ファースト・コモンウェルス・ファイナンシャル（FCF）2026年第3四半期決算説明会：NIMは4.10%に到達

主要ポイント

• コア1株当たり利益（EPS）は0.45ドルとなりました。業績には、連邦エネルギー税額控除による470万ドルの一時的な利益（税引前ベースで600万ドル相当）が含まれています。
• 貸倒引当金繰入額は1,420万ドルに達し、これには未実行融資コミットメント向けの350万ドルおよび貸倒損失向けの1,070万ドルが含まれます。個別引当金約770万ドルは、以前に特定された3件の債権に関連しています。
• 純利ざや（NIM）は前四半期比で10ベーシスポイント拡大して4.10%となり、預金コストは7ベーシスポイント低下して1.67%となりました。
• 貸出金残高は年率換算で2.6%増加しました。個人向けおよび法人向けの新規実行額は前年同期比で増加した一方、繰上返済による減少ペースは5四半期ぶりに鈍化しました。
• ファースト・コモンウェルス・フィナンシャルは、平均価格21.18ドルで約8,800万ドルの自社株買いを実施しました。取締役会はその後、さらに2,500万ドルの自社株買い枠を承認しました。
• 経営陣は、今後の金利変更やイールドカーブの変化がないと仮定した場合、NIMは2026年第4四半期に4.20%近くに達し、2027年には4.20%台半ばまで上昇すると予想しています。

主要財務データ

事業および業績の動向

純利息収入は、バランスシート構成の改善、預金コストの低下、貸出利回りの上昇からプラスの影響を受けました。経営陣によると、直近の利上げは時期が遅かったため第3四半期の利益への貢献は限定的であった一方、不稼働債権の利息戻し入れが四半期NIMを約4ベーシスポイント押し下げました。

手数料収入は第2四半期から横ばいとなりました。ウェルスマネジメント、住宅ローン業務、バック・ツー・バック金利スワップの増加があったものの、前四半期に計上された130万ドルの一時的利益がなくなったことで相殺されました。

非金利費用が増加した一因として、長期リース延長に伴う60万ドルの減損処理および第2四半期に受領したベンダーからの返還金50万ドルが今期はなかったことが挙げられます。また、貸出発生に伴うインセンティブ引当金の増加やFDIC（連邦預金保険公社）査定費用の増額も寄与しました。

個人向けおよび商業向けの両部門で貸出の新規実行が改善しました。経営陣は商工業（C&I）向け融資を戦略的優先事項として強調する一方で、単一の分野に頼るのではなく、HELOC（ホーム・エクイティ・ローン）、住宅ローン、間接自動車ローン、商業用不動産、C&I、設備ファイナンスなど幅広く成長を目指す方針を示しました。

投資用不動産の建設融資残高は、当四半期中に1億ドル以上増加しました。経営陣は、これらのコミットメントに基づく融資実行が平均12〜18ヶ月の期間にわたって行われると見込んでいます。また、HELOCの新規実行も未実行コミットメント向け引当金350万ドルの要因となりました。

同社の2027年に向けた投資計画には、テクノロジー、人材、マーケティング、不正防止、バンカーの生産性向上、リード獲得、財務分析が含まれます。ファースト・コモンウェルス・フィナンシャルは、35社のフィンテックパートナーと連携しており、データ駆動型の顧客インサイト、コールセンターの効率化、情報セキュリティ、決済機能への投資を継続していると述べました。

業績見通し（ガイダンス）

• 純利ざや（NIM）：経営陣は、2026年第4四半期のNIMを約4.20%、2027年には4.20%台半ばと見込んでおり、許容誤差はおよそ5ベーシスポイントとしています。この見通しは、追加の金利変更やイールドカーブの形状変化がないことを前提としています。
• 貸出増加率：同社は1桁台半ばの成長目標を維持しました。経営陣は、第4四半期の成長ペースが第3四半期と同等かやや上回ると見込んでいますが、金利上昇が需要を減退させる可能性があることも認めました。
• 手数料収入：2026年第4四半期の非金利収入の見通しは、2,400万〜2,500万ドルで維持されました。
• 費用：2026年第4四半期の非金利費用の見通しは、7,400万〜7,600万ドルで維持されました。
• 預金ベータ：経営陣は、定期預金を除く有利子流動性預金について、預金ベータ（金利感応度）を推定25%として想定しています。
• エネルギー税額控除：経営陣によると、継続的な購入により実効税率が約1〜2ポイント低下し、年間で1株当たり約0.02ドルの押し上げ効果が見込まれます。この利益は取引条件に大きく依存するため、短期的な計上タイミングにはばらつきが生じる可能性があります。
• 株主還元：取締役会は2,500万ドルの追加自社株買いプログラムを承認しており、経営陣はブラックアウト期間終了後に自社株買いを再開すると述べました。

