FCF - Earnings call transcript Q4 2024 | First Commonwealth Financial Corporation

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Operator

Hello, and welcome to First Commonwealth Financial Corporation Fourth Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions]

I'd now like to hand the call over to Ryan Thomas, Vice President of Finance and Investor Relations.

You may now begin.

Ryan Thomas

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

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

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

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

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

Thomas Michael Price

of we Ryan, strong of share X.XX%, everyone. the you, quarter met and ROA pre-provision the ROE core fourth $X.XX X.XX% pretax We In a of Thank XX.X%. year of an consensus X.XX%, ended and fourth welcome, estimates profitability. quarter, earnings efficiency relatively NIM a and per preserve ratio with of a

integrated unanticipated pressure, credit months We a we maintaining achieving ended We further deposits, loan sets profitability. XXXX some in we selectively top made believe high-yielding enable last year when one, X the year, categories all focused pricing of hires started, up managed margin, we higher of expenses liquidity face for on that acquisition and on better staying than while C&I another in well stabilized and that and and growth, will us our Durbin. was announced the key grew Reflecting the a position that capital costs XXXX. the year pursued deposit quartile

tepid alone of was led deposit were and grew to in that tepid Finance Average categories by rates C&I and C&I million the well. fourth the deposits quarter, notable Equipment in the was grew spot X.X% the the as bright higher $XX in the year quarter quarter. Importantly, increase. both at balance end a in commercial average large drove the demand consumer load of much customer lending. CRE came portfolio which but in Demand throughout a skewed

year seeing of better the with to grow would our grew from deposits the deposit ratio X%. be A most end fairly across regions, We're the down XXXX growth are high of the year drove with powder or and at the and lend. comparison to on our emphasis for some leaving of at accounts. XX.X% us tasked to $XXX.X core XXs loan-to-deposit end where transaction average an That teams deposits our million dry balanced all

profitability as and our turn growth in is we engine growth XXXX. More now primed importantly, the feel we on sheet for balance loan

quarter, fourth estate selective real to liquidity and credit, due saw we the In some pricing for good activity time after being heightened commercial concerns.

middle C&I emphasize to the acquisition small across continue business. banking We of relationships market, business and

and stems growth backgrounds. C&I Our whom have XXXX markets, strong X key from regional of we and beyond, both optimism regarding in growth loan accountability presidents have new in regional strong

been estate, CRE. believe consumer indirect last runoff commercial behind of in bevy and the aspects and finance, a We've stronger us. we've SBA, and months. acquired loans C&I, the over headwinds portfolio hired gotten leaders We bankers real with XX commercial We've lending. former C&I of talented never the equipment Centric

strive loan will mid-single-digit this year. for growth We

that environment the service XXXX but income detail, $X.X as revenue interest hit fee income, to scaled our half rate higher for to second well. up NIM. Durbin of other seems charges and And a the on expand because fee terms should will we in million up wealth mortgage believe evolving overcame of favor Jim meaningful in help management longer we SBA stepped the and

Credit of levels that credit X loans recognized had provided elevated and costs, were and to charge-off remained this throughout of but driven but a declined position. signaling Centric our We elevated quarter. in the pressures above charge-offs by to lingering our year strength nonperforming we from acquired reflected last and in loans X.XX% continued moderated NPLs fourth peer the had X.XX%, loans in quarter, Encouragingly, the reserves for quarter. lot

by Our significantly XXXX portfolio. were credit loan impacted metrics the Centric acquired

our our migration talent with years with our It's and leverage math. of we this more its and favorable We we've metro above Cincinnati. and that X first help see acquisition bank this build replicate are small XXXX. goes in trends major lot Cincinnati as Center upside is the good which for in mass in existing size. in us the We acquisition. success beyond announced strategic, a enter all led like critical However, markets, of a had asset market in the will bank really well other of cast presence to Ohio's Bank We of a deal

customer Net highs improved branch historic metrics First as Score Lastly, reached for customer the satisfaction Promoter Commonwealth. experience and

improve and to living neighbors continues our is that our lives businesses. and to their financial of around rally the Our mission organization

