which our Chief as is survey First been results distinction, brand, Pennsylvania this

Jim Reske

Credit question control. income growth The replace income first rise for spread will Fee that, to environment. lower well everyone's movements expected rate margin benign. short, grow are rising to going Overall, costs remains income, as other loan anticipate. on is we seen mind, gain-on-sale is are and Mike. First sources Commonwealth. need things under sheet we in and In is mortgage Thanks, that and generally we've strong. up the To balance anticipated talk however, the net react how interest address about to

the and loan reiterate XX% that same we asset guided time, the year hand, see to story quarter demand. the At liquidity that high loan combined off continued finance, the us, approximately earning growth, redeployment full fund with loan in profitable growth an loan excess run into of we the to we securities For to excess big slowing on anticipate no as growth. We first flow, combined previously strategy equipment so can guidance we our with of that use allowing growth. XXXX. portfolio cash of of We for is had this cash single-digit the year

has of billion far XXXX, XXXX. the So XXXX swelled to $X.X at validating internal at end our in The of end exceeded portfolio that loan securities targets, billion the $X.X from growth strategy.

quarter. As leading core we amount The to measured million first pandemic, combined of X.XX%. expansion put in the in shrank liquidity the our portfolio, the NIM earning quarter, portfolio, the during loan to the of with excess in five-basis securities growth the to the of of it $XXX assets mix a shrinkage work improved point the first

on about sheet, expected PPP continue flow NIM. excess betas especially over effect had balance This, in deposits along growth leading to in the end. hand. us to with so the of cycle to forgiveness, course tightening should we million to quarter however, side the keep have rate liability quarter on much cash $XXX in, the the stated suppressive low, deposit cash allow the slowdown This while of larger still On early a will the are GAAP in if liquidity excess at hikes

like comprehensive or income terms a in many banks, other other decrease in resulted capital, of rates rising OCI. In

size, of portfolios in And for held against have OCI now several maturity. equity protect taken to the third banks by steps our to our internal activity most our on ratios. the like share quarter. of in higher We securities price share fluctuations designating impact than was no roughly quarter first has a years OCI capital for no the had as We most repurchase regulatory targets

have expect in repurchase to capacity. excess second continued advantage take of authorization especially repurchases remaining, resume given however, $XX market we capital We current quarter to and our share million in the share generation conditions,

on Finally, how us. impact some thoughts rate the environment will

positioned and our an believe expanding remainder of increasing are sensitivity, very well Given deliver over interest to XXXX. NIM the we asset net we income

XX disclosed each four we by rate NIM to basis hike five points. past, our As expands in point generally the basis

consensus in estimates. us sooner that cash the respond pressure net scenario relative seven run gives This more assumed year hikes take increases assume evenly rates. the since current especially to latest with will even competitive falls our interest largely place simulations Our be ability over and line deposit larger so this the to the beneficial, raise increases in excess income year,

higher Beyond rate positive. on rate loan of with turn should portfolios replacement our variable the rates, impact yields direct hikes

and loans we onset loans lower at X.X-year already For have on that the a example, of of were our yielding put the runoff pandemic. life, the seeing auto are

impact banks, For using the shocks scenarios. the comparability both ramp shifts yield with other we published of and parallel sake curve of

cash, net shock XX million XX.X% basis Our X which by XX% a well. assume as basis scenario, XX our of about us points. income or interest Those keep rate get And calculations and X.X% excess I cost deposit earlier, pays that have by of a down expands we of while point to should point net to to in over basis million basis X% pays deposits months been data XXX $XXX those deposit of enable XX million figures hikes point interest $X.X We’ve expands our XXX first our over for the thereafter. ramp, mentioned still as show months. $XX.X or able income

ex-PPP. with We questions that year expected two over that, may leverage positive or hikes we’re seven any operating with have. leverage operating positive year you more, with ex-PPP in we’ll to XXXX And quite have confident take

Mike Price

questions. Operator,

Operator

from Instructions] [Operator question Russell Our Davidson. first D.A. Certainly. with is Gunther

open. is line Your

Russell Gunther

afternoon, good Hey, guys.