リスクと注視すべき分野

第3四半期における最大の圧迫要因は信用コストでした。不稼働貸付金は増加したものの、経営陣はポートフォリオ全体の広範な悪化ではなく、以前から特定されていた少数の取引先に集中していると説明しました。

大型債権2件が不稼働状態へ移行したため、分類債権は2,600万ドル増加しました。一方で、特別注意要認（OAEM）融資は2,500万ドル減少したほか、ウォッチリスト対象融資は年初来で1億ドル以上減少しました。

ペンシルベニア中央部の約3億ドルのポートフォリオ内には、約6,000万ドルの要注意債権が残されています。経営陣は最大の大口取引先を除けばエクスポージャーは細分化されていると説明したものの、同ポートフォリオが引き続き信用リスク上の逆風となっていることを認めました。

金利の上昇は、特に商業用不動産における融資需要を減退させる可能性があります。経営陣は、さらに50〜100ベーシスポイントの金利上昇が起きれば、一部のプロジェクトで融資を受けることが不可能になり、期日を迎えるローンの借換が困難になり得ると指摘しました。

預金獲得競争も激化しています。同社は預貸比率を90%台前半に維持しつつ、貸出の1桁台半ばの成長と同程度の預金成長で資金調達することを目標としていますが、これには預金に対して市場水準の金利を支払うことが必要になる可能性があります。

アナリスト質疑応答の要点

債権処理：経営陣は、今後数四半期にかけて主要な減損債権の処理を進めると見込んでいます。新しく不稼働となった最大のエクスポージャーは1,600万ドルのC&I向け融資でした。また、ピッツバーグの複合用途不動産向け融資500万ドルが新たに不稼働状態となったほか、既存のピッツバーグの複合用途集合住宅向け融資1,100万ドルに追加の引当金が必要となりました。

引当金の見通し：経営陣は具体的な四半期ごとの見通しを示しませんでした。マイク・プライスCEOは、引当金費用が1,000万ドル未満に戻ることを期待していると述べたものの、個別債権処理の時期や結果を巡る不確実性を強調しました。

預金の維持：ファースト・コモンウェルス・フィナンシャルは、満期を迎える定期預金（CD）の約80%を維持しています。維持された残高の約半数は現在のプロモーション金利へ移行し、残りは同行の据置金利で更新されます。経営陣は、定期預金として更新されない残高の多くも、マネー・マーケット口座やその他の口座を通じて当行にとどまっていると述べました。

純利ざやの持続性：経営陣は、純利ざやの改善を戦略の実行とバランスシートのポジショニングの双方によるものとしました。同行は以前実施した債権売却による流動性を活用して資金調達構成を調整し、CD金利を引き下げ、無利息預金に注力しました。

融資需要：経営陣は、金利上昇が特に商業用不動産の需要を押し下げると予想しています。ただし、貸出増加率が同社の目標である1桁台半ばを下回ったとしても、固定金利ローンのリプライシングがポートフォリオ全体の利回りを引き続き下支えする可能性があります。

決算説明会（電話会議）全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

[Audio Gap]

[Operator Instructions]

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

Ryan Thomas

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

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

Before we begin, I need to caution listeners that today's call will contain forward-looking statements. Please refer to our forward-looking statements disclaimer on Page 3 of the slide presentation for a description of risks and uncertainties and that could cause actual results to differ materially from those reflected in the forward-looking statements. Today's call will also include non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP. A reconciliation of these measures can be found in the appendix of today's slide presentation.

With that, I will turn the call over to Mike.

Thomas Michael Price

Thank you, Ryan. Good afternoon, everyone. Core earnings per share totaled $0.45 for the third quarter. There were 2 unrelated offsetting financial events this quarter. These results included $4.7 million of onetime energy tax credits equivalent to $6 million on a pretax basis. These tax credits helped offset provision expense that came in at $14.2 million. The provision figure includes $3.5 million associated with the unfunded loan commitments reflective of strong production this quarter in committed lines.

