Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Commonwealth Financial Corporation, Second Quarter ‘23 Earnings Release Conference Call.

I would now like to turn the conference over to Ryan Thomas, Vice President of Finance and Investor Relations. Please go ahead.

Ryan Thomas

Thank you, Bundy, and good afternoon everyone. Thank you for joining us today to discuss the First Commonwealth Financial Corporation's Second Quarter Financial Results.

Karrip, will Financial Price, President Officer; Revenue and call Jim and and today's Officer. Officer; Chief Credit Reske, Jane Brian on be President Mike CEO; Chief Participating Chief our Grebenc, Bank

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

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

Before need statements. this refer the forward-looking the disclaimer from I could a we will to call actual that three statements. uncertainties for page cause statements materially that those begin, description results listeners reflected caution to and differ of forward-looking contain in of Please forward-looking presentation on risks slide our to

call reconciliation these prepared non-GAAP also viewed our today's addition measures. to measures alternative appendix the financial accordance not in slide be include with reported in presentation. of Non-GAAP of for should as measures A an can be and found in results will Today's financial GAAP.

And Mike. it I'll turn over to with that,

Mike Price

and include Ryan, ROA, XX.X% you, consensus earnings margin interest efficiency by of and beat Net headline share, everyone. to core $X.XX Thank Hey. of $XX.X million per Other $X.XXX. net a estimate a which income X.XX% figures translated welcome ratio a of X.XX%.

up to $XX.X million $X.X million, linked a was NIM net basis, quarter contraction. some income On interest our despite

the acquisition the of hit As loans Centric quarter increased. statement, average a grew, full income and deposits

Net $X.X but XX% for with a remained acquisition accounting at was through Our the or $X.X income compared but were was thus million up not with million, X.XX%. healthy of purchase statement. provision did fairly hit low million and reserved marks to the quarter, last Centric $X.X reserve expense charge-offs

was originations seasonally Not increased debit quarter, $X.X were over income sale but mortgage the for quarter million the gain we some to non up sold mortgage only and card XX%. due up fee tailwinds. to to proportion million that $XX.X or on interest Our income last grew

offset $X.X fee expense expense, in the increases to $XX spread costs rose in non-interest deposit by million, income which and revised and customers. a expense, agreement to with Momentum associated incentive was our mailing, primarily due hospitalization to million

of X.X% the end commercial and estate. was of annualized or of $XXX finance growth Loan equipment million at led guidance high and commercial the was our by construction, categories real

average match growth consciously, to were We loan For quarter, up XX%, our funding actively deposits the over our from to March excluding Centric manage deposit June capabilities. balances.

Bank, Recall converted retention Centric are our regulatory as announced In August, less expense had and the the days, in quarter. our acquisition in bank closed the late and as our formerly first capital attracting to last new approval well XX we targets. region, that than we Centric

way deposit led for Community the Ohio, loan Regionally, PA and with and quarter second Northern growth. Pittsburgh us

on further follow. Some reflections second the quarter

categories. Our with and we still deposit and strong an than top CD aggressive growth depository gathering competitors activities quarter less that granular those became second already and focus of saw both In the our continues to diversified. and improve in pricing savings is on

account worked years. this personal overnight for Our period same opening from we've on originated account year. our in-market online just of clear, XX% strategy the has last through improve an than several to This This is doubled story acquisition the more recent checking deposit been continues than that has be more to and no with channel. checking accounts success

but business, portfolio. have while add our to pricing. efficiency and to We're we're businesses volumes, our indirect those beginning subdued our pleased other with Also, spreads we finance equipment on of in requiring the type coupled improve progress sale business mortgage to with SBA gain our and assets and better and continue our businesses, that the indirect

than those off higher on came basis in loans second indirect quarter. the new example, that books For ran points XXX the at

the of in have to In-State Banks as World's earned for recognition the and year Best a by Pennsylvania. one Lastly, Forbes Best proud of in the Banks the are we also row fifth as one

I'll CFO. With Reske, turn Jim over our it to that,

Jim Reske

Mike with a earnings, start balance with so Mike. sheet Thanks I'll started update.

