First Commonwealth Financial Q1 2026 Earnings Report

First Commonwealth Financial EPS Results

• Actual EPS: $0.37
• Consensus EPS: $0.40
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: $0.32

First Commonwealth Financial Revenue Results

• Actual Revenue: $133.70 million
• Expected Revenue: $134.32 million
• Beat/Miss: Missed by -$617.00 thousand
• YoY Revenue Growth: +12.90%

First Commonwealth Financial Announcement Details

• Quarter: Q1 2026
• Date: 4/28/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 29, 2026
• Conference Call Time: 2:00PM ET

First Commonwealth Financial (NYSE:FCF), headquartered in Indiana, Pennsylvania, is a bank holding company whose primary subsidiary is First Commonwealth Bank. Established in 1889 as Indiana National Bank, the company has grown through a combination of organic expansion and strategic acquisitions to build a diversified platform of commercial banking, retail banking and wealth management services.

First Commonwealth offers a comprehensive suite of financial products, including deposit accounts, personal and business lending solutions, mortgage origination and servicing, treasury management, and trust and investment services. The company tailors its offerings to meet the needs of individuals, small businesses, middle-market companies and nonprofit organizations, emphasizing personalized service through both its branch network and digital channels.

Operating in Pennsylvania, Ohio, West Virginia, Maryland, Kentucky and Florida, First Commonwealth leverages its regional presence to deliver local expertise and relationship-driven banking. The company maintains a focus on community engagement and economic development in the markets it serves, supporting growth through both traditional banking solutions and specialized financial guidance.

First Commonwealth Financial Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Net income of $37.5 million and EPS $0.37 missed consensus of $0.40, as net interest income fell $4.2 million after the sale of $210 million of Eastern PA commercial loans and elevated loan payoffs.
• Positive Sentiment: The net interest margin declined to 3.92% this quarter but management expects margin expansion of roughly 3–5 bps per quarter, targeting the low 4% range by Q4 helped by higher replacement yields on new fixed-rate loans and a $150 million swap rolling off.
• Positive Sentiment: Deposits grew an annualized 6.3% and the loan-to-deposit ratio fell to about 91%, giving the bank flexibility to test lower deposit rates and potentially improve funding costs.
• Negative Sentiment: Credit metrics showed pressure with non-performing loans at 0.98% and a $3.7 million linked-quarter increase in provision, including $9.6 million of specific reserves for three larger credits (with $28.1 million, or 30.4%, of NPLs SBA‑guaranteed).
• Positive Sentiment: Capital and shareholder returns remain robust—tangible book value per share rose 4.3%, CET1 improved to 12.5%, the company repurchased ~$22.7 million of stock with ~$25 million authorization remaining, and raised the dividend for the 11th straight year.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the First Commonwealth Financial Corporation First Quarter 2026 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one again. Thank you. I would now like to turn the conference over to Ryan Thomas, Vice President of Finance and Investor Relations. You may begin.

[Ryan Thomas, VP of Finance and Investor Relations at First Commonwealth Financial]

Thanks, Abby. Good afternoon, everyone. Thank you for joining us today to discuss First Commonwealth Financial Corporation's first 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 this call will contain forward-looking statements.

[Ryan Thomas, VP of Finance and Investor Relations at First Commonwealth Financial]

Please refer to our forward-looking statements disclaimer on page three of the slide presentation for a description of risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statement. 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.

[Mike Price, President and CEO at First Commonwealth Financial]

Hey. Thank you, Ryan. Good afternoon, everyone. Several headlines for the first quarter of 2026 follow. Net income of $37.5 million resulted in $0.37 of earnings per share as compared to our consensus earning estimate of $0.40. Net interest income was down some $4.2 million for the quarter to $109.3 million as we sold $210 million of Eastern PA commercial loans and loan balances fell another $74.2 million due to heightened payoffs. Our commercial loan repayments swelled to $630 million in the first quarter, up some $150 million over the first quarter of 2025. In the first quarter, we had 18 successful CRE projects.