The other $10.7 million represents provision for loan losses, driven principally by approximately $7.7 million of specific reserves associated with 3 previously identified credits. Nonperforming loans increased, but the increase was also concentrated in a limited number of previously identified relationships rather than broad-based portfolio deterioration. Beyond those 2 events, the operating trends of our core businesses are strong.

The net interest margin increased to 4.1%, supported by a decline in deposit costs to 1.67% and the impact of the Fed's latest hike on our variable rate loan portfolio. Additionally, consumer and commercial loan origination throughout the third quarter increased year-over-year. Loan payoffs also slowed for the first time in 5 quarters, leading to annualized loan growth of 2.6% in the quarter. Together with current backlogs, these trends support the outlook for loan growth within our mid-single-digit guidance. A 3 principal areas of focus for the near term include better credit performance, generating profitable growth and controlling expenses to create positive operating leverage.

The latter becomes vital to investment in the future of our company. Our 2027 investment plan includes opportunities in technology, talent, marketing, fraud prevention and improved banker productivity, lead generation and financial analysis. Lastly, we believe a mission-driven community bank of our size remains important and relevant to our customers, communities, employees and investors.

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

James Reske

Thanks, Mike. Mike provided the broad brush strokes of our financial performance this quarter, including credit. So I'll spend my time drilling down into our results to help you get a better understanding of the long-term run rate of our financial performance. The credit story is important, but I don't want to overshadow positive trends in our net interest margin, spread income, balance sheet growth and our fee income trajectory.

Before I walk you through those things, however, I want to spend a moment addressing the impact of the tax credits and the buyback on the quarter. First, the tax credits. We have, for many years, purchased credits against our income tax but this was our first foray into federal energy tax credits. We started looking at these tax credits in the second quarter this year, and we purchased just over 50 million in credits in the third quarter. Those credits will be applied towards our federal tax liability for tax years '25 and 2022.

That resulted in the recognition of $4.7 million in tax benefits in the third quarter. We intend to purchase credits going forward, including for tax year 2026. And with that purchase, we will purchase additional credits that we can carry back to 2023 and 2024. Once that's done and assuming the laws affecting the transferability of federal renewable energy tax credits don't change, will let it settle into a rhythm of purchasing tax credits like this every year. We think this could bring our effective tax rate down by approximately 1 to 2 percentage points, which might be worth about $0.02 per share per year, but it's heavily dependent on the terms of each deal.

The other major event of the quarter we're talking about was the full execution of the previously announced $75 million buyback program. We came into the quarter with about $13 million of share repurchase authority from our previous program. Combined with the new authorization, repurchased approximately $88 million of stock during the quarter at an average price of $21.18. That helped rightsize the tangible common ratio from 9.9% last quarter to 9.2% this quarter.

That, in turn, contributed to the expansion of our core return on average common equity to 15.90%, up 24 basis points from last quarter despite the elevated provision expense this quarter. We are also pleased to announce that our Board has authorized an additional $25 million in repurchase authority. We intend to recommence share repurchases next week once we come out of blackout. Beyond the tax credits and the buyback, however, there are positive fundamental trends in our revenue that are worth talking about.

Our net interest margin or NIM expanded by 10 basis points from 4.01% last quarter to 4.1% this quarter. We were able to decrease deposit costs by 7 basis points last quarter. The September rate hike came too late to have much benefit on loan yields in the third quarter. But loan yields in the third quarter were held back by the reversal of accrued interest on nonaccrual loans, which created a drag of approximately 4 basis points of NIM in the third quarter.

Looking forward, with no further changes in rates, which means no hikes and no changes in the shape of the yield curve, we would expect our NIM to rise to around 4.20% in the fourth quarter and continue to rise into the mid-420sin 2027. We all those estimates are give or take 5 basis points as perusal. I'd also point out that if not only NIM that is a good story for us, but our net interest income increased as well by $3.9 million last quarter, an annualized rate of approximately 13.7%.

Fee income was unchanged from last quarter, but that's only because real progress in core fee items such as wealth, mortgage and back-to-back interest rate swaps was offset by the loss of $1.3 million a second quarter onetime gains we didn't have this quarter. Our previous guidance for fee income to range from $24 million to $25 million per quarter remains unchanged for the fourth quarter. Expenses were up to quarter but were impacted by several discrete items. We incurred a $0.6 million write-down on the extension of a long-term lease, but it will save us money in the long run.

In addition, we received a $0.5 million reimbursement from the vendor last quarter that we obviously didn't have this quarter. Those 2 items together accounted for about $1.1 million of the quarter-over-quarter swing in expenses. The other major increased expense items included incentive accruals primarily related to increased loan production and our FDIC assessment costs.