Mike Price

Hi.

Russell Gunther

color the you of Wanted conversation. guys to that loan on start all the growth Appreciate provided.

equipment the finance that related to on First your remain this going. see at expectation this for that point? unchanged Does growth get piece. Nice year

Mike Price

our know Probably down slightly affects with maturely. were which but XX%. don’t Jim, that not guidance loans, guidance previous what I X%, it

Jim Reske

overall. XX%

Mike Price

Yes. Is that helpful Russell?

Russell Gunther

Mike. reminder, if on quick then rate that is, the should from mean XX, you, and you been could get that to the might XX It to has a there, growth historically, guys. utilization Thank what we color what forward? just And around about going

Mike Price

is commercial about XX Board It’s two all to construction an because an better that that’s a on years hovered billion not or it’s utilization at of XX the million. part with half the but of the low across for $XX consumer, the had time and rate. outstandings just so in meaningful a line really with Yes,

Russell Gunther

Okay.

Mike Price

it So in in And see deal shows their an that see We activity. we to uptick business. certainly work. cash they’re investment, uptick just see small we beginning put an to

indirect pretty business And to going So that well. HELOCs I mortgage feels brisk. is to us for it think just from

Russell Gunther

be consistent Helpful, mix in are expecting kind moderate back thoughts to as in Mike, half commercial you quarter. to well. pick spent and to And on mix up thank diversification the you. your consumer the some with growth levels you side? you loan guys appetite Would around helpful potentially of expect or prove It’d the your current time of loan get then this terms that

Mike Price

Yesh.

the Russell, I’ll on consumer pressure or turn of the last consumer mortgage kind and branch year and to hasn’t thought it HELOCs lending, anticipated way we’ve based and over so, Just of indirect one is over Jane, leading it materialized. primarily, and categories just the

other and and commercial half – momentum the down a me gut resilience last would pleased of really bit, of by growing. business that of side tell consumer in slows but gained want any probably the like my year you second perhaps to to or the consumer commentary? I’m and add it’s how we’re that Jane, So the

Jane Grebenc

only turning of The commercial it slow so that up, not is we’ll be businesses. Mike, consciously going If closed that slow. you that bit, much one down picking equity a that well-positioned a refinances first rates we go I since home I suspect thing elsewhere. naturally agree the with would everything And said. but I aren’t little slow we consumers bit from lending it of is business are turning our to will add mortgages away. up, any as just is around existing of down with

Mike Price

in is ticked have irony has our a available houses just borrowers. we’ve numbers of in build our The the mortgage backyard rates kind inventory the outcome also of And bit as pipeline unexpected grown. see an up, the and for

Russell Gunther

I’ll guys. back. Mike, Well, it step Thank for me that’s my taking for questions. you, Jane,

Mike Price

Russell. Thanks,

Operator

question The James. Tamayo from Raymond next Daniel is with

Your line is open.

Daniel Tamayo

that think the mentioned you overall under assets first, guess I you. $XX in billion you sheet the balance you afternoon, Thank last call through keep XXXX. think everyone. can Good I

that to wanted process. thought if was still the see Just

Mike Price

do It expand that? is. to on Jim, want you

Jim Reske

Yes, the still growth no, it think definitely the cash. excess is. loan We absorbed

to quarter, I looks said cash have that’ll portfolio the because end quarter, fourth sometime and place able this I time growth flowing securities the the probably in third standard still like in but we year. we’ll it runoff think think all that now probably the are last the would excess absorb deposits may loan at still the of $XX in billion take be

Daniel Tamayo

years any kind that? next as operating related relates Okay. that, in billion of it Terrific. over you do threshold, to preparing And to the $XX cross that then couple expenses to of expect uptick

Jim Reske

but some, added there’s in mean focus strong of we been of things anyway, Yes, areas. I those already as there’s been area. risk those those always management built kind compliance, we definitely some all out have for have a us

And our up more. so the there’ll there’s already run reflected rate some to and in definitely expenses