deposit quarter. deposits On of Centric annualized unadjusted the balance Average XX%, sheet excluding but months grew deposits the that's deposit: acquired because only average two we basis acquired Average an the to for our on Centric balances first compared at up of XX.X% first quarter. had rate an were

the XX% deposit the expectation. till Through the deposits, of retained Centric relatively growth is which of everywhere quarter. offset June decline by Essentially the acquired is acquired period balance deposits was XXth we within in end in else, have Center flat

though the by mix steady, increased in the and to from in continue shift balances changes the generally non-interest most were like of money deposits XX we bearing see savings, accounts basis mix deposit of XXX Even points. the The CD, XX points the to market cost from deposits. banks basis

increase but consecutively. points a of the to basis pace been since slowing the three The over continued points second in by Centric And XX. in XX, by slow at XX, of quarter, months year, deposits XX basis X of basis closed is so January did this by fact, only XX increase February of and they the grew points And grew, in the costs rate. deposit has on acquisition cost slowing While the March.

bearing of was in June XX, Non-matured last deposits non-interest from the little points cost XX.X% resulting XX.X% total June that were change of see deposits XX, ratio cycle beta a XXX And we through deposits to XX%. to quarter. cumulative at the at basis encouraged

XX XX the net up while of basis funds of So while up points, only XX X.XX%. leading XX in compression basis basis went margin interest deposit up went overall to points costs points, to loan yields the points, basis cost was

see NIM, quarter we second The benefit from marks. the Centric

of quarter. the liquidity X by basis into NIM the anticipated on NIM $XXX second X.XX So the this points the largely basis million by below points for of month fed of but should about June, with back maintenance today a ended offset is excess about XX boost the effect the of X.XX. in We our quarter suppressive NIM high

our a off calls relative rate back peak on summer, steady interest slow X.XX% the projections by the this that income, deposits rates X% for at NIM indicate to end in based ahead, fall Looking taking XXXX, short-term stability year bringing at pressure rates steepness forecast this of hold growth NIM net and of into and about in some and curve.

NIM asset Alternatively, rates longer, but higher if up. for deposit stay costs, pressure from will increasing come rising will yields hold under

scenario, our outlook So relatively stable. even is that in NIM

has which suggests would predict, However, depositor that potential than I outcomes difficult caution normal. proven behavior of wider range to a

healthcare employees, so show up was our volatility our and our incentives health due deposit costs self-insure based always of expense hospitalization hospitalization, to Non-interest our the some employees. actual disclosures. on We for experience

that So in our are long run. the lower we believe healthcare costs

reversal to anticipation because there returned normal in under to our last this levels. quarter in and only $XX sending to CFPB Incentives assets. updated accruals the customers due cost And deposit for quarter total plus were up of disclosure, agreements billion for was supervision customer crossing coming to

at loan XXX,XXX expansion, to opportunistically average buying below price second retire using weighted support capital quarter, we We shares in were repurchased to shares $XX.XX balance against capital hit back per the We price the internal quarter the a when and of generation shares as opportunity the ratio try second growth cheaply. $XX.XX. in share to

common down increased retained per growth from earnings book ratio AOCI remained in our AOCI. value our CET-X The X.X% tangible brought Tangible $X.XX outstripped increased to an to quarter at XX.X%. equity last however share as from X.X%, increase slightly ratio but $X.XX unchanged

at of became of outstanding a $XX next callable points at the which we rate the over date. that June LIBOR Xst fixed million about X.XXX% basis at through from the course XXX.X will have payment $XXX million bank a at to of month of sell of level debt three and went to subordinated X.X%, convert floating

it And to turn with Mike. back that, I will over

Mike Price

open Operator, questions. line for the

Operator

[Operator Instructions].

Raymond go from of first Our Tamayo Please from Daniel question comes line James. the ahead.

Daniel Tamayo

guys. afternoon Good Hey.