Looking ahead, our previous guidance of $74 million to $76 million per quarter remains unchanged for the fourth quarter. We will provide updated noninterest income and expense guidance for 2027 in January as we have done in the past.

With that, we'll take any questions you may have.

Operator

[Operator Instructions] Your first question is from the line of Kelly Motta from KBW.

質疑応答

Unknown Analyst

This is Megan Mens on for Kelly Motta. So your deposit costs trended lower, very good trend. And so I was just sort of wondering how sustainable you guys thought this was in a higher rate environment and with any competition? And last rising rate cycle, your deposit beta was just under 40%. So any thoughts on what you thought that was going to be in the next set of hikes?

Thomas Michael Price

Jim, you start.

James Reske

Yes. I'll just offer a couple of thoughts on that. One is we do see deposit competition heating up and our long-term goal is to grow our deposit base commensurate with our loan growth. So we look for mid-single-digit loan growth, we would like to fund that consistently with deposit growth to keep our loan-to-deposit ratio where it is now in the low 90s. And that means we have to pay market rates for those deposits with the competition heating up in a rising rate environment, we expect our beta to be consistent with the way we calculated our historical beta of 25% with CapEx that are nonmaturity deposits, interest-bearing deposits, not including time deposits.

We do a lot of -- we actually pay outside vendors to look at our deposit base to kind of accurately assess where our deposit betas have been in the past, so we can have a good estimate for the future, but that's the estimate we're using about a 25% deposit beta. So hope that please answer some of your questions on Mike, you want to add?

Thomas Michael Price

It's a bimonthly exercise. Every other week, we are getting together as a team and trying to understand the texture of exactly what you're talking about. And where we might attract some money and also how we might manage that for margin. It's a fun conundrum.

Unknown Analyst

Okay. That was helpful. And then I also -- like you had very strong noninterest-bearing deposit growth and time deposits came down. So can you sort of provide more detail on the drivers of that as well as upcoming maturities in CDs in the next quarter and the rate they're maturing versus the new offering rate?

James Reske

Yes. A couple of thoughts. We do the last 18 months or so, we had CDs at shorter-term maturities, but every bank was doing that. So nothing really new there. We're kind of keeping a term short and that was working. Earlier this year, we started going a little bit longer. We had some doubts whether a 15-month CD would attract customers and balances because customers simply don't like to go beyond 12 months, but it worked very well for us. And that was probably because we had a very strong customer perception of a falling rate environment.

So if you saw a good rate at a longer term, it will be on 12 months, we are able to gather funds in those accounts. Now there's a shift in the customer sentiment towards a rising rate environment, so it's harder to get customers to do that. But the way the structure we have -- a number of CD maturities coming up soon. I wouldn't call it a cliff or anything that's unmanageable. But because those rates were short now, a lot of those seeds are maturing, and we're dealing with that as they come.

Our CD retention rate has been fairly consistent over time. We're -- I don't think it's that different industry averages. We're able to retain about 80% of the CDs that mature. The 20% that don't generally tend to stay with the bank, they go into money market accounts or something else on as those rates are close. The 80% of do stay, about half of those will want the current special rate, whatever that is, and the other half will roll to the retention rate we're offering them. That whole process works, and that's a lot of the way we manage the rate cost -- the deposit cost of the bank, that's worked well.

Thomas Michael Price

Yes. I'd just add that the texture of our depository on the noninterest-bearing side is about 2/3 commercial. And so a lot of that might be more seasonal. And it's really overall though, about 2/3 consumer when you consider time and noninterest-bearing and now. And that's really at an average size, it's much smaller. So it just doesn't have -- it has a little less pressure there, and that's really good for us. So we have really a consumer-oriented granular depository that's really served us well through the last 2 cycles.

Unknown Analyst

Okay. And then just 1 more. You were active on the buyback this quarter, and I know you said that you were going to resume them next week. Could you give any like color on the run rate or put in numbers to it? Or is that all we get?

James Reske

Yes. I just -- we announced because our Board authorized did a $25 million authorization. And then 1 of the reasons we do it in $25 million chunks like that, unlike the 1 we did last quarter with the $75 million is that, that allows us to do the repurchase just due to the amount of retained earnings we have after paying a dividend to shareholders. So we don't want to telegraph in advance because we don't always know in advance. And even if we do, we wouldn't want to say it is the precise timing of when we do those kinds of buybacks. I just can tell you that we'll be back in the market next week and so we'll be active in the buyback.