[Mike Price, President and CEO at First Commonwealth Financial]

They were refinanced or sold, representing a payoff of approximately $240 million in loan outstandings. The net interest margin, or NIM, fell as expected to 3.92%. Among other items, positive replacement yields on new fixed-rate loans in the first quarter were 54 basis points higher, and coupled with a $150 million swap rolling off in the second quarter, this should provide the impetus for further NIM expansion. Deposits grew 6.3% end-to-end annualized in the first quarter. Our money market promotions have resulted in new consumer checking accounts. Period 4, we have been reticent to aggressively drop rates. Given the elevated loan payoffs and a markedly lower loan-to-deposit ratio, we are well-positioned to test lower deposit rates in the next several quarters.

[Mike Price, President and CEO at First Commonwealth Financial]

Non-interest expense, expenses were up $1.2 million to $75.5 million in the quarter as salaries and incentives increased alongside $500,000 of prepayment fees for the repurchase of long-term debt. Our efficiency ratio climbed to 55.4%, and we intend to slow down our expense growth rate. The provision for loan losses increased $3.7 million to $10.7 million on a linked quarter basis, as we had $9.6 million in specific reserves for three larger credits, one of which was from Eastern Pennsylvania. Our non-performing loans, or NPLs to loans, remain stubbornly high at 0.98% in the first quarter. Specifically, three previously discussed relationships totaling $20.5 million moved to non-performing status during the quarter, with $9.6 million of associated specific reserves.

[Mike Price, President and CEO at First Commonwealth Financial]

These downgrades offset otherwise positive asset resolution during the quarter. Please recall that of our $92.3 million in NPLs, $28.1 million or 30.4% is guaranteed by the SBA. The balance sheet and liquidity continued to strengthen in the first quarter as we paid off virtually all borrowings, lowered our loan-to-deposit ratio to 91% and grew tangible book value per share by 4.3%, while at the same time repurchasing our stock. Other notable first quarter items include our Centric Bank acquisition has exceeded financial expectations and helped lead Centric to company-leading loan and deposit growth in the second quarter. Residential mortgage had a strong first quarter with both loan volumes and gain on sale income.

[Mike Price, President and CEO at First Commonwealth Financial]

The small business and business banking segment volumes were brisk as we have added new bankers and enhanced credit processes. Also, our retail bank had the highest Net Promoter and customer satisfaction scores since we began tracking. As we think about the ensuing quarters and future, it will be important that we focus on the basics. Namely, live our mission, grow the bank, get better. As we grow the bank, we must do so steadily and ensure our credit costs converge and surpass peers. Getting better will necessitate new approaches and technologies to both make it easier for customers to do business with First Commonwealth while simplifying internal processes. Given our adoption of FinTech over the years and our current AI usage, we have important tools to continue to evolve our company. Simultaneously, we must become more efficient as we scale the bank.

[Mike Price, President and CEO at First Commonwealth Financial]

Our first strategic initiative, live our mission to improve the financial lives of our neighbors and businesses, remains the cornerstone of our brand and is what sets us apart as a community bank. With that, I'll turn it over to Jim Reske, our CFO.

[Jim Reske, CFO at First Commonwealth Financial]

Thanks, Mike. Mike's already provided an overview of financial results, so I'll drill down a bit on spread income and the margin. Spread income was down from last quarter by $4.2 million, but approximately $2.6 million of this decline can be attributed to having fewer days in the quarter. The remainder stems from the lower levels of earning assets and the impact of last quarter's Fed rate cuts on the variable rate loan portfolio. The Fed cuts resulted in a nine basis point contraction in the yield on earning assets, somewhat offset by a five basis point decrease in the cost of funds. The decline in earning assets is largely the result of the disposition of $210 million in loans that were moved to held for sale at the end of the fourth quarter.

[Jim Reske, CFO at First Commonwealth Financial]

This quarter's net interest margin, or NIM, of 3.92% is in line with our previous guidance. While it is down from last quarter's 3.98%, the NIM in the fourth quarter benefited from about three basis points from several unique items that we talked about last quarter, including the recognition of accrued interest from the payoff of several loans that had previously been placed on non-accrual status. Looking ahead, the NIM should benefit from fewer than expected rate cuts that keep the variable rate loans from repricing downward while continuing to allow the fixed rate loans and securities to reprice upward. The expiration of $150 million in macro swaps on May 1st, this Friday, is even more valuable in a higher rate environment, as it will allow those loans to float to higher rates than expected.