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

James Reske

combined and of quarter, million fee was million Mike. $X.X $X.XX $X.X is a by largely per in share that expense. million by driven Thanks, of income in quarter from spread improvement our income. offset core On a somewhat a $X.X basis, up quarter expense linked decline in Fourth provision saw last improvement $X.XX earnings we

basis points quarter. the total points basis end in and in the X quarter, NIM X purchase but to of third fourth X had contributed the compression of We accounting quarter, the points basis

of have So without the out would purchase the the fade unchanged. NIM accounting, reported been

in our book deposit quarter. dynamics at X happening you look our were If deposits, this there

last received previously disclosed is over first corporate that deposits quarter. The or quarter. the the of end were million last we quarter by Average fourth in deposit the one X.X% the up million towards $XXX annualized $XXX.X

not was entirely So deposit. less all our due growth point continue average deposits came The in down borrowing of though new as up that basis our modest large while than we at pricing deposits The our book. overall the new result decline total commercial costs, to cost X.XX%. to X acquire to a largely, was

movement funds. dynamic other affecting deposits public The was in

result deposits always were first the of coming decline year largely $XX.X every as decline Our back seasonal end balances, the end-of-period in public a before which by fund of a in million $XXX.X down million, quarter. toward

annualized the for by of an $XX.X X.XX%. fourth quarter growth in rate Turning to loans. Loans grew million

loan year mid-single-digit build laid for projecting are Mike as that We about. we've the upon groundwork growth talked growth next we some of C&I

portfolio that get we the in And headwinds had XXXX so behind in runoff us.

margin together, that that NIM. spread interest the the net in XXXX. We in expand putting So XXXX income will growing growth believe a in loan be of can function

forecasting it stable only that expand the end Our over higher of now XX to in is in X points now. to first is basis scenario, XXXX year. NIM XX quarter, remainder on internal is the next but relatively based the rate than year cuts And steadily the

at should line confident revenue of revenue ] quarter do the We grow of leading return positive acquisition expenses, leverage top share and Bank ability growth in top create [ leverage planned recently second about per a so in Centric acquisition, operating the to Together per improve announced XXXX. our to we starting faster that a line moderate after were with modest before steadily third XXXX over equipment loan year, EPS this in operating guidance, quarter our the and close to contributing will as additional the of of quarter $X.XX XXXX.

swap Fee fact in nevertheless, an hedging that a the of last on $XXX,XXX million fourth the benefit million due to the in despite about in of a income quarter-over-quarter the investment rose BOLI over was Fees interesting story improved income. third improvement gain limited positive quarter about income mortgage income by quarter, $X.X with of a quarter $XXX,XXX on gain and generally Fee onetime a sale over income, quarter. had costs, last $X.X combined net $XXX,XXX course. and partnership in increase

Stepping able than bank a how interchange on improvement, the for hit back of in income more fee of expected that quarter-over-quarter offset a was the impact long been the income because story the of second just good because us Durbin us, XXXX. has to not bit, but half

improvement debit fee a at in interchange up because million, was fee $X.X by wealth $X.X lower whole, million XXXX primarily SBA. than in income last card-related of but as and core back including income mortgage, our income was Durbin Looking indeed due to year-over-year total businesses, year

The on. half dollars XXXX, gradually contributes second Center of in of income ahead we'll look to about a million as of the in we of million fee year. $XX quarter hundred quarter As income $XX thousand generate growing fee Bank ] XX%, the believe in year per few the the the quarter goes -- to first acquisition we [

once Noninterest expense per increasing the $X $X.X realize comparison and losses Fraud second began that in, to noninterest the closed fraud we experienced increases expense million the Bank $X compared $XX will previously quarter largely the detection recent we due jumping Center including some quarter million quarters that as be improved second first merit by elevated quarter. $XX severance in to of staffing. We as quarter items and million expense. the quarter, in the quarter, losses by the acquisition half million approximately to in we enhanced second believe software declined last another in last XXXX, investments about announced and operational in to million benefits kick to of in by

expense from Total quarter. the down provision $X.X provision. million to third Turning in was million, $XX.X

tail is last by and You this of driven experience credits $X of may elevated quarter handful credit quarter's X that charge-off charge-off those our just credits of about totaling experience of million. a a the was largely recall

in for specifically In periods. quarter approximately prior our the fact, $X in charge-offs from fourth reserved of total, million loans

the XXX,XXX result ratios balance earnings sheet buybacks strong quarter, after We've we limited the we announced with as repurchased Center of after acquisition closes. Capital year and shares off but a improved will stock a of shut in the until resuming buyback be growth.