Operator

Your next question comes from the line of Daniel Tamayo from Raymond James.

Daniel Tamayo

Maybe just starting on the credit side, if you can just kind of touch on your thoughts on the path of resolution for the increase in the NPLs and the classifieds?

Thomas Michael Price

Yes. I'll turn it over to Brian, but I would just share with is, we had 3 identified credits that made up the bulk of the reserve -- specific reserves this quarter, they were identified. We still have probably about 20% of our criticized is really from our entree into Central Pennsylvania. So that's outsized, and we continue to work that down. And the complexion of that is probably about $60 million of $300 million or so criticized. There's just 1 larger loan in there that's about 10 and probably 1 over 5. And then after that, it's pretty granular.

Brian, what would you add?

Brian Sohocki

No. That's your good comments, Mike. And Obviously, the classified increase specifically this quarter. It was the result of the migration of 2 of the larger loans that moved into NPL. And generated reserve. The third loan was already a nonperforming loan that had some incremental reserve. So if you look at the increase, it was specific to these identified credits. To your question specific to the future, obviously, the resolution of those is our key focus, and that will drive the classify the nonperforming and the reserves moving forward.

To Mike's point, importantly, we're not seeing broad-based deterioration with new credits moving into the category. As you drill down into criticized loans and watch loans, our OAEM actually decreased by $25 million this past quarter, while the classified increased by $26 million. It's there where you really see the transition, the migration from the criticized into the classified. And when you drill down further into the watch loans, we're down over $100 million year-to-date.

So we're seeing good portfolio performance on the front end. And our focus here over the next coming quarters will be resolution of the nonperformers. At quarter end, we felt that the reserve was appropriate based on the collateral valuations. Each of those loans, as you would expect, is in different stages of collection and resolution and that will be our short-term focus.

Daniel Tamayo

Okay. And then I guess my follow-up would be just on the C&I loan growth side. We had, I guess, an inflection in growth this quarter. Just curious your thoughts around ability to continue the trend there as we look forward.

Thomas Michael Price

Yes. We feel like we're turning the corner. I would say that in fairness, some of that does include our equipment finance group, which has slowed down a bit. But we do have traction in our regions. And a focal point is C&I lending, both larger, all down small business and business banking. And it also remains a focus because those are cornerstone relationships that have a repeat with household value. So that is where our ground game is focused. And is a key for our growth.

However, that being said, as we look to the future, we have 6 lending buckets. We have HELOC -- loan out of the branches. We have mortgage, we have indirect auto. On the commercial side, we have CRE, C&I and then equipment finance. And we really want broad-based growth across all of those 6 categories and relationship value where we can get it. And so we're not looking for 8% or 10% growth in some category to pick it up. We've had years here. We had 2 or 3 years where we grew every region and every product line. And that's ideally how we'd like to grow it.

Daniel Tamayo

I appreciate that, Mike. And then maybe lastly, just on the on that loan growth topic again and probably more on the CRE side, but feel free to answer for any of the buckets. Just curious your thoughts on higher rates, kind of where we are and where we could be into next year, the impact that could have on the demand side?

James Reske

I think it will dampen demand. Mike, if anything you want to add?

Michael McCuen

No. You're right, Mike, it will dampen demand. What it comes just to that question.

Thomas Michael Price

Yes. And it will dampen demand, particularly on the commercial real estate side, I mean, half point a full point is going to just make some projects unfinanceable and/or maturing loans that much tougher. That being said, Jim, we have if rates do continue to go up, there's a beta on the short end and also on the longer end of the curve and replacement rate provided the volume can stay up there. Anything you would add?

James Reske

Yes. No. I mean, I think just on that topic, any -- what you're asking about, but the rate environment is a real goal to lock for us right now. It does allow us to continue to be pricing up for the fixed rate loans. So even if there's no if you don't meet our loan growth targets mid-single digits, and they've always been pretty modest. So we think they're achievable. That's what we're planning on now. But if we can, we see we price up for the book, which just works in our favor.

Operator

Your next question comes from the line of Carl Shepherd from RBC Capital Markets.

Unknown Analyst

I guess I wanted to start on the margin. Obviously, a really strong performance again in the quarter and a positive outlook. We can look at the numbers ourselves. But I'm curious your view. Is there anything that stands out? Do you think a lot of this is execution? Is it the environment? And then just kind of what could maybe not get off into for '20 and 4Q and kind of holding that into 2027? Knowing that deposit pricing is always the wildcard.