[Jim Reske, CFO at First Commonwealth Financial]

Based on our new one-cut base case, we are revising our previous NIM guidance upwards slightly, about three to five basis points higher each quarter than before, drifting upwards to the low 4% range by the fourth quarter of this year. First quarter non-interest expense, or NIE, increased by $1.2 million from last quarter. First quarter NIE included about $1.3 million in expense for finalizing incentive payments related to prior year volumes and performance, similar to the first quarter last year, along with the $500,000 FHLB prepayment penalty that Mike mentioned. We expect NIE per quarter to hover in the $74 million-$76 million range this year. Fee income is little changed from last quarter.

[Jim Reske, CFO at First Commonwealth Financial]

First quarter fee income included approximately $435,000 from the payoff of several loans that had been included in the held for sale portfolio at year-end. When they paid off at par, the difference between par and the mark was recognized as fee income. Wealth, mortgage, and SBA are all up significantly from the same quarter a year ago. Fee income should range from $24 million-$25 million per quarter this year. We repurchased approximately $22.7 million in stock last quarter at a weighted average price of $17.67. We have $25 million remaining in repurchase authorization, not the $18.4 million figure that was in the earnings release. We announced a $0.02 increase in the dividend yesterday, marking the 11th straight year of dividend increases.

[Jim Reske, CFO at First Commonwealth Financial]

Combined with the dividend, we returned nearly 100% of internal capital generation to our shareholders last quarter, and yet tangible book value per share grew from $11.22 to $11.34. We intend to continue share repurchase activity in the second quarter. Our CET1 ratio improved from 12.1 to 12.5%. Our TCE ratio was unchanged at 9.7%. With that, we'll take any questions you may have.

[Operator]

Thank you. We'll now begin the question and answer session. If you've dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is star one to join the queue. Our first question comes from the line of Daniel Tamayo with Raymond James. Your line is open.

[Daniel Tamayo, Analyst at Raymond James]

Thank you. Good afternoon to everybody. Maybe starting just on the increase in the charge-offs. I appreciate the comments on the loans that were paid down or sold in the second quarter early on. Maybe just a clarification on that. First of all, were there any charge-offs associated with those credits that were sold or paid off? Then, Jim, I was just wondering if you had any thoughts on provision or net charge-offs for the rest of the year. Thanks. Brian Sohocki?

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

Daniel, I can jump in. The charge-offs from the portfolio, we recorded $2.8 million during the fourth quarter when we moved them to held for sale. Then there was approximately $400,000 that had paid off at par that were reversed and run through the income statement in the first quarter. As you look at the other charge-off activity, you know, my comment would be that, you know, we remained above our long-term target, but we did improve sequentially and, you know, the level continues to be, you know, driven by a limited number of isolated credits. You know, we're not seeing any indicators of, you know, systematic stress across the portfolio.

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

You know, overall, the performance has been remaining consistent outside of those isolated numbers. I think your last part of the question was just related to the activity in the press release post quarter end. There was two names that were in non-performing at the end of the first quarter. One, we ultimately exited via a loan sale and incurred just a charge-off outside of our reserved amount of just under $150 thousand. The second was an exit, full payoff at par.

[Daniel Tamayo, Analyst at Raymond James]

Okay. Very helpful. I appreciate that detail on the second quarter. I think what you're saying is you're expecting. Correct me if I'm wrong. You're expecting. I guess you said they were a little bit above your long-term target in the first quarter. That should drift down towards that range kind of as the year plays out. Is there like a ramp down you think still from here or we're moving pretty quickly back into that range?

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

Yeah. We'll continue to work through the resolution. You know, specifically, as you saw in the release, the one item which was moved to NPL during the first quarter is a second quarter charge-off. More of a slow ramp down to the historical level as we resolve those credits than move them to NPL.

