First Commonwealth Financial Corporation

Second-quarter core earnings per share were $0.44, up $0.07 from the first quarter. Core ROAA was 1.46%, core pretax pre-provision ROAA was 2.14%, core efficiency ratio was 52.24%, and net interest margin was 4.01%, up 9 basis points sequentially. Average deposits grew 2.03% and loan growth was 1.97% annualized. On the credit side, management said charge-offs remained elevated, while nonperforming loans declined modestly and criticized assets were about 3% of loans, essentially unchanged. Forward guidance: management expects net loan growth to pick up in the second half of 2026 and return closer to mid-single-digit guidance, fee income to remain about $24 million to $25 million per quarter, noninterest expense to remain about $74 million to $76 million per quarter, and NIM to be in the low 4% range. They also reiterated that deposit competition is heating up, especially in CDs, and said they will continue share repurchases, supported by the newly approved $75 million authorization.

Mike Price emphasized that the quarter reflected broad operational improvement, with gains across net interest income, fees and expenses, and he highlighted stronger momentum in several lending businesses. He said loan production is improving across a wide set of businesses, including equipment finance, indirect auto, HELOC/HELOAN and consumer, and believes all five regions can grow in the second half after only two regions led in the first half. His tone was constructive but realistic: he acknowledged elevated charge-offs and large payoffs, but said the team is better aligned, talent has improved, and the company is using technology and AI tools to support service and efficiency.

Jim Reske focused on the margin, deposit costs, expenses and capital deployment. He said 6 of the 9 bps NIM improvement came from lower funding costs, with the cost of deposits falling 5 bps to 1.74%, while loan yield improved from 6.03% to 6.07%; he also noted June spot deposit cost was 1.71%. Fee income rose $2.3 million sequentially, helped by an $806,000 sub debt redemption gain and a $450,000 BOLI death claim, and noninterest expense fell $1.3 million after first-quarter items like snow removal and an FHLB prepayment penalty rolled off. He said tangible book value per share increased to $11.58, CET1 rose from 12.5% to 12.6%, and the company repurchased about $12 million of stock at $18.66 while the board approved an additional $75 million authorization.

Analysts focused on elevated commercial payoffs, the increase in classified loans, and whether credit costs could normalize. Management said the classified increase was only about $10 million across 2 credits and was a migration within previously identified criticized relationships, while watch balances fell by about $30 million and delinquency stayed stable. On payoffs, management said the pace should subside because many were one-off sales or planned moves to the permanent market, and on charge-offs they pointed to a longer-run normalization toward roughly 30 to 32 basis points. Questions also centered on deposit competition and the NIM outlook; management said CD competition has heated up across the market, the balance sheet is still asset sensitive, and a 25 bp Fed hike would add about 5 bps to NIM.