Thomas Michael Price

I think our loan yields have been going up. I think on the higher yielding and the lower yielding, we have good loan mix. I think we have good deposit mix that we might be able to hang rate and still overall keep our cost of deposits relatively flat. So I think we're in a nice place just because we have a granular depository. And we'll test that. And we actually will test at a couple of times within a quarter with certain specials and products, the team.

And so I think we're relatively well positioned, but things tend to play out a little differently. That being said, granular consumer-oriented depository, particularly on the longer end, if you have a bunch of $5,000 and $10,000 CDs and the opportunity cost of not getting the highest rate, it's not in tens of thousands of dollars if it was $1 million, it's in hundreds of dollars instead. And I think that portends well for us. We have 200,000-plus households in our consumer bank. And like I said, they're over -- well over 60% of the overall depository.

And then we have that noninterest-bearing Majority of that is business, which I mentioned earlier, and we're getting better and better. Our TM capabilities are getting better and getting some fee income, the team with that and having more solutions for our clients. So we're just -- we have a broad ground game. Now that's a little harder to manage sometimes, but there are benefits, and I don't know -- what you want to add?

Unknown Executive

Just to answer the question of the strategic or is it good fortune. I think if you reflect back on the first quarter, we talked about the fact that we came across some liquidity from the loan sale. We felt that gave us the opportunity to change the mix a little bit of our whole portfolio. We start to price down a little bit at the CD side, and we strategically really focused on noninterest-bearing.

So I think as we expected that time that we'd have some good success on deposit pricing, that showed up now. And now we probably have to think about pivoting a little bit towards focusing more on the growth side now that we got ourselves in a good position.

Thomas Michael Price

Yes. We do feel like and Jim started off, we really feel like we need to be a profitable bank on the net interest margin side, but we also feel a pressure to grow net interest income. And we have and we just don't feel like -- we feel like we can do better there or we should do better there, or we should do better.

Unknown Analyst

Okay. That's helpful. And then just a follow-up question. On the tax rate. Should we -- are you sort of pointing to a Q4 rate kind of like this quarter then and we just think about the benefit from, I guess, 23 and 24 and then 26 from a similar type purchase of an energy credit. Is that a fair way to think about or help us out, Jim, when where else in the peer [indiscernible].

James Reske

Yes. So what I'm trying to get some clarity on is that it's going to be a little lumpy at first until it gets into regular res. So because these tax credits are newly transferred, we're kind of making up for lost time. We wanted to give this 1 in before we filed our 25 return on October 15. And so that's why we started in the second quarter, and we be kind of got it done by the end of the third quarter. and that took care of the '25 liability. And now there's an opportunity to do 2026 pace back to tax years '23 and '24.

So our -- these tax credits, you can purchase them up to 75% of your federal tax liability. That number ends up being roughly $25 million per year for us roughly. So heated '26 and then '23 and '24, that's like $75 million worth of credit. So what I'm trying to telegraph is a lump like that coming through. Once that's done, then you get 2028 -- 2027 and '28, you start getting buying this every year as long as the law doesn't change. And the law seems to be favored by both conservatives and lips on both sides of the aisle for reducing taxes and promoting renewable energy.

So there's a good chance of it persist for a while. And so I'm trying to give as much of an outlook as I can for you guys to help you with the -- just use modeling a tax rate. When I talk about like 1 or 2 percentage points when we talk about the annual tax rate to we're -- the federal taxes rate is 21%. Right now, our effective tax rate is a little hair over 20 because we have a very small muni portfolio. We have BOLI, and those 2 things are -- as the balance sheet grows. We're not really adding to those things.

And so less-proportionately less mass of the balance sheet. So the effective tax rate a year or so ago was in the high 19s now. So It's very little hair over 20%. These federal tax credits, if you start getting that rhythm, could really bring that down, which should fall right to the bottom line. So trying to give as much queries I can with that noting the waters too much. So I hope that helps.

Operator

Your next question is from the line of Matthew Breese at Stephens Inc.

Matthew Breese

A few questions from me. Jim, on the NIM, I think you had said 2027, call it mid 2027, perhaps a NIM mentioned towards 420, which is pretty incredible, especially without anything esoteric on the balance sheet. But I also think I heard you say that's with no rate hikes. And it does feel like we're going to get anything from 1 to 3 hikes. How does that change kind of the NIM outlook?