Mike Price

afternoon. Good

Daniel Tamayo

The just I first, as following stable or margin, margin don't see we the or on don't guess hikes up here. we get guidance. if many see we cuts it as get many I relatively

rate of rise. that that that are the see continue – what apologize. climb with if environment, we saying? see cost you're rates suggesting kind you see Sorry do asset the Mark rate you'll same the I the funding hikes, stable around Is stable you But yields to

Jim Reske

of equation a This did bad Dan. I Jim. just is if if the it's guess Yes, It's I hike, definitely hike. part

So putting on the been while points, we're loans quarter, on new and this loans call X%. low basis if books that at the in we've hike, another around that's replacing it's off that books the the on XX second have run been through X%

giving this X% go rates they we'll in stay positive if as continue those see margin the through by us year today the and to benefit in year. So of have to they end, replacement end X.XX%

repriced the That margin constructed a of balance of half with the upwards sticky lot stability new that the then bit loans benefits on give the part from little will half down. comes way we've way we've more a be stability. us floating fixed, sheet and And

Daniel Tamayo

it, growth Got you assuming in this terms what loan And at of are okay. point?

Mike Price

to on if will a plenty of of this guidance past loan there’s kind yoked Our high surprised bit we bit, mid-single equally the a little and but just We've deposit – be engines, continue side quarter, metering growth digit. anything revenue with growth. we're

Daniel Tamayo

well question. was Okay, next my that

last it range balances, those loan-to-deposit rates were in guess and second deposit be is be the question; putting put do relatively same new them ratio expecting quarter on build them as third the to like, growth up to you're sounds on on I to what you for to just the that what what So in expect you quarter? CDs, my you in it similar them and now. the

Jim Reske

targets have – right we these the these the yes, now. So market are specials in

a special at have X.XX%. We

like That's the of when roll rate, story, come half rate. anyone And about CDs incremental half mature, a at the will CD current maturities market full about will So CDs will at that. the because come the we on have not does. the at lot rack on

half that That So CDs new of average is rate. those incremental down. their the that brings cost cost helps growth of the overall CD overall CDs, close to the of incremental

Daniel Tamayo

all my Well, okay. color Jim I Thanks it, that the appreciate Got questions. guys. on and

Mike Price

Thanks.

Jim Reske

Thank you.

Operator

of Markets. from Capital RBC ahead. question comes from Our go line next Please a Shepard Karl

Karl Shepard

Hey, good afternoon guys.

Mike Price

Karl. Hey

Karl Shepard

just of last away pick color that Jim, increases up the it? is conversation on mentioned slowing that? more function hike Can you deposit little Is you the to in on or today wanted I from rate to a there put more a CDs. the cost further getting before the just through quarter. there deposit

Jim Reske

anecdotally kind there's of quarter. much we points, just consumers the a to there's We in and observations confidence I big go up of talked these in so effect No, have. first just some seeing, we're and then when basis us think what XXX give wake about there. an effect it numbers and from X% There's that

in steam the be half first quarter, but in of and to quarter, very year. seem this on more picked first slow steam the third first fourth slow It of the really in in last year. up the the non-existent quarter It –

but it's So of took place. are they pricing, they a X% smaller. lot want And still that says don't someone when want X.XX%, repricing the increments incrementally

of And kind so what been that's observing we've anecdotally.

pressure. We're to there's upward really pricing relatively did the a slowing to see at I – feds and mislead still that there's that story. pressure. scenario, If smaller I pricing idea off to cutting quickly, but We of explain falling them increments upward pressure the there's down that still repricing pace rate definitely helps I come still think the pleased – that the just will starts rates don't mean a of that think

Mike Price

our discuss of we product that. President, meets bank team lines and day our other are our time. Information decisions Montgomery, Jim, of Officer game Chief Jane every making all The And the to Heads our business and week. Norm Grebenc

than the pricing in room year certainly with We aggressive be. have the the more second were in we half be second quarter, to need of

Jim Reske

that And build answer. I would on

I so that was slowly, think – shift quarter to that in first and the the got some relative fairly the so kind in our first second. the of the second deposit of benefit the quarter of aggressive growth less probably quarter, continues. But market that pricing of some and turned pricing

says if chose have be. we be to why that's Mike to aggressive more room So he

Karl Shepard

that's helpful. Okay,

sense. of quarter. first switching the time spent my looks accounts lot a a in tidying lot for quarter first of own like good bank I I guess, Your a comments finance. make up equipment it topics But