[Daniel Tamayo, Analyst at Raymond James]

Okay, great. That's helpful. Thanks. Jim, maybe, Mike or anyone on the loan growth. Just curious what pay down activity looked like in the first quarter, kind of how you're forecasting that to trend down for the rest of the year and how that offsets against origination activity.

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah. We compared the first quarter to the first quarter of last year, we had $10 million more of production, well over $900 million in the first quarter of 2026. Our payoff activity was heightened. It went from about $480 million to about $630 million. It was up $150 million, and we felt that on top of the loan sale. Last year we grew modestly. We grew about $95 million in the first quarter to about 4.5%, maybe 4.4%. Notwithstanding those payoffs, our activity was steady. It was good. It was HELOC, HELOAN was a bright spot.

[Mike Price, President and CEO at First Commonwealth Financial]

I would say small business banking, and still trying to get the commercial real estate construction portfolio to overtake the payoffs and some of the originations there. We just feel the year sets up pretty well, notwithstanding $150 million more of payoffs from a year ago. I would say that in the ensuing quarters since the first quarter of last year, the payoffs went up every single quarter. We feel with rates maybe cresting here, perhaps that and moving up, that that activity has slowed somewhat here in the last 30 days or so, or maybe it's coming at a natural end because we don't have that many big names left to pay off.

[Mike Price, President and CEO at First Commonwealth Financial]

That's the calculus, and we do feel good about the level of activity and that we can hit the guidance that we've given historically of, you know, mid-single loan growth.

[Daniel Tamayo, Analyst at Raymond James]

Thanks for all that color, Mike. Appreciate it.

[Operator]

Our next question comes from the line of Catherine Mealor with KBW. Your line is open.

[Catherine Mealor, Managing Director, Equity Research at KBW]

Hi, guys. Thanks for the question. This is Catherine Mealor on for Kelly Motta. Just one clarifying question on the margin. Appreciate the comments on the three to five basis points of expansion from here. Just drilling down on that exit margin, do you expect to kind of exit the year near 4% or, you know, a bit above that level? If you could kind of help us with how you're thinking about some of the pieces here, what could cause you to kind of exceed that exit rate, reach the high end or low end of that guide?

[Jim Reske, CFO at First Commonwealth Financial]

Yeah. Thanks for the question and the opportunity to clarify. No, we think the fourth quarter should be a little over 4%. I'm really glad you asked because there's variability. The big variability, especially if you look over the last two years, has been deposit behavior. I think we're in a really good spot now. The loan-to-deposit ratio now 90.9. Down. We, we really have some room here to bring down our deposits just because the balance sheet's so liquid. Gives us just a little more freedom to be a little more aggressive on deposit rates and bring that down. That's the big.

[Jim Reske, CFO at First Commonwealth Financial]

In fact, the big variable factor in our NIM forecast. Yeah, all else being equal, we expect to end the year a little over 4%.

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah. I would just add that, in bringing down the cost, we will balance that with we hang promos, and we have nice we've gathered a lot of deposits, core deposits as well as interest-bearing. It's been a terrific way to gain new checking accounts. The team has done a nice job. It's more of a balance than you think so that we'll pick our spots, as we decrease rates, probably perhaps a little bit more on CDs. By the way, we're gonna test this and we're gonna move the steering wheel, but we're just gonna be cautious because household growth, the granularity of our depository is tied to, when we get a customer, we're gonna have to lend to them. It's just a good thing when we get a new consumer customer.

[Mike Price, President and CEO at First Commonwealth Financial]

Our depository is about 50/50 consumer, which makes it very granular. We sail through events like Silicon Valley three years ago. We grow deposits pretty steadily over the last three years or so.

[Catherine Mealor, Managing Director, Equity Research at KBW]

Great. I appreciate the commentary there. I guess kind of on that deposit gathering activity you saw, you know, a nice quarter here. Do you expect that to, you know, keep up with the mid-single-digit loan growth you guys are getting? Just kind of trying to get the right side of the balance sheet here, seeing if keeping up with the loan growth.

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah. Long term, yes. Maybe shorter term, we're gonna test some things and just we'll test some things. We have a good team.