And any have. may will take with you questions that, we

Operator

[Operator Your first question Raymond from James. Instructions] from Tamayo comes Daniel

Daniel Tamayo

mortgage you banking about but specifically on Maybe don't you how just start you from if as we Durbin rate it bit other the But year, if had income? some talk now? gains particularly guidance and just that appreciate curious just run at a can then impact as on and the the card, clear little very decent the I loan you're -- know card think I if the you you Jim, lines, mind, of fees, a out. can laid last the well curious sale the the

James Reske

been pretty us the we but opposed felt impact is of the to quarter, solid. really income, has of credit quarter cards, there's we fourth debit run even as that's long-term consistent are, continue third rate card the the cards more On the hit there doing some but in perhaps pretty benefits in to

of thought looks expect good going this go The and Wealth look then down, income -- as that actually had the that a in that coming continues for tremendous little things of had grow. year, annuities might actually to Mortgage at actually with that but -- business time lot That selling it doing fixed us. think well SBA to when fee a the customers income. for faded end we rates you business were towards well. a bit the to towards a good year, And really slow is out we summer generate a year really time be at a that's

to good fourth And to thing. other don't we I swap quarter more fourth by driven a then things there the customer well. depending fund to was another fee want really business, business quarter. really swapping are where That rate prefaces the movements if what The income the as back-to-back so try. little gain expectations It's good. a on was got fixed in are, you on know swap Mike, floating, as for in

bit a next generated than year. in the to expect we fact, more we generate In fourth quarter

year. next growth think year. of next for the that is we underestimated income amount we fee can actually swap We're generate prime So

So of fee us. not a good source Mike? be income the small for

Thomas Michael Price

a Jim the as than from That's well would about of Yes, it less fourth third, it a little 'XX stated difference be. think downdraft. thought the $X.X quarter 'XX we just to I year-over-year million

we think about X.X%. I pegged

million. So $X.XX maybe at

James Reske

you There go.

Thomas Michael Price

it's last trust there's gain that was in in the is But income there. seeing in $X.X was wealth saw last it fourth X.X%. I year last also think $X.X uptick time really million, We group, quarter year little a just some management was sale our million year, So where this mortgage compensate SBA. and million. better then helped nice Gain This And spreads uptick X%. time was we're $XXX on for on of This year sale very million. $X.X close.

spectacular, So really blunt year-over-year growth but just of and Durbin. compensate not the really that solid pretty helped impact

Daniel Tamayo

Mike really if that's expect great absolutely. to growth. mid-single-digit guidance that's Yes, in the maybe loan more And growth commercial then headwinds off That's for XXXX, start coming curious ramp? Just loan your that's drivers to are XXXX. got that Curious year, on XXXX next accelerate consumer? real a between color. something estate if one for guidance? of that what early or C&I-driven -- you more in the And growth or

Thomas Michael Price

fourth not we good a lot in estate of quarter. credits really, commercial a Well, or the solid quarters doing with quality the of estate quarter XXXX, real after X X commercial in in first real had nice

it. start jump helped that So

sheet a treasury the probably between balance we mechanisms CRE I put think C&I. C&I, get will good support. bank. XX% in will management portion can if Likely, with be And be we We is hope CRE. yoked best-in-class will that and are -- the And that it goal. Long a be will plus we that term, talent, place a it vision, have with we that's

is coming. that So

And Finance bumped and business. continues most capable And roots lending little we and businesses of content just nice indirect, a to satisfied our not leader going and consumer XXXX, that, to were bit. last also year, up have the good up. in where those team pricing because group managing spreads least, then job perhaps ramp Equipment them that handle probably of with our metered turn a XXXX. where importantly, We spreads. the done had like great the really really liquidity in lost bit a The but we we're and has has really that on just little a have

And feels so good. that

on done built division thing other that complements over true so our handful bridge really that he's corporate the a out he's a bank, of is we've is leases just The and impressive to done bank. corporate of

talking but XXXX. we show this line ramp of bed we're be So for pretty We years were get we kind year, where grown about me. Dan, where we know of will and at region every straight. be but this I grew at, of couple falling every and a of And X And enthused, years business you're had how there, probably in back we'll growth our mirror, to of in but a much good clip. it hope bit Hopefully, a a will rearview about be out