$XXX mentioned still had this you seems And that running, Is the want you it's year. expectation? of now out business any fair a there that like really past the to in refresh? balances up and think put expectations in million longer-term kind or I

Mike Price

one? that take you don't why Jane,

Jane Grebenc

the for Thanks question.

to the to I around margin. business coming though, about might is $XXX going because to that year side think or buy, think it, a bit the replenishment just so want either tied on in along on on But and nicely and based indirect capital, equipment we're finance next pleased much it's be I we'll still little as capital it's so prepared beyond, with for clients. calibrate of come don't we how talk in We we I'm much commercial what's that paper million.

Jim Reske

paper, a the prepayments, help direct better. duration steady. and yields just Jane rate and duration nice, I If add continues around more shift the from yields. could business with over shift on is It's in fairly of as with to get an But mentioned, experiences which new the would asset coming And to so just is five indirect yields not if – at right very even think that I the have environment. production mix paper just been the X% years, a class quickly, falling lot

Karl Shepard

quarter. Thanks good for everything, help and the with

Mike Price

you. Thank

Operator

line from question Please go comes the Perito KBW. Michael ahead. next from Our of

Michael Perito

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

Mike Price

bet. You

Michael Perito

expanding just curious, as year, a I the the where – we I of more was XXXX? as But I minutes would guys of challenging just both high-level, too environment NIM missed the done you. OpEx of rate and back look a thinking of guys OpEx investing nice is an about maybe update you and maybe the of Thank you're of and guys the really in kind are side product got space. kind apologize have think to where of much you just you philosophically there, and near-term I on great. of and on investment be half late. if tracking to in tracking are job couple how appreciation I seeing the really kind But without you know this. Obviously, kind

Mike Price

managers figure. the a that pay businesses We've they'll XX feel little swooned that been a the of think nice the even or bit. beat the is have for economy a years, we're pull does keeping dividends and I We not. would over two we lever Jim? expense recover. us And to a or good could you, be as some that How We good continues around right think could to higher. or

Jim Reske

right. That's about

and those. I investments and favor IRR, stewards good we've we managers get think seems of our question the the of on and good we doing think this kind in anything, your capital. been We returns good at also really get of

finance now a that did in up. doing compete we invested building lift we business out we and mortgage So a that that in built out and the with business,

run. So I for those think than more investments really pay will themselves in the long

think a that was good just I Is that right? question.

Michael Perito

all that's very makes and no, sense. Yeah, helpful

the given and generate invest the of Is challenges. slow being summary? to longer some mean, like So focus want high little I a with term leverage not the operating but too kind to as that but a upward here, of hopeful to maybe usual, positive from I sounds kind don't pressure level. business a line, down it much kind to environment of hold of continue the fair say and the

Mike Price

feel and particularly our We we for It longer steady on can some longer term. there's term SBA loan our businesses, growth of We company. deposit fee have room the like bullish is. and uptick an growth in We're mortgage. think

every two last we years we can now, our we in six We're there I we're every businesses subdued. like right focused Regionally, And spoke grew consumer the there. we mean, loan of market not improve think I and to. just, right Jane of HELOC feel certainly lending line – is Equipment have markets. now. in and finance, some each we But in business grew

can we our on funding competitive a and our we've within and the the we it's we're funds leading and of don't But on maintain low-cost advantage terms but The to sells of and the be bit just to we We that in and yet feel little realized what fully communities. depository. bullish in more bank a the capacity like company need direct on future hit of of our the find cylinders. want mortgage, commercial way is kind auto built,

Michael Perito

just and think you your rate outlook there your about of you, room, is maybe as guys. assuming me, what any then on then for stabilization back And year, today, Thank you're and that secondly see half we some based in Helpful. the the guidance.

kind than swaps, these year of have little a that's rebound, items fee be worked would – thoughts? that against some bit where trust helpful For you the on half the that to there looked the rating half run could mean, you your were first love in any year. mortgage, line sight of of has rebound the back lower some I of whether or in even of