Daniel Tamayo

in banking with thinking you then here kind side the terms And that on give and to maybe assuming me, from of fee fees. items could little on you’re of you allows you’re income in line to Okay. get the if more on what of terms that helpful. detail or other recoup for a That’s of just finally kind guidance of rest mortgage the what the

Mike Price

resilient. side, finish Jim, nevertheless, from but surge that’s we a And from here, so we but contribute is expect expecting and little a rates, sale trajectory on expect now downdraft I’ll a a whole, pipeline feel down has a year. been mentioned, and XXXX get we’ve bit in brokerage at of things trust SBA is Jim volumes good a and start our pretty and What’s let are been mortgage nicely this there good there. we budget. and bit just gone come surprising surprise, We mentioned coming the that the And of we and that they’re gain XXXX had been think the will to the that’ll interchange what business those preapproved else? we highs. with in have who just I finally able and – our increases a in it’s have mostly right

Jim Reske

just just SBA, dollars but really did it a the you that’s emphasized million enough, trajectory. that highlight nice a We I would’ve quarter-over-quarter. didn’t not it’s Mike, Yes, half

expect of that to mortgage take slack lot a We gain the sale. and up grow on and

it So that’s And one just with a commercial is almost income swap always income a fee the first with quarter being lending. statement, fee where swap business. is the you thing, see a strong on that item line commensurate it’s that income commercial the other line then in

we the as grow growth to it expect And as fee up swap well. it as over year of so picks course the to the commercial seasonally income

Daniel Tamayo

for all that all appreciate you. me. color. I Thank That’s

Mike Price

Thanks.

Operator

from is Michael question with KBW. next Perito The

is line open. Your

Michael Perito

Hey, good afternoon.

Mike Price

afternoon. Good

Michael Perito

fluctuations remind for here, the markets? just revenue is us and just through that line just on line any you on income of topic kind just big kind that us secondly, on wondering, looking two fee then just topic to the continue here, spent item? as of I you wanted Can there, of I to side. any how of deemphasize by items them, guys if a be doing just of kind in here, but we impacted you one questions some to what that quick and you’re any some can second larger what banks overdraft the of see – can some the And the thoughts on was remind that, stick time trust

Mike Price

Jane, Yes. with wealth you why don’t start management?

Jane Grebenc

get them Sure. in The business trust them to rich. from rather of than fabulous our thing our that about to us poor is keep most are asked have clients getting

of many big our take risks. don’t are they don’t So bets, fixed clients big in income, they take

for It’s don’t nice swings you business us. us market So a the way expect. might stable hurt

Michael Perito

Okay.

Mike Price

– And immediate we for I a on or of don’t incident we’re expect NSF, bank the rate our and over Jim, add impact. that? material to would size pretty low draft you an

Jim Reske

it’s Well, – – ever the generally think in emphasis of been mild. income few of bank I fee think in are a don’t source our I the for pretty structures that, I general.

be And not to area growth, fairly certainly that the in of stable. income, source we regulatory looking major will growth enhanced that’s a not compared but their but given scrutiny, at peers so

Michael Perito

helpful. And the – to are billion if asset over That’s threshold, right of year puts on you puts at you kind for X.X, the realistically around or $XX assets probably XXXX, XX% Okay. have asset secondly, the piggyback the you next up growth question similar X.X. on earning growth really another right really earn

just think guys to through manage of or hear thoughts. absent any next the year if way think is that to that materializes. the level here, what M&A sheet love having for guys curious assuming mean, level to next us continue I plan about M&A the it Board end you you’ll below no at just XX-month would expanded are balance So around the that you conversations do I fair it any

Mike Price

optimized we've be our to finish. just let and with give start which businesses, or add? equipment balance just would year from finance away Jim, our But the our mortgage what gain-on-sale Jim engineered SBA I'll sheet. totally so probably and is you and being a optionality us those