[Catherine Mealor, Managing Director, Equity Research at KBW]

Great. Thank you. Then last one from me, just on expenses. Wondering if this is a good core run rate to build off of in 2026. Maybe you could provide some color on what sort of investments you're making and where you're exercising more discipline on the expense front. Thank you.

[Jim Reske, CFO at First Commonwealth Financial]

Yeah. No, I think the guidance we gave, you know, we talked about NIE hovering the $74 million-$76 million range. You know, I wish I could actually give you a tighter range. I know it's a $2 million range. Those just vary a little bit quarter-to-quarter. We're just committed to keeping expenses under control. Mike, I don't know if there was anything.

[Mike Price, President and CEO at First Commonwealth Financial]

No. We've been good stewards of expenses over the years and, you know, we like efficiency ratios that are less than 55%. We've been pretty good at operating leverage through the years and as we scale the bank, we have to stay true to that culture of. At the same time, we're getting stretched on expenses and talent. We have to find the right mix and really have lots of good discussions, just like other management teams.

[Catherine Mealor, Managing Director, Equity Research at KBW]

Great. Thanks for answering my questions. I'll step back.

[Operator]

Our next question comes from the line of Karl Shepard with RBC. Your line is open.

[Karl Shepard, Analyst at RBC Capital Markets]

Hey, good afternoon, guys.

[Jim Reske, CFO at First Commonwealth Financial]

Hello.

[Mike Price, President and CEO at First Commonwealth Financial]

Hello.

[Karl Shepard, Analyst at RBC Capital Markets]

Can you guys hear me?

[Mike Price, President and CEO at First Commonwealth Financial]

Yep.

[Jim Reske, CFO at First Commonwealth Financial]

Yes, please.

[Karl Shepard, Analyst at RBC Capital Markets]

Okay, great. Jim, just one quick one on the NIM guidance. I think you said you moved from two cuts to one cut. Is that later in the year, or is it earlier and might have a little bit of impact?

[Jim Reske, CFO at First Commonwealth Financial]

I think it's a little later in the year, like, late summer, but I can verify that. It's an interesting dynamic. I'm kind of glad you, again, glad you asked, because if there is 1 cut, If the rate environment is down a little bit, it gives us an opportunity to be, to take deposit costs down even further. Generally, we say we're an asset sensitive balance sheet, but if the other side activities on the deposit side, if it's a falling rate environment because there's a little more opportunity on the, on the deposit side than it, costs us in the variable with a downdraft in the variable rate loan portfolio. When we look ahead out of 1 cut, I know this isn't the question you asked.

[Jim Reske, CFO at First Commonwealth Financial]

I'm just kind of thinking about it as you ask that question.

[Karl Shepard, Analyst at RBC Capital Markets]

Yep.

[Jim Reske, CFO at First Commonwealth Financial]

One cut versus zero cuts. The delta for us isn't all that big. The cut, the 1 cut in our base case forecast is, as I said, late summer, about September, actually. Hope that helps a little bit. At least I mentioned in my prepared remarks is that the base case last fall when we were doing the budget for us was based on a purchased vendor that most banks use, and that was four cuts for the year. It's quite dramatically different now.

[Karl Shepard, Analyst at RBC Capital Markets]

Okay. That's helpful. I wanted to pick up a little bit on the credit discussion. I know the provision will kind of be an output of what's sitting there at 6/30, but if I put all your comments together and the specific reserves for the credits that resolved after quarter-end, it seems like there's room for the provision maybe to drift back down a little bit. I think you're kind of signaling with no stress in the portfolio, a stable reserve. Is that a fair way for us to think about this?

[Jim Reske, CFO at First Commonwealth Financial]

I think so, yes.

[Karl Shepard, Analyst at RBC Capital Markets]

Okay. Great. Those were the two for me. Thank you.

[Jim Reske, CFO at First Commonwealth Financial]

Thank you.

[Operator]

Our next question comes from the line of Manuel Navas with Piper Sandler. Your line is open.

[Manuel Navas, Managing Director and Senior Research Analyst at Piper Sandler]

Hey, good afternoon. Can you speak a little bit more on the buyback pace? Is it impacted at all with any potential shifts in loan growth? I mean, I know you reiterated the guide, but if loan growth comes in at different parts of the range, would you buy back more? Is that part of the calculus?