Mike Price

a gains $XX ago, $XXX,XXX. And about saw could last or bit were SBA. We're is little million little but and a pretty are lower be versus pipeline through million six that the The a sales $XX they stronger And perhaps decent Yeah, better, tailwind. I nonetheless, year, think mortgage a there. pipeline. than on months year a $XXX,XXX

think I quarter improvement. in $XXX,XXX the second

are I being by more clients. think rates accepted

We're high inventory, homeowners, key the majority rates and – of range, into we once is and have see the influx activity. think the so seeing low in is prequalification inventory. they five I volume fact could a of The fall rates an but

So a move needle bit the little we maybe there. could

and mid-single-digit quite because margin really loan the there focused the important are to spreads commercial in our the growth, we're But businesses grow to higher factor frankly, be more on attractive. just

Michael Perito

guys you color for and Thank taking for helpful. my Very it. Got the here question.

Mike Price

Thanks.

Operator

Navas from question comes of go from line Davidson. D.A. ahead. Our Manuel Please a next

Manuel Navas

of of came just questions and about? Can came return have of been kind Hey, the Centric think you to answered. just I slug that that net of how from a lot kind my charge-offs

Mike Price

that the working mark-up through. with don't credits rest I'll a that. identified that? front good why think and But take the Brian take Brian, I of let did we're the you credits the or job we pretty Yes, that we

Brian Karrip

charge-offs, associated which $X.X $X.X net of Centric for. reserved $X.X portfolio. million we of million about with Yes, reported been the had were previously

annual work for credits, So, credits, the identify those non-accrual credits those, appropriately portfolio, and second mark be you charge-offs through saw workout, on as the then sheet we we that do our either the moved review, actions to elevated. or on we've as line take quarter

Manuel Navas

Is there Just see are. Just kind reserved? wondering wondering that should a the what are if of it? pipeline for more expectations these of we already

Brian Karrip

reserved non-accrual We special do and that been that being on credit in assets have at. worked that are have are for,

Manuel Navas

Thank That's Okay. me. for you. actually it

Mike Price

Great. Thank you.

Operator

of go line Matthew comes Please Our from next the Breese Stephens. from question ahead.

Matthew Breese

Good afternoon.

Mike Price

Matt. Hey,

Matthew Breese

I was the that XX NIM. quarter. over margin you to where the rate? bps some of purchase good a I out points sense hoping to give this for on Could handful start believe contributed basis accounting the just should me next run quarters? that Is XX shake

Jim Reske

that’s – think a question. I No, great

I basis basis out a quarter points of kind that. quarter little then X a X think and to come it's bit. fading X a after down by We kind point or bit going little calculate of next basis about

though, you text invest in sheet, on offset, all the suppressive the back that to excess that. recall the effect release prepared are part the of we the cash So, on remarks of NIM of if and balance starting in earnings also that the was

of today's little That'll help we hike, economically NIM after we'll up the suppresses than happens with that a so, in pick securities, It what awash, more the we XX basis it's maybe rate. points of a at exact invest rate. up little almost And because balance see margin. deposit or some it bit sheet. both now sides that. more, But It ratio. a maybe We as just right borrow pumps upon put the it at certain same

factors two of other. work those will off each of So to continue kind

Matthew Breese

last we back some quarter, the portfolio. some coming I the down, growth think was in something Okay. start to money I point-to-point. mentioned maybe X.X% know see Should that's securities quarters? it And put securities to to Obviously, starting you

Mike Price

purchases securities And Yes, half. I did second in quarter. as the you definitely some had hope some in it. just second We more so. But more should offsetting the now runoff buy we well see

Matthew Breese

Okay.

Mike Price

couple bought We just ago. days a some of

getting more seeing are more attractive little opportunity there. a we're So and the yields

Matthew Breese

full bps the provide. and deposit XXX range I to your XX-Q NII particularly wanted bps bit that X foots cycle XXX was sort the surprising sense XXX is impact some in work bps I a pressure on given the hoping there NII know at X%, considering of the from guess if construction cuts. of, comment kind could on And cuts than which reasonable thoughts a sensitivity of XXXX not you then, this about for you sheet. I point point, less I is off could call around balance basis from of it also of cut, beta kind of rate in disclosures any or whether point is updated NIM XX of to think of to impact, it you to

Mike Price

That’s questions shifts. by concrete those the couple So, of the would a are start our I rate interest there. categorical with are risk. disclosures parallel I'll all start a in saying, XX-Q statement, but accurate.