James Reske

Yes. Thanks for asking. And I'm just trying to keep it high level so that you could take that information and apply your own rate forecast to it. But here's the thing I tried to do without getting too much into the weeds. We purchased an outside rate forecast. It's the same way forecast that most banks, I think, purchased. That rate forecast would have the short-term rates coming down to like the Fed funds like 3.62 by the end of next year.

And in fact, the entire yield curve going experiencing a parallel downshift. That assumes that inflation is under control, the they can cut rates a whole bunch of things. that scenario, the short-term rate as is a December hike in it. So the short-term rate comes up. We benefit from that. The NIM expands, we peak in the first quarter and then start trailing off. puts a lot of complexity to taking to account, and this is a ton of assumptions on how the future is going to play itself out. So we try to simplify that and say, let's just assume nothing changes. The yield curve is frozen.

We got to temper hike and nothing else. What happens? And that's the Goldilocks scenario I mentioned earlier. That's really good for us. The curve has had some steepness to it. The repricing of the fixed rate loan portfolio continues, it was really good in the third quarter. And that continues

to.

[Audio Gap]

Mentioned you're here opening 4 that you're really starting to pay attention as a high priority. The level of NPAs where they're at, it's starting to feel less fluky less kind of like one-off fraud situations that we had 12, 18 months ago. Could you maybe help us out what are the top 3 NPAs? What are they geography asset class wise? Is there any future loss content better than them? And what are you doing to kind of reverse the trend here? Or is it a function of higher rates and a little bit more credit notes?

Thomas Michael Price

Yes. Just maybe I'll start with what we have done. And just on the SBA, we've really stopped our out-of-footprint lending. That's about 20% of NPLs. Mike mentioned the loan sale in the eastern part of the state last year, and we've really closed that production office there. We've limited our leveraged finance and our dealer floor plan businesses. We bolstered our portfolio management.

And at the end of the day, those are all good things, but we've also -- right now, 20% of the texture of our classified, criticized and if we look at our charge-off history, the last several years is really our entree into Central Pennsylvania. And so I mentioned we are now down to about $300 million there with about $60 million and criticized. So that's a lot of work on a portfolio that when we acquired it was just under $1 billion. And at the same time, we've been able to be profitable and move forward.

Now I've calculated the delta on the delta on that is 14 to 15 basis points over where we would have been otherwise, which is real money. And you and I have talked about that. And so I do feel like I said this a year ago, and I know you're reminding me of is we're in the latter innings of this. But I feel like we are in the latter innings of it. When you asked about the top 3 I think of the Central Pennsylvania C&I loan. I think of a downtown Pittsburgh-based multifamily -- multifaceted development opportunity.

And the third 1 would be an Ohio student housing project. And each of those is -- I could give you the $1 over $10 just under 10 and 2 just under 10. Brian, what would you add?

Brian Sohocki

Yes. I'll just add a couple of anecdotal comments to build on, Mike. So he mentioned the $60 million of criticized loans that we have on the books from the Centric acquisition. I think the -- taking one step further into that, the positive about it is there's 1 loan over $10 million. There's very limited nonperforming. So to your impaired question, there's about $5 million or $6 million of impaired in that portfolio.

So once you get past the 1 larger criticized loan, that's in that $60 million bucket. It's very granular and very manageable. And I think we've been deliberate in the market. We've added credit talent on top of the actions around the portfolio that Mike referenced. So not completely out of the woods with the headwind there, and there's always some variability with reducing that $60 million, but I feel it's granular and becomes manageable.

And then as you look at the top impaired loans in the nonperforming bucket. Overall, and Mike referenced the 3 from this past quarter. Those are 3 of the top 4 loans in our impaired loan bucket. The larger C&I credit that came in this quarter at $16 million is the largest in that portfolio, the $5 million mixed-use Pittsburgh credit, that came into nonaccrual this quarter is one of those top 4 loans. So $21 million kind of flowed in to the nonperforming nonaccrual bucket this period and comps for 2 of those top 4.

And it's worth just providing a little more color. The 1 that was already in as one of the top nonperforming, we added some provision and reserve through this period. That's an existing. It's an $11 million loan, and it's, I guess, the second largest nonperformer we have. It's also a Pittsburgh mixed-use multifamily property. So hopefully, that provides a little color. Once you move out of the top 3 loans are the only ones of magnitude from the fourth loan on through the 25th it drops below $5 million declines in size very quickly on a per loan basis. So I feel, again, the granularity is a positive and to continue as we continue to work through it.

