Summary of First Commonwealth Financial Corporation (FCF) Q3 2025 Earnings Call

1Key Financial Results and Metrics

Return on Assets (ROA): Improved to 1.34%.

Core Pretax, Pre-Provision ROA: Increased by 10 basis points to 2.05%.

Net Interest Margin (NIM): Expanded by 9 basis points to 3.92%.

Average Deposits: Grew by 4% across all regions.

Cost of Deposits: Decreased by 7 basis points to 1.84%.

Loan Growth: Increased by $137 million (5.7%), with strong contributions from equipment finance, commercial banking, and home equity lending.

Fee Income: Represented 18% of total revenue; slight decline in gain on sale income offset by improvements in wealth management.

Efficiency Ratio: Improved to 52.3% from 54.1% in Q2.

Tangible Book Value: Grew 11.6% annualized on a linked-quarter basis.

Net Charge-Offs: Totaled $12.2 million, primarily due to a $5.5 million charge-off related to a dealer floor plan fraud case.

2Strategic Updates and Business Highlights

Acquisition Success: The recent acquisition of Center Bank in Cincinnati exceeded customer retention expectations.

Digital Growth: Positive trends in digital services and customer satisfaction; ongoing enhancements to the digital platform.

Credit Quality: Nonperforming loans decreased to 0.91% from 1.04% in the prior quarter, with expectations for further improvement.

Operational Efficiency: Focus on improving efficiency through technology, including robotic process automation (RPA) and artificial intelligence (AI).

3Forward Guidance and Outlook

NIM Expectations: Anticipated to experience short-term pressure due to Fed rate cuts, but expected to stabilize around 3.9% in 2026.

Loan Growth: Projected mid-single-digit growth in loans and deposits moving forward.

Expense Growth: Expected to increase by approximately 3% in 2026.

Credit Quality: Anticipated stability in charge-offs, with expectations to operate in the mid- to high 20 basis point range.

4Bad News, Challenges, or Points of Concern

Credit Issues: The dealer floor plan fraud case resulted in increased provisions and charge-offs, although management believes it is isolated and will be resolved by year-end.

Loan Payoffs: Increased payoffs in commercial real estate are expected to constrain loan growth.

NIM Pressure: Potential for NIM to decline in the short term due to expected Fed rate cuts and seasonal deposit fluctuations.

Competitive Pressures: Noted increased competition in metro markets, impacting loan yields and pricing structures.

5Notable Q&A Insights

Credit Quality: Management confirmed that the remaining stress from the dealer floor plan relationship is expected to be resolved in Q4, with no incremental provisions anticipated.

NIM Dynamics: CFO Jim Reske indicated that while NIM may face short-term pressure, it is expected to stabilize in the future, with a focus on managing deposit costs effectively.

Organic Growth: Management expressed confidence in maintaining mid-single-digit loan growth despite headwinds from payoffs, emphasizing a diverse lending strategy.

M&A Activity: Increased conversations around potential acquisitions, with a focus on smaller, strategic opportunities that enhance liquidity and deposit growth. This summary encapsulates the key points from the earnings call, providing a clear overview of FCF's financial performance, strategic direction, and outlook while addressing challenges and insights from the Q&A session.