[Jim Reske, CFO at First Commonwealth Financial]

Great question, Manuel. It's not really driven, it's not leveraged by the loan growth. We have plenty of capital to capitalize for loan growth. In other words, I don't think that if we were to grew gangbusters, we'd be pushing the capital ratios into any kind of

[Jim Reske, CFO at First Commonwealth Financial]

Place where we'd be concerned. It's really more driven by just a dollar amount of capital generation. We're kind of operating under a Fed guidance that says you're allowed to buy back, return to shareholders, between the dividend and the buyback, up to the dollar amount of capital generation in any given quarter, but not beyond that. That's kind of what we've been operating on. There are peers that do go beyond that, but that requires a full-blown application with the Fed, and we just haven't done that. That's what we're doing. Last quarter, there's a chart in the supplement that we published on the Investor Relations portion of our website, the PowerPoint, that shows a return about 95%, close to 100%.

[Jim Reske, CFO at First Commonwealth Financial]

I think we came within $1.71. No, it's not so much loan growth. It's a fair question 'cause we always say the primary use of capital is organic loan growth and capitalizing as we go. I can see where you're coming from, but that's really driven by just the dollar amount of capital generation. That's the cap.

[Manuel Navas, Managing Director and Senior Research Analyst at Piper Sandler]

Okay. Shifting over to loan growth for a moment, any shift to the mix? Just because the production is pretty solid, you're gonna keep the same mix? One specific, could you comment a little bit on the equipment finance growth? Are we approaching a cap, or does that still have a year or so left to run? That was kind of the nice positive area of growth for the quarter.

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah, the mix is probably 1% more commercial, probably 61-39 now, commercial consumer mix. That's changed. Obviously, to move it 1% or so, even in two quarters takes a lot more production on one side than the other. We are becoming more commercial. We actually talked about that this morning. Because we love the consumer households and the deposits and the granularity of that, and we just wanna have good balance there. Great question. On the equipment finance side, I think there's room to run there for another year or so. Knock on wood, it's really met our credit projections.

[Mike Price, President and CEO at First Commonwealth Financial]

That portfolio mature here, begin to mature here in the next year or so, and we'll see how those credit costs come through and how that matures. We feel good about that business. The other thing the team has been very nimble and creative is, you know, we had a goal to kinda, you know, once we got that up and running, to really switch that to an end market through leasing business. They're already pivoting there in a meaningful way that will result in a good portion of that business being end market leases to our commercial clients. It's just a talented team, and we're just delighted with how that has unfolded. Hopeful that that's helpful, Manuel.

[Manuel Navas, Managing Director and Senior Research Analyst at Piper Sandler]

That's great. Thank you. I appreciate it. I'll step back into the queue.

[Operator]

As a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Matthew Breese with Stephens. Your line is open.

[Matthew Breese, Managing Director at Stephens]

Hey, good afternoon.

[Mike Price, President and CEO at First Commonwealth Financial]

Hey, Matt.

[Matthew Breese, Managing Director at Stephens]

A few questions. First one is, towards the back of your presentation, looks like you have $35 million in maturing office next quarter. You have $17 million in the third quarter and $13 million in the fourth quarter. Given we're not totally out of the woods on office yet, just curious, have you looked at the maturities and any sort of credit worries as we come upon those dates?

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah. We've looked at it going out about next through the end of next year, actually. Brian, do you wanna comment on that?

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

Yeah. I'll just jump in and, you know, we continue to actively manage the portfolio. We have seen exposures continue to trend lower. You know, my comment on the maturities is, you know, part of that is also, you know, managed purposefully through shortening maturities and extending into a certain period in order to facilitate an exit or a refinance or a sale of the property. One of our biggest successes in 2025 was just that, where we had a large reduction in the second half of the year through an asset sale as a result of that.

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

You know, we evaluate maturity by maturity throughout the whole portfolio and focus over the next 24 months and, you know, are actively pursuing, you know, exits that, you know, make sense for the portfolio.