Operator

from comes from Markets. Shepard question next Karl Your RBC Capital

Karl Shepard

when it? The next the of know, the guidance confidence other loan the Jim, is that And from just repricing? from let's much you. and gives talk piece Can your how And don't sheet you of a expansion model? the bit on look growth you start just is it calls you for I of year, swaps. balance about versus little half with at NIM what maybe deposit

James Reske

it that. us it. I that. talk is number about we And because see pretty guidance you The to high. you glad a how gives tell about think so asked We I'm to want Karl, chance

So One for of it portion a the ]. half table that things. There's in comes from right, you're the a something website. we swaps [ of Relations that is couple put about our of Investor on out amount

add X year. at the freight to will macro alone points for swaps of as So in basis -- environment looking that a the the NIM we're just XX

I'll is the you side. why. And It's The tell in answer because the asset to so projections looking rest on from? at the our was year question projections the our deposit way ability customer where the is the solve you upswing, predict come -- short so the does when NIM the way are ], ago to aware. in up rates projecting consistently And [ very a weakness we're on we're and rates on maybe

that. we what customer So own and -- we deposits then we make And priced would fairly predicting customers saw their behavior up. was aggressive, choices thought protect and

very we're we're conservative we costs deposit now. conservative, the So in as now, maybe forecast forecasting too way

out on of you, some generally NIM in also deposits of forecast We cost and is our have we the beta loans just assumptions rest, in the are the do I all embedded gave at not the but So rates our that rack all. growth. philosophy, growth. with grow the from fact like want pricing so to we We high the for commensurate that We ratio to to grow want deposits we've loan, there. loan-to-deposit XXs down deposit like the to We'd got keep it 'XXs. going

up have but we showing ends no So deposit want the keep to in deposits. almost reduction there that growing deposit we costs. pricing

it quarter, see market show doing. Now so what the banks internal is reported studies our is We that if costs. everybody you have everybody this in look deposit reducing far that at

for in an So lower billion about to $X.XX example, short, first we mature book, $X opportunity that -- going billion in you of next quarter is us $XXX billion to about give almost and because can't $X.XX everybody so deposits. first year or we the of a the about else. CV there's like half I'll everything billion $X.X have million, actually

basis positive next we year have -- manage basis next replacement we So saw What's but They're on half opportunities as on. the is first as look points year points. to basis forecast went the went we positive replacement we're of XX year about about down XX yields XXX positive it. come yields. in deposit and of because positive about not that They the points about the costs positive that's at in But XX the year. basis on, banking were points on loan happening now side,

propelyield improvement. up the points close portfolio -- to XX to X% X.XX% under yield loan brings loan about that to overall just So of from basis about

it's all the side. I on asset when for give So forecast forecast that is the -- us, all NIM

depends the it rates. course, on Of

the lot. we those update $XXX million we'll on in the $XXX there off next comes move year, trying also And end going in expect quarter-over-quarter, by things next It's and really macro saying cuts appropriate. the gyrate the kick stay we're -- million first X the have new stop to of We quarter, and year. guidance as towards that start conservative to first a forecast really the this don't come off, to next

$XXX May off X. million first comes The on

days. counting we're the on So

color, So helps. that hope lot but that's of a I

Karl Shepard

just little Mike all and us. of I that in then walk makes attracted one No, and that key about got center. a to through appreciate them sense And a what like you can assets Cincinnati know that. to of lot you for Having you pieces franchise maybe of on bit the you? how But some

Thomas Michael Price

Yes. Stuart I we and [ about X area called Milford, on down or straddles years that on then side, just there. ] where franchise mean for or Hill the I've acquisition X through Ohio Bankers a our love known Indian And I Madera through have either an as leg branch.

and just and we'll fits ingrained business. pretty it's has complement seemed And then and board lenders. it commercial well. refer it's some So mortgage the some that in his good -- hopefully, a It is and nicely Board good to ours he pretty community

So nice little -- million like perhaps to powerful -- good can triple that in maybe really in we help combination double we grew new or to of $XXX with there I down market president feel our now, this be million. from it franchise the she can could acquisition. And $XXX that we it's have just and get us a deal leader a really loans

that really and anything size could nice just you want beyond add? it So -- bank. way to of the Jim, powerful is be the