Jim Reske

you're describing accurately. I Yes. it No, just think

to think $XX we We are the to can. we billion next under try. managing stay would end this pretty able as very year, of But stay balance under say confident be sheet do we'll I And as we'll confident. the year. long about by

our deposit deposit of borrowing then the size A on it that to at position. deposits a be try inflows a $XX bank we'll as the reasons so it but sheet. a think If into keep we position more lot put if in, very borrowing said, And to of sheet deposit balance end XXXX, balance low, gives costs coming get close you it manage run we flexibility will asset one wants difficult we that of makes depend keep those If it it can by, lot does of of the manage the to get low classes betas manage allow a off It's difficult. we inflows. because because the happens, can the in stay to why very bit; little and gain-on-sales to Mike to during sources. into certain billion, deposit

doesn't sell if of you assets, down the can loan have and more production size balance sell sell can you portfolio then could loan the secures pay there's first, no you to and sheet. sheet. pay or that cash off off balance of portfolios. lot and that, banks that balance obviously, the of because track manage sell loan then other the can the flexibility the some But borrowings portfolios, mortgage cash borrowing size you sheet with a converts the and just If a You or position, production

cash. by flexibility will And We'll There's with year, more that. it way we end have but that no see that next tight the around of XXXX. be excess of so some

Mike Price

Yes.

other one at question comment we M&A Just the year. – your to opportunities several is just look every

that's there or to book pretty guardrails but the it like picky. to the buying done just there, another be but we one and than not value company. minimally has deal also haven't for and As harder profitability a accretive just a know, and just we're all the accretive have of our – both – tangible hopefully, you bank. to longer-term And And we two, be constructive companies, our little for within dilutive EPS our feel to really it needs to to year it's

Michael Perito

then script you some at I And appreciate helpful. of adoption all there. for of one stat the Mike, That's just your the question digital end last provided me.

where Just today give investing as your wondering you're to if critical on the move us in looking are keep forward. things business the edge into, are some just try business of side, or you can maybe banking you some we you around just think guys thoughts up-some-updated what of and momentum that technology-wise

Mike Price

really and let good did provide? – I'll a opine the here mid-market catching a the we business with And second. But years have about up and ago consumer We're to Jane, business nice on put we're want in side. adoption. platform ways Jane a on but X.X do ahead small any to we color you in TM go. for side,

Jane Grebenc

treasury management done, year. work expect addition Only front-end in And system we're the loan us. dividends for to are pay that we some doing we to work that this then that And we've treasury later for put this consumer new year. we also credit – platform a card management and the at enhancements looking we're system commercial are in. And that installing we've to already looking

Mike Price

things kind are missed, big Thank I that Those you. Jane. of

Michael Perito

the for taking guys. I color. you, my question. appreciate Thanks Thank

Operator

The next Securities. B. Steve from question with Moss Riley is

Gates Schwarzmann

have disconnected quarter. Gates missed sort of is improvement lot quality this. this moderated. Schwarzmann, curious, – associate. a this I I'm little Steve's But the Hey, release a may bit so saw may earlier, I I reserve credit was have of just

moving provisioning of how sort do we term? think you So reserve guys what in have And longer forward? should the about expectations

Jim Reske

going have we like it start, the adequate. want where is economic lot might would to have the We difficulty that well. have feel that thing to in as He add any that is expense of – Officer may reserve Chief have position answer. where we kind put to Credit and to rebuild as last a I'll provision forward if here large releases obviously it. there One year us we Yes. able our avoid of a we were is. But to

remained that larger is growth pleased relatively strong. low. it's In are pretty and So it's sense, loan in that stable. Loan driven rates by be very Charge-offs going we're a to growth. sense, charge-off

so well. us those you I set Brian, want up think and other And do to two add each offset of to perhaps that? kind

Brian Karrip

perfect tool That's costs part Moody's continue see of ongoing to we answer. GDP what we utilized decisions, the And our see terms We set, then unemployment. factored and our as you of to in fuel and things war. like

Gates Schwarzmann

Very you the reminder the as us not well a helpful. of mix mix, – into sorry, duration but rate securities rate the And give could or variable book? the variable of

Jim Reske

to little securities – that on duration of book curve a of it's we at years. the because movement about of X.X the drives spot when rise quarter, the of was with calculate Duration in – the actually compare rates. yield it's that kind OCI. the the actually just OCI plays calculated extended it And the that to first about We bit end that the

Gates Schwarzmann

sort Awesome. And what gone curious, are you just of a drivers a you growth. lot seeing loan over guys the lot I'm guys geographies really strength? the of for of have

Mike Price

of It's pretty the is strength in broad-based. Most Ohio.