Operator

[Operator Instructions] Your next question is from the line of Manuel Navas from Piper Sandler.

Manuel Navas

I appreciate all the commentary on credit, but what do you feel like kind of the time line for all that? Is there a best guess? We said a couple of quarters of 30 to 32 basis points of maybe higher net charge-offs. Is that still hold? Like I know this quarter was a little bit better because some recoveries. But just kind of thoughts on that go-forward look of charge-offs or provisioning.

Brian Sohocki

Yes. We don't provide specific guidance to the future quarter reserve and provisioning as we work through those specific credits we discussed I do recognize that this quarter was heavy on reserve and light on charge-offs and we would expect to work through these credits in the next couple of quarters. And we did allocate based on our collateral and our workout strategies on those loans. And I would expect that barring unforeseen events, we kind of manage within our typical provision going forward. Mike you want to add to that?

Thomas Michael Price

This quarter was, I think, our highest provisioning quarter we've had ever, and $3.5 million of that was unfunded, which are primarily construction loans that they'll get funded later, but still, it's it was the highest. I would -- I think we should hopefully get back down under $10 million, but we'll see. And Manuel, I wish I could -- I had a crystal ball here. We will get it to converge with towards pure numbers and that's what we're focused on.

Manuel Navas

A component of the provision this quarter was that those unfunded commitments. Does that mean that there's potential for stronger near-term growth? Or is that kind of spread out over time? I didn't realize the construction, but go ahead.

Thomas Michael Price

Yes. Through 3.5 million would be committed lines, which would be primarily construction lending on the commercial side. And then also, we've really had a nice year on HELOC lending out of branches. So those would be -- you would expect takedowns on both the HELOC and the construction over the course of the next year to 18 months. So that's the good question, if you will, and the provision expense, if there is such a thing.

Brian Sohocki

Sorry, Manuel. There was over $100 million of investment real estate construction growth in the quarter. And as you would expect, those are going to fund over a 12 to 18 month period on average, usually an equity phase for the first ramp-up period. So the that construction portfolio has been growing over the course of 2026. So we see nice incremental growth being funded out of that, and we'll see kind of some more incremental benefit in 2 quarters as you see those loans start fund.

Manuel Navas

Yes. We've been watching for a kind of a return to mid-single-digit pace. I guess 3% can accounts this quarter. Do you think that you accelerate near term? Or is it just kind of slow rise process from here into next year?

Thomas Michael Price

Well, I think prognostication, probably, I think we can hopefully keep at that pace or a little higher in the fourth quarter. Beyond that, you talked a little bit about rising rates and what that might mean for family-owned businesses, consumers and others. In our mortgage business, we've had a lot of gain on sale income this year. And they've kind of battled through it and they felt the rate increases in the volume in late August.

I can almost remember the week where we were just kind of on fire for 8.5 months. And then we saw just a little downtick, but we were able to keep it up. But you just -- you worry a little bit about the state of the consumer and the -- particularly the family and the small business and the impact on them. So that's why a little tepid around -- we're not in a sun belt. We're in community, in Pennsylvania and Ohio, which is a little different texture.

But quite frankly, there's a lot happening here with energy data centers in our backyard that could really propel us even if we were to get into a ticket you might not have a recession or the same kind of ticket in Central and Southern Ohio and Western Pennsylvania that you might have in the rest of the country. So that's another thing that we felt a little bit impervious through the last cycles. Both on our indirect auto book tended to perform really well, 30 to 40 basis points of losses even through some tough cycles. So there is something about this area of the country, Western Pennsylvania and Ohio where -- they performed well through the last couple of cycles.

Operator

There are no further questions at this time. I will now turn the call back to Mike Price for closing remarks.

Thomas Michael Price

Yes. As always, we appreciate the questions and the challenges, the encouragement. We're so excited about the future of our company. We've always been kind of sharp the last couple of years with fintech investments and things like that. And we just -- we'll continue that. And we're looking at some really capable tools that can help us with everything from next best product to data-driven insights, call center efficiencies, smarter ways to work and done a lot with anti-fraud and information security and money movement.

And just excited about continuing the pace of investment there. And I think we've highlighted in some of our investor calls, we have 35 fintech partners and just the democratization of technology and what it might mean for a company of our size and how we can compete and excited about that as we look to the future and try to bring the best of the community banking experience but also just have a level of specification where we could remain relevant to our clients.

And just thank you for your interest in our company and appreciate your questions today.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.