[Mike Price, President and CEO at First Commonwealth Financial]

Is that helpful?

[Matthew Breese, Managing Director at Stephens]

Yeah. Okay. Yes.

[Mike Price, President and CEO at First Commonwealth Financial]

Okay.

[Matthew Breese, Managing Director at Stephens]

Jim, it looks like the cash position is up a little bit, you know, maybe at sets of $100 million - $150 million.

[Jim Reske, CFO at First Commonwealth Financial]

Yeah.

[Matthew Breese, Managing Director at Stephens]

Kind of a near-term deployment for that?

[Jim Reske, CFO at First Commonwealth Financial]

Well, we, there are a couple things. The cash's position is up in part because of that, the execution of the sale of the loans that were in held for sale. We see that can actually pay down, and Mike mentioned this, but pay down some FHLB borrowing. We spot some securities and still have a, with the loan book shrinking a little bit in the first quarter, we got that excess cash position. We can foresee the pattern of some of our depositors, some of our large deposits that are in the public funds category. A lot of those come out in the second quarter, we'll make sure we have cash around for that, we don't invest that money and find ourselves having to borrow money because we have those outflows.

[Jim Reske, CFO at First Commonwealth Financial]

Knowing that those are coming, we're holding some cash for that and holding the cash for excess loan growth. To the extent it doesn't materialize, we probably would be buying more securities. We're buying now to expand the securities portfolio a little bit. That's kind of actually the one of the issues at the moment.

[Matthew Breese, Managing Director at Stephens]

Okay. I did wanna touch on, you know, some of the categories outside of equipment finance. Traditional C&I ex equipment has been down for three quarters. It looks like commercial real estate's been down for two quarters, and, you know, we talked about prepays and payoffs and things like that. You know, for the larger segments, C&I commercial real estate, when do you think we will start to see some net growth there? Is that a 2Q event?

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah, it'll be definitely this year. We've added some business bankers. We're seeing. That's really more on the small end, more granular end. You know, the payoffs are happening on a little larger credits. That's kind of a tough swap because you gotta do four loans for every one that's paying off. I like that long term that the team, we've added a lot of business bankers over the last two years. They seem very productive. We actually, in the C&I segment on the smaller end, small business and business banking actually grew that in the first quarter, $30 million or $40 million. Really haven't done that on that bottom, you know, $600 million, $700 million, $800 million of that space. That's good news, and we feel good about that.

[Mike Price, President and CEO at First Commonwealth Financial]

That's obviously granular and comes with more depository. We still have had some payment headwinds, no doubt.

[Matthew Breese, Managing Director at Stephens]

Okay. last one.

[Mike Price, President and CEO at First Commonwealth Financial]

I do think we can grow it. We will grow it.

[Matthew Breese, Managing Director at Stephens]

Okay. Last one is just, you know, between Ohio and Pennsylvania, there's just a ton of activity between chip manufacturing, AI data centers, some power plant build-out stuff. Just hoping for your comments around all that. You know, how much of it can you say has had or potentially could have an impact on the pipeline or loan growth to date?

[Mike Price, President and CEO at First Commonwealth Financial]

You know, it might already be having an impact. I mean, we have a, we have a really, probably our deepest pipeline after Cincinnati had a great first quarter. Our deepest pipeline is probably in our $4.5 billion community P.A. market, particularly on the small business up through the business banking segment. I think that I was with a contractor for dinner on Monday night and who's doing a lot of power generation, gas-powered, one in Homer City. It's having a real impact, and it's good to see. I also think that, I mean, Ohio has really grown the last few years and helped really led out in growth. I expect that to continue. That's everything together.

[Mike Price, President and CEO at First Commonwealth Financial]

Community PA always generated a lot of deposits, and now it looks like they're setting up for a good year on HELOC, HELOAN, and small business and business banking. That's, I don't know. We like the business. It's fun, and we feel like we make a difference. But it looks good.

[Matthew Breese, Managing Director at Stephens]

I'll leave it there. Thank you for all that.

[Mike Price, President and CEO at First Commonwealth Financial]

Okay, thanks.

[Operator]

Our next question comes from the line of Daniel Cardenas with Brean Capital. Your line is open.