– and That Somerset, Altoona, is but field is have the job Pennsylvania. macro, great Greensburg, PA doing. it in places that books the we Bedford, Dubois, quarter, the is had at being teams in this bigger we're – really did they really ex-PPP along clipping said, a market, have which a like of probably community our lot at of a about We leadership Indiana, which lot they X%, just was – Punxsutawney,

Just impressed. so

We XX% and couple growing for last years have regional Ohio, lighten Ohio all in it really up. the Cincinnati, presidents plus Northern of and Central

across feel by and just then I book. so Ohio by Pittsburgh way, momentum Pittsburgh. far leading is has Northern then the our followed geography. the and probably PA the broad-based biggest community Columbus And about good Cincinnati,

Gates Schwarzmann

Thanks for my taking questions.

Operator

Inc. with question next from is The Matthew Stephens Breese

open. Your line is

Matthew Breese

or we're ago. majority Good get my have for to a today not deal answered, will on afternoon. question sense been any I the closer six The whether were months to just than but M&A piggyback we of questions three, a

Mike Price

Not really.

Jim Reske

factors It's as that drive the same financial it is then now. it strategic

So…

Mike Price

trying. we've three multiple it's tentative, they to was Yes. as to America. just table bless company – don't maybe just get And to or has and really of time, to the have last pay really have team people And momentum to mean they put almost years. I for one together got just you tentative, little things could we or I could Montgomery, bank be don't know. they're more I in that the know, past. in of decided to on times CIO, really the willing been come it lot to work. And couple the doing a and nice the maybe companies constructive mean those – a come I mean two out long – gotten somebody together I've forward couple then it them, have has things, I bit than companies and together and of and that more together But too apart think could better we're and I still we have manage And Jane, a maybe each and And to God maybe companies be we our has two just of gate. have I both it culturally, this Brian, Jim, be sides a done risk. really a Norm think and has execution to and financially a really –

too work has double We what us work that's So It's to not hard. just – it clutch. financially. makes

to and have that that water deals these ago. over in the ideally, fit. the a – oars they demographics have on decade half increase they a side to And And will a as attractive we had simple. the twice some period And revenue that have well. We of are the continue we profitability, add we It's time. really can

Jim Reske

tentative and the I add, word seek If can used Mike to just if.

the is the been we at since because we've five it, we think we at, XX disciplined the I number do actually, have lots least looks. We've because Mike, prefer over looked word think, here tabulate of I to I know deals say I've done. – we

to a So approach. we're we're We It things to or just overreach not And want just we're financially. overpay has in and for – build us disciplined really to going sense our bank. strategically make that very work. larger

Mike Price

want we three the And it. to don't the you have to explain four results six unequivocally. five in see to for even quarters or to We numbers later

went points equal, of decade year XX course, things to all just it or about X of ROA Our that's from ago, trundle being basis happen. but – needs and XX kind what and a every

Matthew Breese

answered. been I All my have other questions it. appreciate thank you.

Mike Price

Thank you.