James Reske

partner built No, maybe bank of the nice. big were think really we it happy going like it's to is bank. terms mean We're them really of anyway, And forward. us time, a to It's we Cincinnati in is -- they small a great nice this. this acquisitions love build small I half really decade these we with risk. but in lower just the what erosion a out moves such

acquisitions. small too, open all that So the wouldn't By to these that We're on depends we've got way, it [ do what's available. great receptivity to we ] larger positions. not

Operator

from Kelly Motta question KBW. Your comes from next

Kelly Motta

it in I take deal here. the these? potentially the pace this some appetite more on have was little obviously guess relatively deal and to December, going that. how your I'll to seems really you strengthening conversations follow-up It along small, of announced that and of nice been -- Wondering willingness see

Thomas Michael Price

we Yes, partner The announced and acquire we're after on whatever we the to have deal with bank the with. ground. privilege the day

X enthused president people Just assess market And over and times -- first can people that. with is the help get month we about our the the the getting we already And there, leader meet of find with course they integrated the so us X typically them. there really talent CEO. or that we

family And acquisition helped really X to exciting a grow exciting. it's it's family-owned, grow about I they with little there, billion in like your to or million so before, and bank. And down said we the $XXX X that years. And did $X.XX us

that's those around deals. nice just are line just -- up. mean little So pricing. It's thoughtful them -- I we're And powerful pretty

leave So maybe on bucks the fault, unfortunately. something we'll and table a couple for a of a to share.

we're just a of but through -- we team. And kind good point profitable. to getting just our to we we're billion, $XX and And got we've and still want where grow company, a have

billion pretty the and ahead And feel like are the of look growth we've $XX last years enthused prospects, like some our the in or We to the of talent X years $XX put could us. so bank billion. years at X.X best what on about

Kelly Motta

helpful. of hearing kind the your you of Got understand a was touch to to rating as you risk acquisitions. can through normalization remind portfolio? your portion I it. were related the on are you we prior that how reserves acquired the just wanted talk reserved remaining and specific looks But working ahead, look on NPAs about are of took you like. credits us credit. NPAs provide -- guys more our I of in that really and I banks That's previously charge-off are what credit appreciate also good for

Thomas Michael Price

we our vital in to bank. that we're feel over numbers clean really our we look notwithstanding recent we like I'm turn is this, get we -- team it But place. of this at to through as intimately just Yes, Nonetheless, we Sohocki, involved future the going acquisition, Officer, and And all in Harrisburg But and our and Brian? of grow the credit really Brian in who's to prospects market, at the to Chief have we are Credit like this. where

Brian Sohocki

Yes. Mike. ways. No, thanks, couple of I'll a answer

asset in some across the I last the -- our each over And positive we overall, portfolio, and from in know We in delinquency trends X improvement criticized of nice the on with the saw saw through migration centric First, focus improvement your especially those portfolio. credits the the starting categories is watch-rated assets NPLS. through quarters, board. Centric -- acquired some

in at we saw year down we million, as So $XXX the the over first drop fourth built then saw reduction. that $XX last, the portfolio criticized And the in assets, assets, a by on the the quarter, we've million look just decreased In Centric a overall nonperforming quarter. reduction. movement it, fourth further decreased and the The nice And in third nice then assets Centric criticized quarter. we loans NPLs. watch nice quarter. X.X% and the the some for really in in were loans

the we surely asset of base, into turn percentage in Centric normalization some trajectory trends as portfolio. of more a as we've seen and for year. nice look page and but the So It a in those our provides a next favorable headwind

Kelly Motta

rates seeing up? particularly signs That's Centric How stress, your are portfolio How conversations into borrowers? about And broadly Great. looking with just of holding potentially is staying Are how originated you more any beyond with helpful. higher longer? for the credit credits.

Thomas Michael Price

equipment and We're in things like auto pleased watching finance happened with what delinquency credit thing and how We're Same higher card that's that. here We're more pretty with debt, debt, last Yes. the with there pleased indirect having just with interest closely. consumers quarter. rates unfolding.