They And going give so view run, I'm we're are trying guidance trying the realistic you a on to markets what go. to based are shifts. of to where non-parallel little are more

we on our We've Now, doing suppose. holder forecast the forecast. Moody's use and purchased we're of realistic But pretty this consistently. that been weighted depends perspective a the I we using

So decent on weight, baseline, gives and over us and gets think then we We some a change downside perspective and time. upside weight that a don't those forecast put weights. there's we XX% that

is calls for next non-parallel shift year. that And what a

end end the the yes, front stays up. So the down, middle of curve but comes

loans we a that a environment all reprice don't priced have We lot is curve. us of the That's although up at steepness environment curve for you the we and with generally the kind the like. steeper end downward, in banks money have it, the middle some of curve And and make of yield with banks. positive so that more of end

And again, all shows so to a they is working the go in guidance. us sensitivity to dealing prepared is provide as the rate stability, that inputs Q, updated a shift in asset the predict So put pressure non-parallel that and even continue of projection downward caveat I create would environment. with are behavior calls to together that's say subject those industry NIM we'll I of not things when that that and are for into the a and falling all remarks, kind of all published the But depositor difficult what it, my assumptions to whole very in with. that,

though, your forgetting part was another to was it I'm There and now. question right what

If you could back. go

Matthew Breese

Yes. believe kind a between deposit I of we've XX% that full-cycle beta. In thoughts prior for oscillated and I'm quarters we've discussed now. outlook curious, XX%. your is the where

Mike Price

now. glad want It's would this, now be beta now. higher you clear over means. really I because and I It's higher We this confusion asked, what I'm say cycle But the about XX%. to think through there's some industry cumulative

interpret We the as that through cycle. hiking

from the the of today's points the the XXX So to denominator, that's points and XX Fed from hiking. is raised of hike last the basis the that's hikes. XXX, Fed through That because means cycle. That's basis rates

that very wants on to me how the calculate say, industry consistent beta. I the Everyone don't just is the just know give they denominator.

So, my when I tell you denominator. XX%, that's

that's – at to And XXX. hiking XXX it the dividing They so cycle started will X, deposits XXX, say up because up when non-mature that's I go I look like when I'm by forward, ends.

practice would differ, if the things out to questions I ask Other would is. answer guys piercing about all other more what love find it all you that and cover you may

Matthew Breese

you four try quarters? way. different next Where Well, costs expect deposit over peak to a it do the let's

Mike Price

XXX. The going non-maturity to deposits, I think about be are

Matthew Breese

Okay.

Mike Price

and savings XXX. – money market that’s XXX. money are savings checking Interest-bearing interest-bearing And market. the say that's

Matthew Breese

couple follow-ups other of A for Okay. me.

commencing now? year Durbin a First, from updates estimated impacts change any or the from to

Mike Price

the saying at we've lost of $XX and we've disclosed That's always change, No. that's soft dollars million million income, interchange what's in the been in been Q. disclosed couple about a costs. We've and

quarter about kind years. talking that You cost been saw of we this with $X.X the of had soft some disclosures. for that That's we've million for

Jim Reske

a one-time that's though. Hopefully, cost

Mike Price

That one?

Jim Reske

Yes.

Mike Price

are in the really saying estimates hasn't and in Right. But changed. we've what with that those on been past, view our line

Matthew Breese

And months. Got XX are of in out major have just borrowers, or resets XX it, to million you if up in I points think how those stressed over I XX have you environment? that commitments do today's they okay. office its some have on Curious, – highlights what those mature the rate to credits? from Last reached And noticed of the hold analysis any? stress scheduled you curious, one; presentation the next

Mike Price

in the those review exercised a you in We're sheet Yes. line don't in blanks? We're why touching And annual Brian, process. them in touching customers review fill an May.