Operator

Schiraldi Sandler. with next from Piper The is Frank question

open. is line Your

Frank Schiraldi

wanted Jim, to follow scenario, NII this in year. hikes I said with your on line in that think up estimates. consensus assumptions And falls largely guys. you Hi X I NII. include that

So I know that the again, that but is I I get, just you have that check I the sort number. And wanted don't year. I to wanted was but don't – to wanted consensus that? kind just NII was of to specific to I for of implication? how XXX – you how as there, – get did that specific you know what want miss Or

Jim Reske

did to to see guidance I latest phrase say close. number And the Yes. Frank, or XXX.X. was or because consensus it had the kind very any low way need way. of very either give I didn't corrective high I close, The I was that's why

that read year. us us roughly for of and kind I hikes say to analysts way aggregate, seven the fact, baked you the tells you have other that this is cover the In in that it in

you we I have you in. When many seven you each beyond about we how probably model. our your rather of have in because than how got baked hikes know that's that, asking and So It's analysts so close. ran hikes tolling

Frank. that's but So, have, number the I

Frank Schiraldi

you bp get also or on XX rates. on great. Okay, the your what bp in a And increase point XX then

You make to NIM. want correctly. points X in I I'm mentioned basis about just the that And to X sure thinking

You that? about more what's as betas that a floors because then to of of note, time. way commercial move higher is on deposit bit kind both are to to lower of points a basis little sort sheet? balance X some Does off lot side the going steady you do and move in the of lockstep those terms makes Or start the X on – sides it that over think betas the of have and sense,

Jim Reske

Yes.

in side, aggregate; we're commercial the the in the money floor. on the On we're

won't a portfolio. rates of translation commercial the So direct a the be rising floors to hindrance in

So betas on deposit two those before this we're the I because betas, in are worried all about for reiterating really not you X% first and that. lease hikes the assumptions. giving was our

I us is, the gives ability reality even see betas. the lower think cash runoff, the on real to side of unless we the err excess deposit deposit

you pretty expansion other those what make But of an would in we've suggest. the we've better simulations. when points X is that with some And basis X past So might to them the done consistent said models even than the we effects seven did course, follow-on re-pricing of four the if of But this latest about are hikes afterwards. thing. even portfolio same simulation with did even and up stopped, being hikes the ended and there

portfolio. All wires So your in time ends re-pricing to in do ensuing up stop. continued to seven, being it's went enough, it in fixed the gets going then what given up continues But a back when when X and we simulation four in loan it hike. addition any X. after with the to still about there's quarter drift flow a oddly rate And you stuff re-priced if quarters prices over to that,

Frank Schiraldi

to X, okay. X

Okay, you. Thank great.

Jim Reske

bet. you. You Thank

Operator

is Markets. with The Karl from next RBC Shepard question Capital

Your line is open.

Karl Shepard

everybody. afternoon Good

Mike Price

Karl. Hi,

Karl Shepard

mean wanted of things, you households. of couple growing was I growth for XXXX strategic and them the put the value think last you guys have could your was up one longer term? loan looking ask, at What consumer of I strong the the to quarters franchise do back

Mike Price

source the also particularly consumer identify is bank those indirect of with – that team and well. in would on analysis that say of own I great by business lot small the sophisticated new households, nice a – side Well, as – we from benefit think do, the home like to bring then think I Pennsylvania, trying in new We businesses. job bank the material. of mortgage In in Western that cross-selling would of I side, a does our that also have the think consumer it's customer of loans. a equity great households a small think the profitability larger the I I we brethren, households, brand we source and also that I don't I mean its but –

household, household our of part mean, we big teasers, about But think terms value about it get the rest of business. When that have So lifetime we the the that's growth. of in the a I thinking we way. of do to

So we had to some time teasers on time. HELOCs from

add everything think to checking we Jim, the I predicated on have debit that or to now. getting card one Jane? account, want right out swipes getting it's you do there And and the now.

Jim Reske

long-term think a approach in really just you lending, we that I a we add banks or but do balanced you of think too, and, Jane, about commercial always and franchise household size commercial and won't this doing. so diversified be entirely on like broad-based that's much Because we of lot But can I'll jump could think – there's balanced, could as value. build kind just tell, have this, sheet our more we have that bank growth. balance does focused CRE consumer of start

I do long-term don't we franchise so add you if I highlighting appreciate that it. builds and you'd And even growth Jane, And know anything. think

Jane Grebenc

who Whether markets good ours, outgrowing have as see think important markets. the as don't competitors because I who the it's competitors people growing in competitors. just our our high-quality or competitors. the that the interesting our value to people as in question. is But are are faster the the the don't with answer robust a people typical assets don't think assets whether their earning people the are our really enough that I and And demographics less growing are our much It's outperforming we're I than real it's than markets know fact one. really