I think from basis was points Am the Brian, ballpark? to cut I in in almost half, XX. it like XX

news. And good just it's so pretty

the a for feeling even I And closely. think I bit you there, with have -- we're the rates. are it we XX% think charge-offs Those and portfolio. have guys? longer a so we're term SBA But monitoring guarantee it guidance little is, higher

Brian Sohocki

XX points. to XX basis

Operator

Next question Breese Inc. Matthew comes from from Stephens

Matthew Breese

few A for questions me.

on could Cash on balances whole? be maybe or you on us just just And give securities, some bit side. a update a Jim, as was securities to I one, first stuff. The sheet lower the balance the little hoping, outlook portfolio seem some

James Reske

$XX and Very We remaining extent. in arbitrage million off Feds program, excess this. as Matt. Thanks, million and we We've days that quarters positive lot X back the cash put had about from carrying off it It We ton straightforward. paid participated of we Yes. the that some of the through money -- and left through had that of it to -- we benefited Fed when X year. small think quarters November. that most that some $XXX around lock of in able of year. we've were a cash were on the first talked were was But I We a rate we paid kept we in. had in previously carrying about the and a of last BCFP the to to X of fourth quarter

effect actually had it's So distortive things. such nice, that a but on

us. now we're And a to at behind that more much normal position. nice really it's have basically So

we balanced borrowing So about day, just given right. looking million were that's $XX and I a a yesterday, bank think pretty That's view. on in well my well funded

So that's pretty normal.

portfolio, going about it generally where it is. to On securities the keep we're

there's some off they the quarter. pretty did a where growth. prefunding of with plan We slow. And have do rates beginning fourth still that's the run of there's We for little modest at obviously, are, very -- the off a

your out fund pretty is the and and the stay thought that's million just when one-off big was we about was to to that expected you a when to of flat. that's yield so borrowing kind be for $XXX -- look if you'll of at locked the runoff see and our rates details into because bought bought we So we securities going financials, we the in on XXXX, benefit of then portfolio really rates, curve prefunded a in that's to and are the curve so securities, going the But term went that inverted, it nice. following, borrowing,

Matthew Breese

Got it.

you'd bit in and do to draw you equipment for and loan the of the total Okay. a up terms concentration quick C&I start Mike, of book? to right kind you line portion a of the certainly little whole. Where trajectory book discussed on a financial as

Thomas Michael Price

in my about team less And that it's we like the head vicinity just will is where business. like at. of and way I the and probably debate run. the thought my or really XX% We is We that and

take portion bridge bigger to there almost with know, we I equipment. in athlete don't We A very think we helping business of business, consumer-like the market. I good business. of that the build a can that business corporate -- is the like like it's pie that essential a just have small Maybe could but a bank. lot

kind SBA it of like fits us even. So

And that's the or sure. to going XX% at get so of That's probably XX% but some it blowback can't less, be -- book. for

Matthew Breese

going quarter as get to to think or Again, next that comments like to the so level? the it assume Right. by thinking until grow drive C&I, is book mid-single-digit growth of XX% is this driver. your about you allowance on biggest kind fair I could going XX% portion what's year, to be of that about feels And but it equipment a

Thomas Michael Price

that finance equipment rate. at the grow in will Well, and itself

market go You and billion the like in book has profitability. is any outside most want segment in finance that banking of aggressively. and at of to have terms middle business we grow then C&I valuable bank the through to its that's own that in that one that business that out of feel segments equipment of about small $X We volition, grow the segment book

services, have You and you employees, owners family-owned management cross-sell people. accounts have you and businesses, the know treasury

good decades And and And smaller those for and of relationships, in banks and a kinds talent to skill. like over than get just with relationship. of particularly to us acumen be we'll that through C&I build have them that's hard you able also get concentration very to and things we credit the the know well, feel we do

still excited we're And grow. real And that's commercial probably about. so segment will a most estate

XX%. like to XX think However, like the piece see I'd the to think a XX% prominent of I C&I over years, XX% XX%, portfolio, become to more XX%, I

Matthew Breese

me issuance? a expected kind share the idea what yield for help integration of like NIM get have And the just right? the just their quarter with few what to Or accretable count? do you Jim, On share basically first projection look the any stuff. items, Center Bank accounting deal, should you was What of could is of

James Reske

Yes.

I Second I about think sure because to going question little you We in look over per but the glad don't -- accretable yet, not our much. much. not figure have it's exact be income. estimates. the the have year, you of first. asked, be yield the and don't though, it's I'm appreciated I'll $X disclose their of for this fully spread million I'm quarter at half second a it's expense revenue what

grand million I income, of couple mentioned prepared a fee of remarks, expenses. $X.X hundred about in my of

benefit, X So that's of about you million a be net Hope pickup. of details get. million enough share $X.X after help income that to but about you. tax $X.XX we're to why issuing That's get shares those to some

Matthew Breese

the me gets in helpful. Very ballpark. Yes, Yes.