Brian Karrip

we – loans we that one. around due months, in come one Yes, for each a the the of have XX plan each next

their borrowers. clients. one and look with well We in of plans have maturities meet interest managers appraisal, appraisal relationship resizing, the look rate we very discuss upcoming We advance what an reserves, each clear like. a for to might like, talk our new do potentially So so them about what about may our

Matthew Breese

as Understood. Any red flags work you I outcomes? of sort of kind unfortunate through those? mean, any

Brian Karrip

Yes.

credits nonaccrual have know, as you two pandemic, there. credits into two been that we So, Those we the credits. put office have factoring

We those continue to work million. through for over $XX

As credits, an the outcome space. of the line sheets, two we are in four downgraded Of office those four credits to OEM.

borrowers Again, agreed. expect we and to with have as over of paying those we both were are for the credits credits time. and working each plans those so those And resolve

Matthew Breese

for Thank okay. it, it leave you will That's Got I taking there. questions. I all had. my

Mike Price

Matt. Thanks,

Operator

go line the from Please Scott. Montgomery of comes question from final Janney Daniel Our ahead. Cardenas

Daniel Cardenas

guys. Hey. Good afternoon,

Mike Price

Dan. Hey

Daniel Cardenas

with quickly, move that move this significant we in any the So of saw the decrease on just a see deposit balance, quarter customer quarter? going deposits, there number was – balances customers? substantial the Did this we increase to or in

Mike Price

region, I capital acquisition our had budgeted with that's decrease we we're in there year. first a for – would our budget the say new the and for within Centric

was activity. there acquisition That's expected so we of part a there downdraft that. and And

growth in well. book, six you six like building to start we the And about or the felt the feel good We first of rest and we'll then acquisitions bottom in did the in out think no. having here as there branch done XX get tend there. I months to deals, and they earnest

business the the to side have well, and and gone turnaround has on of focus Centric already our say, quite there. small our the feel we about on I good acquisition retail branch

Jim Reske

but in number I And pretty to I of anything we're disclosive second of balances of stable would quarter. Yes. your balances we’re noteworthy number in is accounts get erosion add, with think question relatively any Michael, wasn't about There a the accounts. the acquired, terms because or talking that. like and like just Centric is trying to

Daniel Cardenas

And but good. for what's right whole good, right, acquisitions, banks, for maybe now, All not environment only asset then terms the of in like subsets?

Mike Price

We're not seeing a lot.

there's of a think Jim, you want But we're encouragement. seeing anything out this at lot and add? to point. there I opportunity a not lot conversations of

Jim Reske

No, I right. that's think

opening market anywhere. more pressures be if there'll more is this funding that commentary they maybe feeling think liability-sensitive larger face up with think sheets. lead opportunity banks, I I smaller and more banks balance color can just probably future pressure are more than you in But so maybe the

so open pretty for it's might quiet. but And now that opportunity, up still

Mike Price

the But biggest relatively Yes. to on you the running have year did. can making still ground offense we're working Closing that's opportunity easy converting hit deal play is now and bank the we sure and that the just later. and right a we

And right so that and energy and focus has a now. lot of time our

Daniel Cardenas

Good. rate me, half last year? tax And in question the of be the your how thinking about I for should back this

Jim Reske

It's a XX%. over hair

amount change. for those other XX% the of acquisition you. sheet permanent it's Let XX% for me Centric, long the rate, is and bigger, the tax been time. But the under actual basically of Effective differences Its a balance all-in-all really didn't XX.XX%, things. and get number tax with whole

closer just income to bit and a little it's a bigger actual federal XX.XX%. rate, that's So now the base tax

Daniel Cardenas

appreciate I guys. Thanks Great. it.

Operator

I call to over Price would closing for the to now Mike remarks. turn like

Mike Price

in help genuine much. and consumers, proud larger we our in you about Thank questions. company. enthused the a of a we of terms companies good and remain time difference communities our your it's us We're businesses your small privilege. your and very interest company. of and make the built how we about the with way future can We and touched businesses, and think for the lot we've you Thank down They

Operator

This and Thank participation. for conclude ladies your Thank call. does gentlemen. you, today's you

You now may disconnect.

First Commonwealth Financial (FCF) 26 Jul 232023 Q2 Earnings call transcript