[Daniel Cardenas, Analyst at Brean Capital]

Hey, good afternoon, guys.

[Mike Price, President and CEO at First Commonwealth Financial]

Good afternoon.

[Daniel Cardenas, Analyst at Brean Capital]

Just a couple of questions. Have you noticed any change in customer sentiment just given the current economic environment right now?

[Mike Price, President and CEO at First Commonwealth Financial]

It's, it might be too early to tell. I did notice that our interchange income on debit card was off $200,000.

[Mike Price, President and CEO at First Commonwealth Financial]

With the holidays in the fourth quarter too.

[Mike Price, President and CEO at First Commonwealth Financial]

Activity in swipes even. That's probably the first quarter too. I think we've shared this with you, Dan, and others, we've been watching our consumer books like a hawk. Our HELOC, HELoan, our mortgage, and our indirect auto, we're seeing some pretty solid performance. It kind of belies gas that I just filled up was, in Pennsylvania, it's high at $4.47 a gallon. We're watching that closely.

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

Yeah. I just confirm that, Mike. I mean, that was one of the positives in the first quarter is consumer delinquency, you know, trends improved and was somewhat of an offset, helped our overall total delinquency level for the period. We're monitoring everything that's touching energy and, you know, potential inflation impacts as we go through the quarter.

[Mike Price, President and CEO at First Commonwealth Financial]

Dan, I would add, we have probably, it's not like we have 15 or 20,000 customers. We have, plus indirect auto, we have 300,000 customers in the bank. We have a lot of clients. It's a pretty good sample set, sample size.

[Daniel Cardenas, Analyst at Brean Capital]

All right. Just jumping quickly back to credit. Within your level of non-performers, is there any geographic concentration in one particular market where perhaps some of these credits are housed in versus others?

[Brian Sohocki, Chief Credit Officer at First Commonwealth Financial]

No. nothing from a geographic standpoint. as you look through it's been isolated credit events, that have driven, the overall dollar amount of NPLs. you know, the one point I'd add is Mike made a comment in his opening statement. It's just important to, you know, distinguish between the guaranteed and unguaranteed exposure, within the SBA portfolio. those are all very granular. from a concentration standpoint, as you asked it, there are $28 million of guaranteed NPLs in that portfolio.

[Daniel Cardenas, Analyst at Brean Capital]

All right. Just 1 quick modeling question on the tax rate. Is a 20% tax rate kind of a good run rate for you guys?

[Mike Price, President and CEO at First Commonwealth Financial]

Yeah, it's very close. I think we are at 20.26%.

[Daniel Cardenas, Analyst at Brean Capital]

Okay.

[Jim Reske, CFO at First Commonwealth Financial]

Yeah, $20.26 for the first quarter.

[Daniel Cardenas, Analyst at Brean Capital]

All right. Perfect. I'll step back. Thank you, guys.

[Jim Reske, CFO at First Commonwealth Financial]

Thanks.

[Mike Price, President and CEO at First Commonwealth Financial]

Thanks, Dan.

[Operator]

We have no additional questions at this time, so I will now turn the conference back over to Mr. Mike Price for closing remarks.

[Mike Price, President and CEO at First Commonwealth Financial]

Thank you for your interest in our company. I did wanna mention, lastly and importantly, after 37 years at our company, Norm Montgomery, our Chief Information Officer, is retiring. We will miss him. We have hired Ryan Gorney to replace Norm and have a talented team at our company. Excited for Norm and his retirement, and welcome to Ryan Gorney.

[Operator]

Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Participants

Executives

• Brian Sohocki, Chief Credit Officer
• Jim Reske, CFO
• Mike Price, President and CEO
• Ryan Thomas, VP of Finance and Investor Relations

Analysts

• Catherine Mealor, Managing Director, Equity Research at KBW
• Daniel Cardenas, Analyst at Brean Capital
• Daniel Tamayo, Analyst at Raymond James
• Karl Shepard, Analyst at RBC Capital Markets
• Manuel Navas, Managing Director and Senior Research Analyst at Piper Sandler
• Matthew Breese, Managing Director at Stephens