X last on prior the for X.XX. loan me can Jim, X from comment loan And basically is just Okay. then, go to yields yields your

in prior had the cuts floats. think you're some X/X said you've year I think said this that you comments, about expecting of that I you have book X

And to some so XX like the it book Can feels is help provide going on are going to Fed floating what to -- new help whole down square that the think yields into maybe pretty about steep portion loan the the additional X.XX%. book that have just to all go I to a cuts. bps? other ramp of from X% me be you get you color then to and rate sharply up X/X And of if is repricing to get loan

James Reske

When coming at high look X.X%. we're because down, like Xs, projection X.X%, new rates year's in loans are taking we the we points took Yes, tenure XX points. next next basis around the year, XX in that basis

in that cuts and that The forecast rate planned we in don't our year. November. So late September, helps. like in have come the towards They're

of [indiscernible] the about. that the portfolio but So talking is don't in downdraft really year. end you're we That model, you the our don't get in until towards that get

going of up the yield declining. the rates the together, are work when even what kind to helps year that's So to get in be on portfolio

Matthew Breese

it. Got

the Okay. difference. might That square

Operator

Navas Davidson. next Your [Operator Manuel of from comes question D.A. Instructions]

Manuel Navas

little be end wildcards what less we a the for high XX year? have X other that XQ even the NIM range Could What exit be happens end on do bit is you with -- the points of cut. that -- think basis range of

James Reske

price lets ago So and cut. maybe X in year because X a cut it's for it funny, on at the We kind -- March. the rates deposit we of kind scenario portfolio doesn't or the us all. paycut of asked Goldilocks said with

it, So we constant looking then now we're X at had and too.

baked better are to because where environment. your the it's cute, now, if we So are right have rates the they our X great If question X just a in. rates answer is, stay than forecast

find curve and the book XX-year to pick So we little so get picks the a active down. up that of out lot prepayment with the bit, the a there's with slows that shape of permanent speeds we commercial refinance XX-year a yield our drops the because market another up. goes that And of again,

effects net to products effects yield consumer and demand slows and there's the the consumer then priced up, bit. consumer because on as a a a so some little in So down of goes demand have of when lot it are middle curve on

But than of generally the X. So is speaking, better on X across effects X lots than curve. there's better customers

Manuel Navas

higher thinking point? a point? get know I thought that after that stable point that Or XXXX. That's kind and stay there's at if steep cuts at of the in just would to in X stable expect we be kind curve. And of like it that you yield could question. helpful. those of then have a Like would I get about it NIM kind lot

James Reske

our dropping to what I you guidance. that guide what and and the to been more give think like would he hesitate to projections do our next because had see more wanted maybe able new are if gets off at I'm to better where We're now. Xs the is to will pricing deposit forecast. just in it Xs be because we not from least, continue I going down to I loans cup, had higher to keep get dropping. at it or stopped. quarter to We'll that have they look and can yield, the get than anyone issuing portfolio laid rates be just bring And answer going you XXXX and even I XX haven't to looks out. and continue that's banking. all high to just be

XXXX. think everybody bit for we So and in uses that even there's use a upside just in still cuts quite us the has our the looking that 'XX. forecast vendor I over at this was of But I outside would forecast

So what we have see looks set in like. differently to that

Thomas Michael Price

the a there I"m consumers. finance pub I so counterbalance demand. primes for help In will non add Since there'll scenario thing a helping terms guy, and is be fee of demand. businesses, our that nice only the would the like in It

sudden, All a not a the fee other back in expecting and the businesses. that into mid-Xs. gets kinds of we're If rate mortgage of really table. They on could lot mortgage be

so from there's to us. that, on side it another demand, just could And yes, NIM is what the for aside impact too, the do the

Manuel Navas

for side deposit the moment. a to Switching

come to CDs feel cost of slow and in but look wasn't decline that at your quarter. the will this about components, lot continuing rates components, down Do deposit a much did you that maybe shift product of the But that's it if you talked You mix well? as quarter. the