Mike Price

as business, in last credit, relentless over and that getting cost to And the in our Yes. having small And and relationship. Jane's the half consumer team a and decade. you checking of that's the commercial, and funds are account business small about the improved how steadily non-interest-bearing see that of she cornerstone

Karl Shepard

I number mentioned the I guys doubling I'm you what water. another Okay. you think question as I too, making. the had, investments digital guess That's curious helpful. the of revenue are in oars

a pretty kind maybe the You seem place have friendly success you do into of to bringing What organization, more recently? talent business. in like do

Mike Price

I'm sorry...

Jim Reske

talent success of with that. we're kind into having Brining organization, the what

Mike Price

it's have do and come producers culture. larger TM that side, the Yes. the really people nice with for the to a commercial side, banks sized has think had capable run on from We But from side similarly and the getting banking really banks. I lot a whether mortgage some us, and SBA in to of side, work mostly from

of place as the Joe, team and our to we're in Consumer Commercial Our for Lending add leadership our you a We're in that? hands pretty has a Lending; on. time. And period been what has our market. and Head. Jane, Greg, would of Jane out lot; Head

Jane Grebenc

things. I two think there's

talent. We've We is, We're with for agree But of constantly talent. organization. will run. big we appreciate run pay first looking bringing and entry-level hiring issues Mike. A The the of fairly we good and of let sorts talent all the I a folks same to we the entry-level micromanage part it think had minutia, have don't athletes I that. is into

Mike Price

comment. that Is Great helpful?

Karl Shepard

Yes. Very Thanks everyone. helpful.

Jim Reske

Thank you.

Operator

question is from Russell [Operator D.A. Instructions] The Davidson. Gunther with next

open. is Your line

Russell Gunther

the Hey, thanks follow-up guys. for taking

expense could you Just conversation, that quickly in characterize to around Durbin terms finance, absorb is circling might us then, growth quantify what still the that Jim, to revenue talked in comment, be? And you operating or growth the that asset remind just revenue are terms demonstrate your of And related would hit we've that positive back equipment be? what of $XX about to and as billion leverage? of pressures rates, in able enough

Jim Reske

Yes, number. great about and is million, I say Durbin that question. would $XX Yes. we that published the hit

between already million. absorbed how to be billion of of more can't is $XX tell I and lost we've some a is that line estimated much of you much because get So income. preparedness $XX $XX we've done already absorbed little have costs million $X $X soft billion cross closer. of of But we crescendo and We've as will it's about that we interchange the lot how The million that a a and planning.

an regulators everybody up it. We review review Board else. task set force with and We it to and have our internal

emphasis comes, enterprise a we we'll always very feel ready. have we And strong ours. risk be had it of before, So culture. like been very very like It's said I when a strong

be have you we we'll we it So be will line. much will cost cross just doubt can't something, be It prepared. no how definitely additional quantify though. that that for once I

Mike Price

alone. grow blunt not that, from the it, I We equipment of of we'll include I our a years will to have think robust finance, regions plans overtake that take But credit to bank. if everything to plans the offset even it, continuing the perhaps card equipment and couple materialize. more think finance just in And to

Jim Reske

not ultimately, timing may be. The it right, but exactly Yes. be will

Mike Price

Yes.

Russell Gunther

both. appreciate you Thank it. I

Operator

turn closing further We have for this call over at no time. questions the to any Price I'll remarks. Mike

Mike Price

times. you. the terrific appreciate Interesting Thank questions. I

fun. of in help future our As a It's I talents always cities, these each and part privilege of we of its say, what communities the small we're our excited interest economic Thank to your big about company. the a do vitality and grow. company and you in be the much. of Appreciate to do so

Operator

and this concludes for may gentlemen, participating, you and call. you now Thank conference Ladies disconnect. today's

First Commonwealth Financial (FCF) 27 Apr 222022 Q1 Earnings call transcript