James Reske

glad asked the Yes. you stuff there is on because going below really surface. I'm

disclosed. that of by Some the distorted was large deposits we

points deposits, X too. that X we total think, or of I that alone, that so So just basis added pond cost brought of X

example. we is X me deposit talk there out, We track the pulled But category to let in this you movement give rescue -- movement to I I'm intra have want this. about in just still a try So chance different categories. I categories. our to

how money example, in on advantage cost lending what our higher to upward many we of market, window. for Again, the take way wrong the because markets, reprice the branch low-cost got we would special it's at of had up, looking

And segment so we it it. we stratify and

our was the And over which XX% category, last of of market by XX% X%. year, was XX% over X%. example, XX% so the in it markets X%, money stratified category. was then only total for rate. money second in is our over of were third entire And deposit category, quarter, quarter Over that largest

that quarter, fourth XX%. down to And in the was

-- retaining we're not really all. the they're way falling what And kind deposit earnings with but that going it now So up to, story with is along show is to the costs call, these very place in X% the and does every renewal maturity you able of this of maturities have ground bring down, on everybody's rotation tier, to the at plans right? next on mentioned been already saw I we the happening rates anyway. we So other to the banks because mature the about deposit of competition down. doing same the thing, we've CD XX% maturities bring to good earlier, a CD

side. So there's a real on deposit opportunity there the

Manuel Navas

All right.

it try across Just you on year for you and swinging like defend of next a and year second, up to you're you to getting NIM that this end defend should this it XXXX year, NIM if consider would keep your have strong a back I the try would something synthetically view the or otherwise? that to year? expect Is you to or towards

James Reske

want interesting we we use think share, language question. we don't for shareholders, to fundamentals, the of to great think we banking because we or to those name, grow earnings we're way to the as It's understand all want not the develop bank, It's try other things. expense grow we grow at ROA, to of NIM value do the to defend an for a the per shareholders. the but about I all have trying we grow try share would just things

great and liquidity relatively for It's for example, been really stars. achievable. they loan our want great. growth, -- is very low period So helped is doing return about deposit just growth. next come us. low we for a not reaching we're digit keep been a But capital the to That's at and we for lot That's normalcy what position. to loan talking growth year, of off normal a of single

organic lot growth, stakes, as of grow balance out just fund table So the we're a thinking is you sheet go. normal

see defend And then happens to going let's that but wouldn't cart what say. apple them, you upset we this. just to see I'm to

place bank a we really but as there's understand will and anyway, then opportunity, core. I to what's rise want that's the take organically, it driving think we the

Thomas Michael Price

Yes, relative profitability we pretty look something that's at closely.

between where the And is of bank, but to terms in ways. part can it XX every stack get profitability. and of billion, of at couple you the equation look -- growth. you quarter. of looking we're is Part $XX If at a $XXX quality banks that billion And different also we profitability of our rank ROA

you get get with good cost with there can We're managers. credit, there can You can costs. get there NIM, with you pretty

be tangible want upper we we think common horizon, financial to it's So of any about we in in performance. obsess quartile there, a but all the equity want our way kind and ROA, the to on in X-year it's be return X- or

James Reske

X Manuel, thought puts a I'm give going fine you more on And to on this point that. Hope it.

you. example, we have it could manage "Oh, deposit opportunity X% down growth really look in where bring you indeed example, got given we be could higher lower. For given don't to this managed at and the to any we hopefully deposit quarter. If the loan for have for we need because costs down we -- deposit thinking just quarter, filtrate have, say, that we growth, in quarter this

term. don't term, nice the deposit long to it that steady the bank we're the management continue of think to to growth our make better bank sure worse. for because it's long live have more for want a to of generally see path for we definitely and funding We

Thomas Michael Price

way, very it. of looks less coachable, We're from by the the

Manuel Navas

this appreciate extra commentary. I

Operator

turn further it and There this at questions time. are will CEO. to President I no Mike Price,

Thomas Michael Price

appreciate Thanks, We company, course quarter. operator. great being sincere and you remainder to you. put Have our over interest a care. number the Thank of a the We everybody winter. with the Take to sleep, Jim. next look of your we forward of in

Operator

conference Thank today's for joining. you. Thank call. you This concludes

now You disconnect. may

First Commonwealth Financial (FCF) 29 Jan 252024 Q4 Earnings call transcript